Bill Gates has recently proposed a tax on the automation of labor. There have been many people whose jobs have been displaced with the growth of automation in industries that require low-skill labor. Throughout recent years industries are not outsourcing their labor to countries where the product can be made cheaper and more efficiently. With the innovations in technology, firms are deciding more and more frequently to turn their labor into capital and allow for a cheaper and more efficient product that is made in America - but not by people.
What Bill Gates wants to see is a tax that would slow down the otherwise detrimental rapid growth of automation in particular industries. He posits that the negative externalities that arise from this rapid innovation must be checked with a Pigouvian tax in order to make a more comfortable transition. It would aim to reallocate some of the profits made by the firms to social services such as training and education in jobs which have not been affected by automation. With this what Mr. Gates has proposed we are compelled to ask ourselves exactly what the social impacts of rapid automation might look like. The hits that the working class has taken from globalization in the last decades has been quite concerning to say the least. the wealth gap continues to increase while the working class sees their wages lay stagnant.
The article proposes that this tax on automation would, of course, slow down innovation. This causes an issue because "automation is occurring not too rapidly but too slowly." Therefore imposing a tax on innovation now would not be in the best interest of the economy as a whole.
Should there be a tax imposed on automating labor in the US? If so, when should it be imposed?
http://www.economist.com/news/finance-and-economics/21717374-bill-gatess-proposal-revealing-about-challenge-automation-poses-why-taxing
3 comments:
This is a very interesting concept! I am intrigued by many aspects of this article. My first instinct is to agree that a Pigouvian tax on the automation of labor would be bad; limits to innovation are bound to restrict economic growth. Restricting growth in the name of preserving jobs will undoubtedly have negative effects on the United States economy. Instead, I wonder if more specific restrictions reminiscent of the dirgisme of the French economic system would be more appropriate? I don't know what those directives would look like, but it seems like industrial sectors of the economy would be better off redirected than slowed. Globalization has absolutely affected the working class more significantly than other members of society. I view this as a failure of government to provide for the social well-being of its people, and something that could be reduced through training and education, as Mr. Gates suggested. I also wonder if instead of taxation and restriction, more positive government incentives could be put in place to keep jobs in industrial sectors?
I thought that this article was interesting and had many valid points. The tax on the robots would discourage factories from getting robots because they would now have to pay taxes on them and would lead to less people losing their jobs to automation. I think it is important to look at the cost factors of the situation, robots will be more efficient lowering the cost to make products which would result in lower prices but the question is do these lower costs out weigh the cost of people losing jobs to technology. it will be interesting to see if there eventually is a tax on robots.
Very interesting topic. With or without the tax on robots, negative externalities will exist. If robots are taxed, there is no incentive to replace human labor with machinery and less people will lose their jobs, but the risk of slowing down innovation is high. If there is no tax, more and more people will start to be replaced and lose their jobs.
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