Earlier this year, Elon Musk, the billionaire co-founder and CEO of Tesla, pledged $ 100 million in prizes to inventors who find ways to remove greenhouse gases from the atmosphere. The awards, which will be presented by the X Prize Foundation, are part of a silver cornucopia that is hung to induce innovation around the world. The European Innovation Council, the MacArthur Foundation and the US government through the America Competes Reauthorization Act 2010 are among those who spend a lot of money.
This generosity is welcome. Humanity faces difficult challenges, and if prices make people think more about solutions, so much the better. But there is already a mechanism that can be used to encourage innovation: the patent.
The value of patents is determined by the market. A patent that is useful to society can net its owner billions, while a patent that is not useful will sit on the shelf. Compare that with a price. No matter how famous the judges are, sometimes they will miss a good idea and reward a failure.
To sort this out, I interviewed two smart people on opposite sides of the argument. The skeptic is Zorina Khan, an economist at Bowdoin College in Maine who has studied the history of prices. Support is Marcius Extavour, physicist and vice president for energy and climate at the X Prize Foundation.
Khan told me in an email that his research “offers the most comprehensive empirical analysis of innovation prices ever.” She has assembled a database of 65,000 of them dating back several centuries, including the famous Longitude Prize promised by the English Parliament in 1714 to anyone who could help sailors determine their longitude – their east-west position on the world.
In 1790, America’s founders started what became the United States Patent and Trademark Office with the belief that patents were more democratic than awards, which Khan said tend to go to those who are already famous. 18th century European nations relied more on price. “The elites have always been wary of markets,” and preferred to trust the judgment of “the privileged few,” Khan said in an environmental group Resources for the Future podcast based on his 2020 book, “Inventing Ideas: Patents, Prizes , and the Knowledge Economics. “
The Longitude price was one example. It was ultimately handed over to Yorkshire clockmaker John Harrison, but not without opposition from scientists who believed a clock was prosaic and the prize should go to an astronomer. (Dava Sobel, a former New York Times science reporter, captured this well in her 1995 book, “Longitude: The True Story of a Lone Genius Who Solved the Greatest Scientific Problem of His Time.”)
Price arbitrariness came to Khan as she broke red wax seals on rejected requests for a French prize in a dusty attic in Paris. “A lot of these candidates have said they are in dire straits,” she said on the podcast. “They were pleading for the support of the awards committee. But think about this: an administrator had just put the letter in his file, unopened, and thrown it aside. And I was the only person in 200 years who had ever seen the content. “
She’s more than a little cynical about the awards, which she says mostly tarnishes the reputation of those who give them away. “I’m pretty confident that the X Prize will benefit Elon Musk more than the planet,” she told the podcast audience.
Extavour begs to differ, of course. “Prize design is like game design,” he recently wrote. “The aim is to develop a set of incentives and rules that govern these incentives, in order to drive innovation in a particular direction and achieve the specific objectives of the award. The process is part art and part science.
Extavour does not deny the value of patents. “Most of the competitors tend to be IP owners of some type,” he told me in an interview, using the abbreviation of IP. Inventors do not have to assign or license their patents to enter.
But he says patents are not a strong incentive if there is no commercial market for the product or service. There is not a lot of money to be made today by removing carbon from the atmosphere because the price of carbon emissions is low or zero. Extavour compares it to garbage removal. No family would pay to have their garbage removed if they could throw it on the neighbor’s lawn for free.
It is in fact a point of partial agreement between the two. Khan and Extavour both support carbon taxes or a cap-and-trade system, as in the European Union’s emissions trading system.
The X Prize is just one part of an innovation ecosystem that includes patents, angel investors, venture capitalists, contract manufacturers and others, says Extavour. “It’s about generating more activity in the innovation space, using the price structure and money as the spark, and then forming a lot of partnerships that will outlive the price and maybe even end.” by being more significant than the price in the long run, “he says.
Khan replies in an email: “Are the prices exciting? May be. The real issue is how effective they are at delivering scalable solutions that can be commercialized and continuously calibrated to adapt to changing circumstances. Evidence shows that they generally don’t. “
I agree with Extavour that there is probably a role for the awards, while agreeing with Khan that the hype around them is a bit too much.
The increase in non-farm payroll employment in August, according to an estimate by BofA Securities, a unit of Bank of America. That’s lower than Wall Street’s median estimate of 769,000. BofA analysts said they based their low estimate on employment data from private sources released since the July jobs report. The Bureau of Labor Statistics will release official data on Friday.
Quote of the day
“The term ‘property’, in the abstract sense of the mode of being of a thing, has a double origin, theological and legal, which can still be discerned in the French expressions ‘amour-soi’ or ‘own property’. This double origin refers to the general sense of “clean” such as the unstained, the intimate. … The link between “own” and “property” therefore seems to be more than an accident in one language; it seems to be a constant.
– Frédéric Nef, “Property”, in “Dictionary of untranslatable: a philosophical lexicon” (2014)
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