Incentives matter. John McCain understands that. That's why he proposed this:
The Arizona senator proposed a $300 million prize for whoever can develop a better automobile battery, and $5,000 tax credits for consumers who buy new zero-emission vehicles. The latest proposal is in addition to his support for overturning the federal ban on offshore oil drilling.
"In the quest for alternatives to oil, our government has thrown around enough money subsidizing special interests and excusing failure. From now on, we will encourage heroic efforts in engineering, and we will reward the greatest success," McCain said in a speech at Fresno State University.
But, why does the government have to provide the incentive? Shouldn't markets do that? What am I missing?
*"The $300 million battery bounty amounts to $1 for every man, woman and child in the country. He said such a device should deliver power at 30 percent of current costs and have 'the size, capacity, cost and power to leapfrog the commercially available plug-in hybrids or electric cars.'"
