McCain's Reward

We already have a publicly funded reward for new inventions designed to promote new technologies. It's called a patent. It's mentioned in the Constitution. John McCain should learn about it.

The Founders realized that innovation was cool: Jefferson prided himself as an inventor. They also respected but didn't completely trust the market. They implicitly understood that there was an appropriate space for the government to shape the market, and one way was by guaranteeing artificially by law that profit from innovations should be exclusive to the inventor for a while so that they would have a stronger mercenary incentive to invent. They left it to Congress to fix the terms in an effective manner.

If there's a technology we want developed, we can muck about with the patent system, or we can mandate it. If we know something is inventable, we can pass technology-forcing regulations that, say, mandate that all vehicles run on super-efficient electric batteries by 2015. Car companies can either develop the tech, or get out of the business and leave it to someone who will. That has worked in the past, but for obvious reasons, business does not like it. So it's easier to sweeten the patent prize.

McCain thinks this is a super-duper technology that it would benefit the public to develop, to the tune of $300 million. Supposing that is so, we should mandate its use, right?

Consider that one of three things is true: (1) the new tech would be very profitable to its developer, or (2) it is of marginal difference, so not worth investing in developing, or (3) it would ultimately be a bigger threat to existing profit streams than it would be an advantage, enough so that's it would be worth developing it or buying the patent just to keep it off the market.

If (1) is true, then an extra reward is unnecessary. It may cause a breakthrough to come marginally sooner, but for the most part, it's just an extra bonus to someone (most likely a Korean business) who already stands to get truckloads of money.

Number (2), although logically possible, is far-fetched in real life. If it is true, then it stands as an extraordinary example of market failure that should make McCain re-examine the economic philosophy he claims to have (although he probably does not really know what it is, or actually have it).

If (3) is true, then McCain's proposal gives a pile of extra money to someone for actually harming the national interest.