Monday, January 3, 2011

Medals or the Market

When I ran my company in Central Europe I was invited to a partner's home once to talk of the past. He was a highly respected member of the community and had reached the pinnacle of his profession. I thought highly of him and he was a tremendous performer. He was a former member of the Communist Party and educated at the University of Moscow and a member of the Russian Academy.

On that day we went through his attic to get something and in the process I saw a box filled with medals. He dragged them out and he described that the Soviets would award medals for this and that, since true monetary rewards were forbidden. He had a box overflowing with medals.

I was reminded also of Admiral King during the beginning of WW II who frankly disliked the Brits, yet recognized the importance of working with them, and his main issue was they was the British Navy wore so many medals on their uniforms. Then, in the US Navy, wearing medals was far and few between, and generally for official dress uniforms only. The award by the state of something of that type was somehow un-American.

Combining these two historical facts I was surprised when I saw the White House and its Reward program. They state:

The America COMPETES Act passed by Congress today provides all agencies with broad authority to conduct prize competitions as called for by President Obama in his 2009 Strategy for American Innovation.  By giving agencies a simple and clear legal path, the America COMPETES Act will make it dramatically easier for agencies to use prizes and challenges to spur innovation, solve tough problems, and advance their core missions.

In a world of widely dispersed knowledge, prizes and challenges are an essential tool for every agency’s toolkit.  As the co-founder of Sun Microsystems Bill Joy once famously said, “No matter who you are, most of the smartest people work for someone else.” This fact calls for a fundamental shift in the way an institution solves problems. Prizes and challenges are part of the solution.

In the Free Market we have prizes, it is called economic wealth.Anyone in the US is allowed to risk it all for that prize and many make it. If you want a pension and lots of awards for work well done, become a Government worker. If you want to contribute to civilization, start a company. This idea of there being some Government GS 9 who selects based on some Beltway Bandit consultant's report who should get an award and reward for doing something is nonsense. Again, the market makes that selection. The Sun folks saw that first hand, as did Google, and then again as did Enron on the flip side.

The Government should stay out of the way. Americans, unlike Brits, Russians, French, Italians, etc do not wear medals on their clothes, except perhaps for a Medal of Honor recipient. We have no royalty dispensing goodies, or do we?