McCain's Insulting Gimmick

John McCain has recently said the government should offer a 3 hundred million dollar prize to someone who can invent a battery that far surpasses existing technology.

This is what people in politics call a "gimmick." It is ridiculous and counterproductive. Ridiculous because there is already a prize - the inventor of such technology will be greatly rewarded by the market itself and hardly needs Mr. McCain to award more of money that is not his.

This type of gimmick can be counterproductive because it can distort incentives. For example, if the best technological development is not a battery at all, a researcher might still be inclined to work on a battery to get the prize.

Furthermore, this type of idea opens the floodgates for such gimmicks. When government engages in this kind of activity, it will inevitably become political. In other words, congress and the President will start working on ways to issue these prizes to their favored individuals and firms. The U.S. government already spends money that is not theirs with extravagance, and this proposal shows that Mr. McCain thinks he knows how to reward business’s with other people’s money better than they do.

John McCain needs to read "The Wealth of Nations" by Adam Smith, published in 1776. This book is the foundation of most economic theory and the U.S. economic system generally. In it, Smith describes notions of human nature in general which help explain economic activity. Smith speaks of the "invisible hand" of the economy, which sets prices, supplies and demand at levels which are determined to be appropriate by the market itself, rather than self-interested politicians.

Mr. McCain needs to put together a fundamentally sound economic policy. He has admitted openly the economy is not his strong suit, but this should not impede his road to the White House. A sound, comprehensive approach with recognition of the fundmentals of economics will more than suffice.

Between inflation, the rise in mortgage foreclosures, distorted food prices, big bank bailouts, and other government created atrocities, the U.S. has managed to screw up the economy pretty badly, and proposing a gimmick like this is nothing short of insulting.