Thursday, May 18, 2006

Prosperity of The Colonies

The abundance of natural resources continues to fuel expansion of human population at the Asteroid Belt. Huge asteroids like Ceres (diameter 918km) and Vesta (diameter 500km) become permanent mining colonies. Miners drilled through the asteroids to create cavities to house their colonies. Thus, you could find human beings living inside huge asteroids getting used to the micro gravity inside the rock. These were the first space-age cavemen.

Since then, there will be 3 distinctive groups of people at the Belt- Rock Settlers, Free Traders and the Administrators.

As the Rock Settlers established themselves within the cavities of their asteroids, they began to set up their own specialized manufacturing base using minerals mined from their own home. A colony in asteroid rich in titanium would initially find competitive advantage to manufacture ship’s engines. Over time, they became so efficient in producing high quality engines that even it the titanium deposits in their asteroid run out, their engines will still be in high demand even if they have to import the raw materials causing the price to escalate.

Thus the Asteroid Belt become a giant industrial estate with the Rock Settlers becoming the major industrial force of the system. Almost everything used in the Belt was manufactured inside some rocks.

Meanwhile, the traffic at the Asteroids is controlled by the Free Traders. These were the people who spend their entire lifetime in their ships travelling from asteroid to asteroid serving as conduits for trades. Whenever Earth orbits passes closer to their vicinity, they will trade with Earth traders – exchanging the Asteroid’s industrial products with Earth’s organic products like coffee, tea and chocolates which have become prized luxuries by the people at the Asteroid Belt, Rock Settlers and Free Traders alike.

Apart from trading, some Free Traders engaged in tourism, bringing people to outer planets like Jupiter, Saturn and Uranus.

Despite the distinctive lifestyles of these 2 groups, the dynamics of the asteroid society causes many overlaps among them. For example, a Free Trader who is tired of moving around can choose to sell his ship and buy a partnership share of an asteroid. Likewise a Rock Settler who wants to travel can choose to sell his shares of his asteroid and buy a trading ship.

Prosperous Free Traders who owned huge fleet of trading ships will inevitably diversify their assets to acquire shares of manufacturing bases in asteroids. Likewise for successful Rock Settlers who acquired shares in trading companies run and operated by the Free Traders.

The smallest of the 3 group was the Administrators. These are the people living in Mars Station 1, the only gravity-generating base in the Asteroid Belt. Despite their small numerical numbers, they were the most organized group and their influence could be found throughout the Belt. They set up the infrastructures for the whole system.

If the whole Belt is seen as a nation, then the Administrators will be the ruling class. However, this system of government is unprecedented by Earth’s standard. They were not democratic because there were never elected. Nether were they dictatorial because they do not have the means to enforce their rule. They did not even have a single soldier. Therefore the Administrators never demand, they only advise. These advises were usually acted upon by the inhabitants for business reasons stated below.

The Administrators used their organizational and planning skills in setting up the system’s infrastructures and thus positioning themselves in a favorable business position. They were the single largest customer, financier and business partner to the rest of the inhabitants. Naturally, lucrative contracts would be awarded to the “Most Favorable Business Partners” referring to those that chose to obey the Administrators’ advice. While Free Traders or Rock Settlers who has decided not to follow the Administrators’ advise will not face any direct action, they will be placed at lower priority when it comes to business dealings with the Administrators. This is a result nobody wants.

The most influential company set up by the Administrators was MarsNet, an internet service provider. This company has a database of millions of subscribers, thousands of advertising contracts and paying regular rents to hundreds of habited asteroids for leasing space on them to store relay stations and data recovery centers. Whenever MarsNet decided to install additional relays and data centers, it would always be flooded be many tender quotations because the orders were usually huge in the magnitude of hundreds of relay stations at one time.

Company Registra, an organization arm of the Administrators was responsible in registration of companies. It earned its income from a one-time registration fee, maintenance fees and arbitration fees. While it was not compulsory for the businesses to register their companies, all of them chose to do so because a registered company gave the impression of integrity. This facilitates business dealings.

Whenever there was a dispute among the companies, they would approach Company Registra for arbitration. Once they did that, apart from paying the arbitration fees, they were obliged respect the outcome. For serious cases, Company Registra can choose to deregister a recalcitrant company.
When the demand for capital increased, the Administrators set up Asteroid Exchange and Capital Reserves. The Asteroid Exchange was a combination stock and commodity market. It allows expanding companies to raise funds by selling their shares to the public and provide a liquid secondary market for these shares.

In order to facilitate hedging on commodity prices, the Exchange started a futures market for various metals, most popular being uranium, plutonium, gold, platinum and titanium.

Capital Reserves is the equivalent of central bank for the Belt. Its most important role is to issue currency and regulate credits. Unlike the nations of Earth that printed pictures on pieces of papers and call them money, the Administrators were more resourceful. They first acquired a number of precious metals and then issued coupons on them. These coupons can be used by anyone to redeem the stated amount of metals from the Administrators. As long as the integrity of the Administrators is not in doubt, these coupons are as valuable as their underlying assets.

At first these coupons were used to pay the Free Traders for services render and goods delivered to the Administrators. Then they started to circulate among every inhabitant at the Belt. Even Earth traders started use and keep them. On Earth they were know as “Space Money”. Eventually they became choice investments for Earth fund managers. The Administrators were careful to preserve their integrity and transparency in order not to cause any negative effect on the coupons.

It is important to note that this coupon is different from Earth’s money. Every coupon is a promise from the Administrators that guarantees the redemption of a certain quantity of a certain metal. There are a total of 5 metals used as underlying asset – gold, platinum, titanium, uranium and plutonium. So, the relative value of the coupons also depends on the relative values of their underlying asset. For example, when the price of gold is half of platinum, it takes 2 coupons of 1 kg Gold to match the value of 1 coupon of 1 kg Platinum.
Soon, some Rock Settlers started to set up banks to receive these coupons as deposits and lend them out as loans.
When the economy expanded, so was the demand for the Administrators Coupons. In order to issue more coupons the Administrators will have to acquire more metals. So far the Administrators refused to issue empty coupons. They began to explore mining on Mars. Being the only people in the Belt who can withstand high gravity, they had to be personally involved in the entire mining operation. Once promising mines on Mars had been identified, the Administrators invited tenders for the design and manufacturing of mining robots, surface dwelling units and transportation system from the “Most Favorable Business Partners”. Not only that, some partners were invited as shareholders for this venture. By this time the term “Most Favorable Business Partners” became quite redundant because everyone who live in the Belt was one.
Since mining operations started in Mars, the number of Administrators moving to the surface of Mars increased. Soon they began settle the permanently become the first Martians. Thus the Administrators Group started to split into 2 groups, the original Administrators that continued to do the same jobs as before and the new Martians that occupied and prospered from mining activities on Mars.
It is important to note that due to the huge area of the Asteroid Belt, no amount of communication system can overcome one limitation of physics – the speed of light. If you try to talk through a phone to a friend that lives one light-month away, the friend can only hear you 1 month later and when he responds, it takes another month for his voice to reach you. So the idea of live telecast and real time quotes is quite limited. For this reason, no one can technically be truly considered dominant in this world.


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