On June 23, 2008, during a speech at Fresno State University, John McCain proposed we set up a prize of $300 million (about one dollar for every man, woman, and child in the country) to the first successful producer of batteries of a “size, capacity, cost, and power to leapfrog the commercially available plug-in hybrids or electric cars.’’
That is what I call the Big Prize theory. To motivate a lot of people to put out a lot of effort toward a favorable goal, offer the winner — and only the winner — a big prize. Successful examples in aviation are the Orteig Prize of $25,000 ( a lot of money back then), which motivated Lindbergh to fly the Atlantic; the Schneider Trophy which motivated floatplane racers for decades to produce floatplanes that were faster than the fastest land planes; and more recently, the $10 million Ansari X PRIZE which motivated Paul Allen and Burt Rutan to build a rocket ship and fly it twice into space.
I have written in favor of the Big Prize for years, including an article in a small economics magazine. (To see my Airport Business blog on the subject, visit www.airportbusiness.com and scroll down to my blog of April 3, 2006.) It does my heart good to see a presidential candidate also in favor of this powerful means of motivation.
As McCain points out, “In the quest for alternatives to oil, our government has thrown around enough money subsidizing special interests and excusing failures. From now on we will encourage heroic efforts in engineering and we will reward the greatest success.”
He further says he could pay for the prize by “canceling three pork-barrel projects that are unnecessary and unwanted.”
Yes, I do realize that is just a campaign promise, but folks, it’s so nice to hear one that I actually agree with myself. (Well, actually, I don’t believe in subsidies at all. But if we’re going to do it, let’s do it this way, rather than subsidize one alternative — ethanol — at the expense of all others.)
Notice that McCain doesn’t say how the batteries should be built. That would defeat the purpose. He just set the results required and left the rest to those competing for the prize. That’s what Orteig did. He didn’t dictate the type of airplane, the number of engines, or the crew. All he specified was the required result. This allowed Lindbergh to try for the prize as a solo pilot flying an aircraft totally unlike the others, and he won.
The free market does the same thing. The winner gets the big prize (profit) and the losers get nothing.
