Our View: Wanted: A winning idea
Presumptive Republican presidential candidate John McCain has received a few derisive chuckles amid the reaction to his proposal that the government offer a $300 million prize, paid by the taxpayers, for the inventor of a better battery for electric or hybrid vehicles. As the candidate put it, the battery should have "the size, capacity, cost and power to leapfrog the commercially available plug-in hybrids or electric cars."
For all the chuckles, this is not a bad idea, and depending on how a contest was put together it could be rather constructive. Prizes offered in advance have spurred a number of innovations, including a chronometer to measure longitude at sea, a problem that had vexed sailors for centuries. The Royal Astronomical Society offered a $20,000-pound prize (a lot of money in 1714) for such a device and it was eventually won by a carpenter. Charles Lindbergh made the first trans-Atlantic nonstop flight to win a $25,000 prize that had been on offer since 1919. A few years ago aerospace engineer Burt Rutan won the Ansari X-Prize of $10 million for building a ship that could go into space and return, and repeat the feat within two weeks, which jumpstarted the commercial space tourism industry.
A number of politicians, including Hillary Clinton, Lindsey Graham and Newt Gingrich have proposed prizes — for various environmental and medical innovations. Vermont Rep. Bernie Sanders has proposed offering prizes for medicines that treat diseases that afflict poor people, like malaria, but might not be commercially attractive enough for big pharmaceutical companies to invest $1.2 billion in research, development and regulatory costs. There's even been talk of replacing the patent system for drugs and medicines entirely with prizes, which would mean anyone could manufacture a new medicine as soon as it was developed and proven.
Thus McCain's idea is certainly feasible, and might well work better than the usual government method of handing out contracts to do research or make items deemed socially beneficial by the government — a method that often leads to cost overruns and subsidizing failure. The best lesson from previous prize offerings is that they seem to work best for very specific innovations rather than vague or wide-ranging goals. Also, there's no reason prizes couldn't be offered by private organizations such as philanthropic organizations rather than the government.
McCain, however, is hardly consistent even with his stated goals. "Instead of playing favorites, our government should level the playing field for all alcohol fuels that break the monopoly of gasoline," he said in what sounded like a veiled swipe at government mandates and subsidies for ethanol. In the same speech, however, in addition to the prize idea (which is definitely playing favorites), he advocated tax credits for purchasers of alternative-fuel, hybrid or electric cars — another example of playing favorites.
The patent system, which offers a temporary monopoly for new inventions, is a more even-handed way of encouraging innovation in a variety of fields rather than a few politically favored fields. People with patented inventions can make significant money if consumers, as opposed to bureaucrats and politicians, like their products — and the money comes from those willing to pay for them voluntarily rather than being extracted from taxpayers.
It is probably the case that there are plenty of incentives in the private marketplace already for somebody to develop a battery that meets Sen. McCain's specifications. A variety of people have been working on improving battery technology for some decades, and the technologies have improved. But the problems are difficult, and offering a dramatic prize won't make them any easier.
McCain has an interesting idea, but it's worthwhile to kick it around, critique it, and refine it before endorsing it.
