What if you were a billionaire?
Perhaps you’ve played this kind of “what if” game with friends. How would you spend time and money with billions of dollars at your disposal?
Based on recent announcements, it’s been interesting to see what a couple of real-life billionaires are planning to do with their big bucks. One wants to conquer space; the other wants to conquer Russian politics. Who has a better shot at succeeding?
Paul Allen made his billions as co-founder of Microsoft. Mikhail Prokhorov got wealthy in the metals industry in Russia after the fall of communism.
Both men apparently share a passion for sports. So, why not spend some money on a team, maybe even two? Allen owns the NFL Seattle Seahawks and the NBA Portland Trailblazers. Meanwhile, the NBA approved Prokhorov’s purchase of the New Jersey Nets in 2010, with the team scheduled to move into a new arena in Brooklyn next year.
As a sports fan, I can relate. With billions, I’d fulfill some childhood dreams by buying the Cincinnati Reds (adding some starting pitching) and the Minnesota Vikings (revamping almost everything around young QB Christian Ponder and running back Adrian Peterson).
But Allen and Prokhorov went in very different directions in their recent announcements.
On Dec. 13, Allen declared his re-enrty into the space business. In 2004, he spent at least $20 million on the first privately built vehicle, SpaceShipOne, to reach space. Now, Allen’s new venture, Stratolaunch Systems, will build a mobile air-launch system to provide access to orbit. The plan involves a massive carrier aircraft — the largest aircraft ever flown — from which a multi-stage rocket booster will launch payloads into orbit.
The carrier aircraft would take off and land on a runway, and would be far more flexible, less costly and safer than traditional ground-based systems. Flight testing is expected to begin in 2016, with the objective being, as noted in a statement, to “bring airport-like operations to the launch of commercial and government payloads and, eventually, human missions.”
Allen declared, “I have long dreamed about taking the next big step in private space flight after the success of SpaceShipOne — to offer a flexible, orbital space delivery system. We are at the dawn of radical change in the space launch industry. Stratolaunch Systems is pioneering an innovative solution that will revolutionize space travel.”
As The Wall Street Journal put it, Allen is trying to establish “the first totally privately funded space transport system.” That’s quite a challenging venture.
But Prokhorov arguably faces an even more daunting task. On Dec. 12, he announced that he would oppose Vladimir Putin in Russia’s March 4 presidential elections.
Putin’s United Russia ruling party lost a surprising number of seats in a Dec. 4 parliamentary election. Subsequently, tens of thousands of Russians protested voter fraud. It reportedly was the largest protest since the fall of the Soviet Union in 1991. And then Prokhorov launched his candidacy for president.
However, it pays to keep in mind that Putin controls Russia’s political system — serving as president from 2000 to 2008, and subsequently as prime minister — along with the media. That might explain why news hit just a couple of days after announcing his candidacy that Prokhorov was interested in buying a major media holding company.
In addition, critics of Putin have not fared well. Fellow businessman Mikhail Khodorkovsky, for example, challenged Putin’s authority, and has been in jail since 2003.
But even if Prokhorov were to pull off a long shot victory in March, he would face another daunting task by trying to provide the groundwork upon which true economic opportunity and growth might be able to flourish in Russia. That would require major changes in government philosophy and policies.
For example, according to the Heritage Foundation’s “2011 Index of Economic Freedom,” Russia ranked a dismal 143rd among 183 nations. The nation’s woes were summed up: “Economic freedom is severely challenged in Russia. While strong returns from hydrocarbons have buoyed its economy, prospects for sustained long-term diversification and growth remain dim. An increasingly statist approach to economic management adds to the cost of investment and mutes private-sector dynamism. Pervasive corruption and limited respect for property rights hinder the development of economic activity that is free from government control or influence.”
So, if you were a billionaire, which is it — the dangers of reaching into space, or the dangers of trying to reform Russia? Not an easy choice.
The challenges of creating a more economical and flexible way of delivering payloads into space are technical and financial. That is, they’re market risks. In contrast, the challenges of gaining the presidency in Russia involve political risks of the corrupt, semi-authoritarian variety, which can mean risking one’s personal safety.
I admire both efforts. Allen puts his own money on the line to fulfill a dream of expanding access to space. Meanwhile, if Mr. Prokhorov is serious, and wants to advance true pro-market, pro-democracy reforms, then he is trying to make a real, positive difference for the Russian people. In either case, not a bad way for a billionaire to spend some of his fortune.
Raymond J. Keating is the chief economist for the Small Business & Entrepreneurship Council. His new book is “Chuck” vs. the Business World: Business Tips on TV.