Bill Gates, the techno-optimist who co-founded Microsoft, is worried about the rise of the robots. What people will do when all the jobs disappear? When he was interviewed by Kevin Delaney of Quartz, he had this to say about it:
“You ought to be willing to raise the tax level and even slow down the speed” of automation, Gates argues. That’s because the technology and business cases for replacing humans in a wide range of jobs are arriving simultaneously, and it’s important to be able to manage that displacement. “You cross the threshold of job replacement of certain activities all sort of at once,” Gates says, citing warehouse work and driving as some of the job categories that in the next 20 years will have robots doing them.
It's a controversial interview. A lot of people think he's either wrong, nuts or a socialist lunatic. And while everyone is focusing on his statement about taxing robots, he is in fact talking about a much bigger issue, which is what people are going to do and how they're going to live when there are so few paying jobs. In our current world, people do or make things, get paid, and spend the money on goods and services provided by other people who do or make things. But this is changing fast. Automation has been a worry for a long time. According to Martin Ford in his book "Rise of the Robots," the first hints of the problem began sometime back in the '60s:
There’s an often-told story about Henry Ford II and Walter Reuther, the legendary head of the United Auto Workers union, jointly touring a recently automated car manufacturing plant. The Ford Motor Company CEO taunts Reuther by asking, “Walter, how are you going to get these robots to pay union dues?” Reuther comes right back at Ford, asking, “Henry, how are you going to get them to buy your cars?”
It's not something that's a problem in the future; it's a problem we are living through right now. Or as Noah Smith writes in Bloomberg,
The fear isn’t that all humans will become obsolete, but that automation will increase inequality among humans. Company owners and high-skilled workers — people who tell machines what to do — would be vastly enriched, while everyone else either works low-skilled jobs for meager wages or goes on welfare.
Smith worries that taxing robots might impede innovation.
The problem with Gates’ basic proposal is that it’s very hard to tell the difference between new technology that complements humans and new technology that replaces them. This is especially true over the long term. Power looms replaced human weavers back in the Industrial Revolution, but people eventually became more productive, by learning to operate those looms. If taxes had slowed the development of power looms, the eventual improvements would have come later.
The trouble is, that took a long time and a couple of revolutions. Smith concludes:
… there are probably better ways than taxing robots to help humans avoid the harms of automation. Instead of slowing innovation, the government should think about taxing humans less and redistributing the income of robots more.
Redistribution! Hence the cries of socialist lunacy. The Economist (with the best punning reference ever regarding Gates and socialism: DOS Kapital) goes back to the first principles of economics:
A robot is a capital investment, like a blast furnace or a computer. Economists typically advise against taxing such things, which allow an economy to produce more. Taxation that deters investment is thought to make people poorer without raising much money.
Others, like economist James Besson writing in Fortune, claim that there will be winners and losers, but that people will have to learn new skills. He also believes that these technologies will boost employment “because they are addressing major unmet needs.”
Gates is right about the need to provide funds to retrain workers and to support them in making these job transitions, but taxing robots will just slow job creation. Automation is creating more jobs than it is destroying.
Another problem is the big question: what is a robot? If a computer program takes my job and writes this post (which could happen; Shelly Palmer has Report Writers, Journalists, Authors & Announcers on his list of the five jobs robots will take first) how will it be taxed? It would be like saying my word processor should be taxed because it put a typesetter out of work. Or for that matter, the fact that you're reading this on MNN instead of in a print publication means that a whole swath of lumberjacks, paper makers, printers, ad salesmen and delivery boys have been put out of work. Should there be a special blog tax?
And of course, the International Federation of Robotics thinks it's a terrible idea. (They would, wouldn’t they?)
A robot tax would make much-needed investments in technology more expensive for companies. “Profits, not the means of making them, should be taxed,” said Joe Gemma, president of the International Federation of Robotics.
Good luck with that, especially when President Trump wants to reduce the 35 percent corporate tax rate, saying “we're trying to get it down to anywhere from 15 to 20 percent.”
In the end, the fixation on Gates’ comment about taxing robots is missing the bigger picture, that we are going through a time of radical change and uncertainty. As I wrote before, we're witnessing the third industrial revolution playing out in real time. I quoted economist and author Ryan Avent, and his book, "The Wealth of Humans: Work, Power and Status in the Twenty-First Century." I'm going to quote his conclusion in that book here, because whether it's a tax on robots, a guaranteed income for everyone or who knows what, something is going to have to be done to address that the world is changing and jobs have all gone poof. It won’t sit well with the Objectivists among us:
We are entering into a great historical unknown. In all probability, humanity will emerge on the other side, some decades hence, in a world in which people are vastly richer and happier than they are now. With some probability, small but positive, we will not make it at all, or we will arrive on the other side poorer and more miserable. That assessment is not optimism or pessimism. It is just the way things are. Face to face with the unknown, it is hard to know what to feel or what to do. It is tempting to be afraid. But, faced with this great, powerful, transformative force, we shouldn’t be frightened. We should be generous. We should be as generous as we can be.