In San Francisco this Friday, the Long Now Foundation will host a talk by Peter Diamandis, founder and Chairman of the X Prize Foundation, on X-Prizes. Here’s a YouTube taster.

It got me thinking. Large prizes are great for stimulating the public’s imagination, but do they make for good public policy? Take John McCain’s proposal for a taxpayer funded $300 million dollar prize for a breakthrough auto battery. The market opportunity for a true battery breakthrough is already so enormous, it is hard to see how $300 million is a relevant incentive. I mean, if you invent that kind of battery, $300 million will be the tip you leave at your celebratory dinner.

Check out this article in this month’s Wired magazine on Better Place (nee Project Better Place), which is a company with contracts to build electric car networks in Israel and Denmark. One of the major investors also owns refineries and had this to say, from the article:

Even if this ends up destroying — for lack of a better word — my refinery business, that will be small money compared to what this will be.

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I think that’s right. McCain’s $300 million carrot is better spent on electric car infrastructure or basic research rather than thrown into the equivalent of a carrot field. Not to say X-Prizes are bad. Just to say that perhaps they should be used to stimulate imagination, and perhaps incentivize technology or applications without immediate or obvious commercial application.