I would argue that orbital colonies are feasible, given current technology and physics, or reasonable extensions of it; and that the long run cost is not overly expensive.
It should be borne in mind that, as countries develop and with modern manufacturing, “stuff” becomes so cheap as to be often disposable. What remains expensive is what they are not making any more of (especially land), and increasingly the constraints on development and living standards are environmental and cultural. When I was young housing was relatively cheap, but consumer durables and automobiles were expensive (and unreliable). Now the latter are cheap and reliable (and mobile phones and television are ubiquitous, even in the developing world), but good housing is expensive and environmental constraints are significant. As for cultural factors, so far it seems that western European (and their ex colonial offshoots in North America and Australasia) and Confucian cultures (first Japan, then South Korea and Taiwan, now China) have the potential to reach developed country status, but the jury is still out elsewhere; for example Russia and most of Latin America seem so far to have got stuck at a semi-developed stage, in most cases because of low social trust and high levels of corruption.
Space colonies would simply be forced to be technologically competent societies – otherwise they would not survive – and most of the environmental constraints which apply on Earth would not do so there. Given the likely future trends on Earth, I may in fact thus be overestimating the cost of space colonies relative to Earth capital costs in a developed country, but there is no clear way to calculate this, so I continue to err on the conservative side and assume current values.
It is clear, however, that any development of space colonies would be a lengthy and expensive process. What would motivate governments or private investors to develop space colonies? Three possible motivating forces, to be considered in subsequent posts:
Getting Started: A Starter Habitat
Space based solar power