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Thursday, June 28, 2012

Catapult 3 - On Prizes

Catapult have £10 million from the government (they are hoping for money from non-governmental sources, such as the TSB who sponsored the meeting. A theoretical possibility of £30 million, but don't hold your breath. This means they are not going to be sponsoring big or cutting edge projects. Indeed they were candid that they were aiming to encourage the "downstream" part of space development, i.e. secondary applications on Earth rather than anything involving going there. They were less candid that that intrinsically accepts that such minuscule government support will not encourage the industry to grow faster here than across the world and that to reach the £40 billion industry size in Britain it will be because the industry worldwide is growing at least the same rate & we are dragged along.
I previously suggested that the money we give to ESA, nominally a space budget but, since ESA achieves almost nothing, actually a budget to placate European bureaucrats should instead be used to fund X-Prizes. Even the government never suggested that there was any reason at all why this would not work, or obviously cost any extra money, all they vouchsafed was that when I detailed this in the submission that they had asked for - they hadn't looked at it.
There is no doubt, as the submission details, that prizes are a more effective way, probably at least 33 times more effective way, of achieving results than conventional grant giving. The 33 times figure is supported here but Freeman Dyson goes further and suggests 100 fold.
So is there a niche for prizes on the sort of budget we have?
There is and the historic prototype exists and has been examined in some detail by Liam Brunt, Josh Lerner and Tom Nicholas of Harvard on the use of prizes from 1839 to 1939 by the Royal Agricultural Society of England (RASE) to promote innovation.
We find large effects of the prizes on contest entries, especially for the Society’s gold medal. Matching award and patent data, we also detect large effects of the prizes on the quality of contemporaneous inventions. p3
It awarded both substantial monetary prizes (in excess of £1 million in current prices) and its own highly prestigious medals for innovative implements and machinery. Between 1839 and 1939, 15,032 entrant inventions competed for the prizes and a total of 1,986 awards were made. p6 ...
In 1878 it was estimated that the trials cost £2,000 per annum (Jenkins, 1878, p. 871-872), while in 1920 the tractor trials alone cost the Society almost £5,000 (Scott Watson, 1939, p. 102). In fact, the cost of the trials was a very considerable burden on the finances of the RASE, whose only sources of income were the annual subscriptions paid by its members and the gate money arising from the annual show. p14
In 1855 dissenting manufacturers authored a report stating: “We object to this system [of prizes] on the ground that it operates as an undue stimulus to competition.” In 1856 one manufacturer commented on the apparent “destructive” side of the prize competitions: “It is unfair because there will always be sure to be somebody trying to find out some improvement or other and there is no knowing where will be the end to it.” p16

Report pdf in full

£1 million over 100 years is £10,000 a year. Comparing the economy of the mean year 1889 £10,000 then equates to £10,400,000 as a proportion of GNP (though it would be £862,000 RPI terms which shows how much better off we are plus population rise. The RASE prizes were available to companies across the world, which makes sense as they were funded from exhibition attendees but does not if mainly government funded.
The very largest and most effective of the sort of prizes I can envisage with Catapult's £10 million a year would be something like the DARPA Road Challenge where $3m (£2m) was awarded for a self driving car system over a 240 km journey. The direct result of this is that automated driving systems are currently in civilian use and 1 state has legalised them on commercial roads.
In Victorian times the state was under 10% of the economy and left much such public investment up to private organisations as the RASE. Nowadays the state spends 50% of all our money and in every other field has taken over such subjects.
Using the Catapult funding for prizes in iterative increases in productivity rather than for breakthroughs like an orbital shuttle ($500/£320 million prize) would have a significant effect. Just as more effective seed drills were produced by the RASE a 10% finer resolution by a cubesat camera (cubesats are mini-satellites 8 inches on a side and can now resolve down to a meter from orbit) would be encouraged by such prizes. More like this £400,000 Singapore government prize.
Indeed taking the example of the RASE and the Royal Agricultural Exhibition it organised further I strongly suspect that a similar space exhibition, with sponsorship by companies like the TSB, with the prizes publicly awarded and perhaps broadcast worldwide in a manner impossible in 1889. This would bring in funds an order of magnitude greater than the modern equivalent of what was raised then. Certainly the Catapult's target of raising an extra £20 million from non-governmental sources, which even they regarded as ambitious, looks fairly modest compared to what an exhibition with such prizes, properly handled, could attract.
Such an annual exhibition with the awards being presented would be a strong inducement to the establishment of a hub for the space industry within easy driving distance of its location. The economic plus added to any economy by the early establishment of such hubs is difficult to overestimate - Silicon valley being the most obvious.
That would indeed be the "undue stimulus to competition" the government itself have been so reluctant to contribute too.
If the UK government were decline to support such an idea the Scottish (or Welsh) governments could do so on smaller scales. Assuming that only 15% of the space engineering done in the UK is done in Scotland the amount awarded in prizes for first achievements would only cost about £1.6 million for exactly the same range of prizes.
The Scottish government has previously demonstrated that it understands to principle of such prizes announcing the £20 million Saltire commercial sea turbine award as being such a prize.
An exhibition in Scotland would be a smaller affair than for the UK but might well attract proportionately more interest from visitors and sponsors. After all it would be unique in the world. I would suggest the Scottish Exhibition Centre in Glasgow, where the World Science fiction convention was held a few years ago, would be a suitable venue.
Since the Scottish government intend to spend £6 million over the next few years training van drivers to drive more fuel efficiently putting (p12 #46) £1.5 million into an "undue stimulus" into an industry estimated even by an "at the speed of the slowest" conglomeration of civil service departments, soon be worth £40 billion to Britain does not seem profligate.

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