Republicans in total control of the national government believe taxes must always go down. Bill Gates argues that the onrushing future of robots makes this view obsolete.
Neither Donald Trump or Hillary Clinton emphasized the biggest threat to jobs, especially in the future: rising automation. As I have written before, a new wave of sophisticated robots, automation and artificial intelligence threatens to make millions of humans obsolete.
Automation and robots have already displaced humans on a scale that rivals that of Trump’s bugaboos, trade and globalization. We see it everywhere from Boeing to Amazon to the automakers. Locomotives are so automated that the railroad industry is pressing to be allowed one-person train crews (as late as the 1970s, it was five people). In coal country, supposedly a hot-bed of Trump’s white working-class support, mines are ever more automated — those jobs aren’t coming back.
In a slow-growth economy, it becomes a zero-sum game with explosive social consequences.
Bill Gates, Microsoft’s co-founder and the world’s richest man, has one response: tax the robots.
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In an interview with Quartz, Gates says it’s inevitable. “Certainly there will be taxes that relate to automation. Right now, the human worker who does, say, $50,000 worth of work in a factory, that income is taxed and you get income tax, social security tax, all those things. If a robot comes in to do the same thing, you’d think that we’d tax the robot at a similar level.”
Among other things, the revenue could better fund jobs “where human empathy and understanding are still very, very unique.” For example, teachers and those who work with the elderly. Gates is willing to accept a slowdown in innovation to make things equitable. And, he argues, government must take the lead.
This may seem like a back-burner issue now. Contrary to his assertion that “I inherited a mess,” Trump received an economy from President Obama where the unemployment rate was 4.7 percent and jobs had been added for 75 consecutive months. The stock market had been on a years-long bull run. Corporate profits hit a record. And average Americans began to see a rise in incomes.
On the other hand, rising inequality is a major concern (to be made worse if Trump gives the rich a big tax cut, making the tax system even less progressive). The lost jobs in those industrial Midwestern towns endlessly profiled were often casualties of corporate raiders (which Trump will support) or moves to the “right to work” South (the Republican power center). Starting a trade war won’t bring those jobs back, at least not until a massive recession and perhaps real war plays out. Working-class whites, already the biggest beneficiaries of the government safety net (which the Republicans propose cutting), will be further hurt by higher prices resulting from tariffs.
And still, amid all these contradictions, nobody in the new administration is talking about the event horizon when the new level of robots and automation really begin to bite. Gates gets it. We need much more discussion.
Today’s Econ Haiku:
They are already too big
Condiments go bad