Tag: Robots

Is Taxing Robots a Solution to Fewer Jobs?

The Daily Escape:

(Slot canyon with dust devil – photo by Angiolo Manetti)

Yesterday, the Dutch voted in an election pitting mainstream parties against Geert Wilders, a hard-right, anti-Islam nationalist whose popularity is seen as a threat to politics-as-usual across Europe, and possibly, as an existential threat to the EU.

Wilders, who wants to “de-Islamicize” the Netherlands and pull out of the EU, has little chance of governing, as all of the mainstream parties have already said they won’t work with him. Given Holland’s complicated form of proportional representation, up to 15 parties could win seats in parliament, and none are expected to win even 20% of the vote. OTOH, polls show that four in 10 of the Netherlands’ 13 million eligible voters were undecided a day before voting, and there is just 5 percentage points separating the top four parties, so Wilders could surprise everyone.

As Wrongo writes this, the Dutch election results are not known, but PBS NewsHour coverage on Tuesday surfaced a thought about taxing robots. PBS correspondent Malcolm Brabant was interviewing workers in Rotterdam:

Niek Stam claims to be the country’s most militant labor union organizer. He says the working class feel insecure about their prospects because of relentless automation and a constant drive to be competitive. The union is campaigning for robots to be taxed.

Brabant then interviewed a worker:

Robots do not buy cars. Neither do they shop for groceries, which leads to a fundamental question: Who’s going to buy all these products when up to 40% of present jobs vanish?

This isn’t an entirely new idea. Silvia Merler, blogging at Bruegel, says:

In a recent interview, Bill Gates discussed the option of a tax on robots. He argued that if today human workers’ income is taxed, and then a robot comes in to do the same thing, it seems logical to think that we would tax the robot at a similar level. While the form of such taxation is not entirely clear, Gates suggested that some of it could come from the profits that are generated by the labor-saving efficiency…and some could come directly in some type of a robot tax.

The main argument against taxing robots is made by corporations and some economists (Larry Summers), who argue that it impedes innovation. Stagnating productivity in rich countries, combined with falling business investment, suggests that adoption of new technology is currently too slow rather than too fast, and taxing new technology could exacerbate the slowdown.

It can be argued that robots are property, and property is already taxed by local governments via the property tax. It might be possible to create an additional value-added tax for robots, since an income tax wouldn’t work, as most robots are not capable of producing income by themselves.

Noah Smith at Bloomberg argues that the problem with Gates’ basic proposal is that it is very hard to tell the difference between new technology that complements human work, and new technology that replaces them. Shorter Noah Smith: Taxation is so hard!

Why are Western economies stagnant? Why has wage growth lagged GDP growth? Automation is certainly a key factor, but rather than point the finger at the corporations who continually benefit from government tax policies, let’s just assign blame to an object, a strawbot, if you will. That way, we won’t look too carefully at the real problem: The continuing concentration of economic and political power in the hands of fewer and fewer corporations.

Automation isn’t the issue, tax laws that allow economic treason by corporations in their home countries are the issue.

Why is nationalism on the march across the globe? Because fed-up workers see it as possibly the only answer to the neoliberal order that is destroying the middle class in Western democracies.

Let’s find a way to tax robots. Something has to offset Trump’s tax breaks for the rich.

Now, a musical moment. Did you know that “pre-St. Patrick’s Day” was a thing? Apparently, some dedicated celebrators prepare for the day itself by raising hell for up to a week beforehand. With that in mind, here is some pre-St. Pat’s Irish music, with Ed Sheeran singing “Nancy Mulligan” a love song about his grandparent’s marriage during WWII, against the wishes of her parents, and despite their Catholic/Protestant differences:

Those who read the Wrongologist in email can view the video here.

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Robots Are Coming For Your Job

Americans worry that robots could make their jobs irrelevant. A new study shows that they may be correct. The report, Technology at Work v 2.0: The Future Is Not What It Used to Be, was conducted at University of Oxford in association with Citibank. Researchers Carl Frey and Mike Osborne, co-directors of the Oxford Martin Programme on Technology and Employment, found that 47% of US jobs are at risk of automation in the next two decades.

They also found that the city where you live may influence the risk of your work being automated. Among metro areas, Boston faces the lowest percentage of jobs likely to be automated, while Fresno, Calif., faces the highest. The cities that fared best in the survey have a cluster of skilled jobs, typically because they have developed a strong tech sector. Boston, for instance, which is home to a number of top universities and has many well educated residents, has become a global technology hub, transitioning successfully from its roots as a shipping center and manufacturing economy to a tech/finance center.

Here are the best/worst rankings:

FireShot Screen Capture #079 - Cities at risk of automation-page-001

Even in cities with the lowest percentage of jobs at risk of automation, nearly 40% of jobs could disappear because of technological innovation, the report finds. So how many workers are we talking about? The BLS reports that in December, 2015 our working population was 149.9 million; 40% of that number would be 60 million people unemployed in the next 20 years. Perhaps it won’t be that bad, maybe 20-30 million jobs will replace the approximately 60 million we stand to lose.

No politician will be able to paint a happy face on THAT.

Skeptics will say not to worry, that the economy has always adapted over time, and created new kinds of jobs. The classic example they use is agriculture. In the 1800s, 80% of the US labor force worked on farms. Today it’s 2%. Obviously, mechanization didn’t destroy the economy; it made it better. Food is now really cheap compared to what it used to cost, and as a result, people have money to spend on other things and they’ve transitioned to jobs in other areas.

But, the agricultural revolution was about specialized equipment that couldn’t be transferred to other industries. You couldn’t take farm machinery and have it flip hamburgers. Information technology is totally different. It’s a broad-based general purpose technology.

There just won’t be new jobs available for all these displaced workers.

There will certainly be many new industries, (think nanotechnology and synthetic biology), and those jobs will be highly paid. But they won’t employ many people. They’ll use lots of technology, rely on big computing centers, and be heavily automated.

Think about what Facebook and Twitter have added to the jobs economy: They are two of our very “best” success stories, and they only employ 8,100 workers. They have had a huge impact on society, and have created significant value for their owners, but the total jobs they have created are only a rounding error in the US economy.

Much of what we buy is produced in factories increasingly run with robots, and maintained and operated by small cadres of engineers. Also, keep in mind that globally, some 3 billion people are already looking for work and the vast majority are willing to work for less than the average American.

So, we can expect an ever-greater number of unemployed chasing an ever-shrinking number of jobs that can’t be eliminated or simplified by technology. Thus, the prognosis for many of our medium and some higher-skilled workers appears grim.

Incomes will continue to stagnate, because automation does not threaten unskilled jobs. This is sometimes called “Moravec’s Paradox”, which says that, contrary to traditional assumptions, high-level reasoning requires relatively little computation, but low-level sensorimotor skills require enormous computational resources. The “Roomba” robotic vacuum cleaner remains just an expensive toy. It has had zero impact on the market for janitors and maids like a rechargeable cordless sweeper has done, yet, wages for American janitors and maids have fallen because of competition from the currently unemployed and newly arrived immigrants.

If we forecast continuing technology breakthroughs (and we should), and combine that with the 3 billion people currently looking for work globally, we have to conclude that the planet is overpopulated if the goal is a growing global middle class.

This is why the quest for better technology has become the enemy of sustaining middle class job growth in the developed world.

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