Back in mid-February, Microsoft Founder Bill Gates was interviewed by Quartz on the automation of low-skilled industries and on robots. During the interview he was asked what he thought of a tax on robots and he seemed to express strong support for such a policy. He said
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.
He’s absolutely right to identify that almost every industry in the developed world has experienced huge leaps forward in terms of the extent of technical development. The level of complexity and intelligence derived from technology is huge and consequently, the fear that this will result in the loss of large sectors of the work force is appropriate. He’s got his finger on a real problem. But he’s profoundly and regrettably mistaken about the necessary solution.
Let’s at least be consistent
The modern economy is almost entirely unrecognisable from where it was fifty of a hundred years ago. Many of the types of jobs which a working man in the early 19th century would have trained in would be entirely unrecognisable to the modern educated university graduate. Industry upon industry has been decimated by technological innovation, so why single out robots as the job destroyers as though their crime is any worse than the invention of the printing press, the automobile or the internet?
If for no other reason, it would be incomprehensibly impractical. Even if there was a way to suitably define the type of technology that destroys jobs in law, it would be administratively impossible for HMRC to implement.
Let’s not press the kill switch
What’s more, to tax robots would be to undermine the very principles which have resulted in much of the human flourishing which we enjoy today. Innovative economic activity, like that which is allowed for by a free society – by capitalism – is the very activity which has resulted in the production of cleaner energy production, cheaper transportation, more immersive entertainment and easier communication. And as their prevalence increases, robots will be no different.
Individuals and businesses leverage the capabilities offered by technology to increase output for a given input. This means that more can be produced, faster and cheaper. So by taxing robots, which after all are simply a part of the broader domain of technology, we would effectively be slowing the unfolding of the kind of progress which we currently spend to much time celebrating.
Let’s not shrink the pie we share
In addition, a tax on robots is a tax on the growth of the same pie which we all share. A sufficiently high tax on robots would prevent them from being produced. It’s difficult therefore, to see how it can be sensible to shrink overall size of the pie, as opposed to allowing it to grow as much as possible and then redistributing some of its fruit. That pie, of course, is the pie that already gets taxed anyway through corporation and income tax.
Let’s learn to embrace change
Yes some jobs will be destroyed by robots in the same way that innovation has been destroying jobs for centuries. But this is something to be incentivised, encouraged and celebrated, because the bigger picture is one of human progress: increasing living standards; better healthcare; and more choice and opportunity to consume, travel, share and own.
But as I said before, Gates is right to identify a problem – the short-term impacts of such change. The solution must lie in our ability to adapt to the dynamics of the supply and demand of skills and experience in a modern employment market.
Rather than shooting ourselves in the foot and taxing the very outcomes we need to incentivise, we should be asking how we can equip the next generation with skills that are timeless – the skills that don’t depend on a particular stage of our technological progress. Problem-solving, creativity, teamwork skills, people management and communication skills, self-initiative and persistence.
If there was a silver bullet to this problem, it lies in education and in equipping ourselves to be able to adapt to and embrace change – not stifle it.