February 19, 2017
Bill Gates Wants To Tax Robots That Take Jobs
Check out this qz article: The robot that takes your job should pay taxes, says Bill Gates.
About 35-40 years ago secretary was the biggest job in most states. Those days are long past. As you can see by advancing the time bar for the USA states map on that page, by 2000 truck driver was the biggest job. So I have a question for Bill Gates: Do you want to tax word processors too?
Also, autonomous vehicle technology will surely wipe out most truck driving jobs in the next 20 years. Do you want to tax autonomous truck technology to slow the rate of that transition? Keep in mind that thousands of lives will be saved each year once autonomous trucks slash the accident rate, even tens of thousands of lives if we include autonomous cars.
I'm glad that one of the richest people in the world is at least aware of the problem. As I have previously pointed out there is about a 30% difference between the high school drop-out and college grad employment rates in the USA. I'm guessing (I haven't looked) the gap is bigger in Europe due to labor laws that make it harder to fire and also social welfare benefits that reduce the necessity of working. But again, I haven't looked. As you can see from my favorite Bureau of Labor Statistics web page Table A-4. Employment status of the civilian population 25 years and over by educational attainment the 30 point gap is holding strong. That gap could easily widen due to advances in robotics, rising minimum wage, and labor law changes that make firing harder to do. I think we are headed for the equivalent of Peak Horse and probably have already passed it for Peak Routine Manual Labor.
Taxes on robots can't work for anything that gets manufactured. In the absence of high tariffs all a robot tax will do is push the manufacturing offshore. I've previously argued that high autonomy for manufacturing robots (lights-off factories) could drive capitalists to put factories on sovereign islands in order to escape taxes to support masses of unemployed. Ireland for example has a small enough population and factories where get manufacturers inside the European Union. Outside tariff zones Iceland offers cheap geothermal electric power and limited number of people to support through taxes to fund a welfare state. New Zealand also offers a limited and skilled population and is is already an escape destination for billionaires if civilization teeters on the brink. No need to go upstairs to Elysium. Living in orbit would be much less pleasant than New Zealand. Though its volcanic and earthquake activity is a concern.
At first glance taxes on robots work better for services that can not be exported. But wait. Taxes on home care robots aren't going to fly because sick old people are going to say they can't afford the taxes any better than they can afford human home care providers. Ditto for taxes on medical treatments. People want cheap health care. So expect political battles over which local robot services are suitable for taxing.
Randall Parker, 2017 February 19 02:58 PM
One way or another, the owners of robots must develop the kind of compassion that will make them share the productivity of the robots with the rest of the people. Basically, what Bill Gates is saying indirectly means taxing the productivity of the robots.
For the sake of argument, suppose that a car company fires a worker whose annual salary was $50,00,0 and replaces him or her with a robot that costs $200,000 to manufacture with 10 years of shelf life and an annual maintenance cost of only $10,000 per year including energy consumption of the robot. Then let us do the math: within the next 10 years the purchase and operation of this robot will cost $200,000 + 10*$10,000 = $200,000+$100,000 = $300,000. But if the worker had not lost the job to the robot, then during the next 10 years the total salary paid to the worker would have been 10 * $50,000 = $500,000. This means that by replacing the worker with the robot, the company earned an additional $500,000 - $300,000 = $200,000 of extra profit, which equals exactly the purchasing power lost by the worker who was fired. What Bill Gates is saying that if the owners of the companies that increase productivity by means of the robot do not share the extra profit (i.e. their increased productivity) with the rest of the society, the result will be lower standards of living instead of the higher quality of life promised by the inventors of the robots.
A benevolent capitalist would simply compensate the fired workers by paying the fired worker's rent and food until he or she finds a new job that pays as much as before.
Otherwise, the law of hierarchies dictates that even among the elite programmers, there will be a lot of firings during the next century, when robots will start programming themselves and object-oriented and functional programming paradigms will require far less programmers: in 2117 a highly trained engineer will use a few mouse clicks and a few lines of high level code to write a gigantic program that would have taken a dozens of programmers several years in 2017. So the top level scientists and engineers will not be immune to the wave of firings.
What we need is a better definition of the word capitalism: the only capital is not cash because cash is not only a store of value but also a transmission mechanism to exchange all goods and services including labor, and all labor is not tangible, having good manners and culture, having a good personality is also crucial and actually adds value to society. Looks at Denmark, where taxes are high but the economy is very productive, and they actually have a caring culture where nobody is left behind.
There is already a tax on robots, it is called the corporate income tax.
RP: "Taxes on robots can't work for anything that gets manufactured. In the absence of high tariffs all a robot tax will do is push the manufacturing offshore. "
Actually this is only true as long as the US can continue to run the same huge annual trade deficit. If the US ultimately becomes a normal country that cannot continually sustain a foreign trade deficit, then the US won't be able to import too many goods manufactured by robots that happen to be abroad, and at that precise moment the manufacturing jobs will stop moving abroad, and we might be approaching this situation of impossibility of sustaining such huge foreign trade deficits.
And as Kaleidic said above, the corporate tax (which is high in the US by international standards) is already a form of tax on robots, since robots increase the productivity (profits) of corporations. If robots (profitable manufacturing companies) are abroad, we can only tax them through import taxes, which is what other countries do more than the US anyway.
But the reason the American corporate taxes are not working well in the interior of the US is because there is already a huge annual foreign trade deficit (already the manufacturing is abroad). Once the manufacturing is done in the US, even with lower corporate taxes, the robots will be paying more taxes to take care of the unemployed.
Another misunderstanding about robots is that in addition to stealing jobs from humans, robots will also be able to do tasks that no human can do, and there will be many such tasks in the future, where robots will not be stealing jobs form humans: on the contrary, in the latter paradigm the robots can create more jobs than they destroy.
Actually when I said above( in my first message) that the extra profitability of the robot is the earning power lost by the worker who was fired, this was incorrect, since the latter number is smaller than the salary of the worker, but giving that money to the worker as compensation is still helpful until he can get another job or at least survive.
Gates is being obtuse because he doesn't want to solve the problem. He doesn't want to solve the problem because he is its prime exemplar:
Network effect private sector rent seeking.
The fact that he turns back around and "gives it all away" is supposed to make us respect him? How about he fix the bug in capitalism that made him the world's richest man? THAT would be respectable!