Why taxing robots is not a good idea(economist.com)
economist.com
Why taxing robots is not a good idea
http://www.economist.com/news/finance-and-economics/21717374-bill-gatess-proposal-revealing-about-challenge-automation-poses-why-taxing?cid1=cust/ednew/n/bl/n/20170223n/owned/n/n/nwl/n/n/E/8947035/n
117 comments
From a policy standpoint, it would be a nightmare to define automation to be taxed. What counts as automation? Should I be taxed when I say "OK Google, remind me to blah blah blah", which theoretically negates the need for me to hire a human assistant to whom I would dictate? Should I be taxed for using a spam filter to sort through my emails and discard the junk for me? Where, precisely, would policymakers be able to draw a clear line between "tax this automation" and "don't tax this automation"?
Exactly, and nevermind the automation that has been taking place in the last 5000 years or so. Gutenberg's printing press displaced the monks who manually copied bibles -- should printing presses be taxed to parity with human labor, so that printing one page of a magazine costs $100? I find it bizarre that a guy as bright as Gates would support such an unworkable idea.
The problem, if there ends up being one, is the speed of displacement. People worry that too much downward pressure on so called 'middle class' jobs will create another 30 year stretch of zero wage growth for a big part of the population, which in turn puts a lot of political pressure on the system to 'do something'.
Very hard to say if that will come true though, if automation dramatically speeds up, we would see a surge in productivity. Yet in recent years, we are seeing slower, rather than faster productivity growth relative to the long term trend. Take note that the doomsday jobs predictions implicitly forecast that we'll be making more stuff, using less effort, meaning society will be richer.
From a tax policy perspective, a VAT addresses Gate's concerns pretty well.
Very hard to say if that will come true though, if automation dramatically speeds up, we would see a surge in productivity. Yet in recent years, we are seeing slower, rather than faster productivity growth relative to the long term trend. Take note that the doomsday jobs predictions implicitly forecast that we'll be making more stuff, using less effort, meaning society will be richer.
From a tax policy perspective, a VAT addresses Gate's concerns pretty well.
Right it would hypocritical to only apply the tax to new automation. To be fair, we'd have to tax tractors, ATMs and calculators too.
I rather suspect that "taxed to parity with human labor" is heavily overstating the actual suggestion.
A VAT addresses this issue pretty well since it taxes the value add nature of both automation and human labor. If we need to subsidize human labor in order to smooth out the disruption effects of mass automation, then expanding the earned income tax credit with the proceeds from a VAT would work to subsidize the human labor at the cost of mechanical labor in a relatively efficient manner. Since it ties all payments to a specific social security number, there's less concern about politicians playing favorites, micromanaging the system, buying votes with policy, etc.
Would you consider taxing automation in current industries with high structural unemployment for the purposes of giving displaced workers the resources to change careers?
Or more general if a person or group of people are let go because their jobs were automated then that automation is taxed for X number of years for the same reason.
Or more general if a person or group of people are let go because their jobs were automated then that automation is taxed for X number of years for the same reason.
What if I launch a new fast food franchise that uses automation from the start?
I never had employees so nobody is being let go. Your proposal would give me a massive advantage against incumbents like McDonalds, since they'd be trapped with either high labor or high tax costs.
I never had employees so nobody is being let go. Your proposal would give me a massive advantage against incumbents like McDonalds, since they'd be trapped with either high labor or high tax costs.
What if that industry is automated because the jobs are dangerous? What if it's automated because having robots do the job allows for more precision, which in turn can save lives (ie medical devices)?
I don't think it's fair to try split the issue into 'good' and 'bad' automation because in either case there is a displaced worker that needs more resources to change careers than unemployment can provide.
If we're going to live up to the expectation that automation will free up labor to work on more useful things then that labor has to have mobility and access to education.
If we're going to live up to the expectation that automation will free up labor to work on more useful things then that labor has to have mobility and access to education.
Taxing robots is easy. Just tax every company with a fixed amount and then give them a tax rebate when they employ humans.
You didn't tax robots, you just increased corporate tax and lowered tax on salaries. Not saying it's a bad idea, but you're affecting lots of other things than robots with that proposal.
Well the US has the highest corporate tax rate in the OECD and the third highest in the world[0] so I would think claims to raise it have a pretty high burden of proof.
[0] http://www.politifact.com/punditfact/statements/2014/sep/09/...
[0] http://www.politifact.com/punditfact/statements/2014/sep/09/...
Actually I think that would be the best solution..just get rid of taxation of people working, which is an incentive for companies not to hire people (and for people to prefer unemployment with its problems and benefits).
The money raised from those taxes needs to come from somewhere else though. Possibilities include taxes on consumption (sales tax or VAT), capital gain, corporate profits, property, etc. Each of these has advantages and disadvantages.
It would tax robots AND have other effects. But what is the reason for the taxation of robots? More (human) people should get jobs and money to spend.
"More human people should get jobs!"
Do you mean that the final goal is to end with the automation? Or do you mean new jobs generated because the transformation of the industries?
Do you mean that the final goal is to end with the automation? Or do you mean new jobs generated because the transformation of the industries?
No i think automation is good. But the distribution of the profits from automation is completely a mess.
The population needs money that they can spend for the companies to make profit. So either a taxation like this or a universal income, else the flow of money (and goods and services) is stalled.
The population needs money that they can spend for the companies to make profit. So either a taxation like this or a universal income, else the flow of money (and goods and services) is stalled.
If you think the automation is good, I guess one of the reasons is because it improves efficiency, then why to incentive a company to hire more humans?
Should a company be also subsidized by the government if it's reducing work accidents and reduces energy consumption(when introducing automation)? That subsidies would need to be payed by taxes from companies and citizens.
In my opinion the solution should not be to employ humans when a machine can do the job more efficiently, and introducing a new tax it could counter incentivize a company to introduce automation and that's exactly the opposite of whats desired. Since to introduce a new technology requires an investment and therefore risks for the company owners.
I think that once it is reached a point that it generates net unemployment, something that has not been the case for previous industrial revolutions, people should be able to reach products and production capacity at lower costs, so to be able to make a living being employed less hours.
Should a company be also subsidized by the government if it's reducing work accidents and reduces energy consumption(when introducing automation)? That subsidies would need to be payed by taxes from companies and citizens.
In my opinion the solution should not be to employ humans when a machine can do the job more efficiently, and introducing a new tax it could counter incentivize a company to introduce automation and that's exactly the opposite of whats desired. Since to introduce a new technology requires an investment and therefore risks for the company owners.
I think that once it is reached a point that it generates net unemployment, something that has not been the case for previous industrial revolutions, people should be able to reach products and production capacity at lower costs, so to be able to make a living being employed less hours.
These profits you talk about are not from automation but from product or service. You could tax companies specializing in automation, but how do you define who to tax? If software an automation based product?
Taxation won't work, for many reasons. Universal income/welfare system has it's own share of problems, but so far that's the only solution that could be somehow made workable.
Taxation won't work, for many reasons. Universal income/welfare system has it's own share of problems, but so far that's the only solution that could be somehow made workable.
If you don't tax the robot, the owner of it ends up with as much control over the economy as all those displaced workers formerly had. Economic production shifts, and no longer produces sufficient quantities of inexpensive food and housing.
The global economy is based on human desires. Whatever is sold in the market is available because someone, somewhere will buy it, using their own productive capacity in trade. Money is used as an intermediary in those trades, to resolve the inefficiencies of direct barter or triangle trading.
So you can imagine world demand as the sum of all human desires. But it isn't a direct sum. It's a weighted sum. The contribution of your desires to world demand is weighted by your productive capacity. If you can make 100 shoes per day, you can buy twice as much as someone who only makes 50 per day. And that difference in productive capacity means that if you prefer chicken to beef, and the slower shoemaker prefers beef to chicken, a farmer trying to decide whether to build a cattle feedlot or a poultry barn is more likely to choose the latter.
It is a complex system that constantly rebalances itself with feedback loops.
If someone else builds a robot that makes 10000 shoes per day, and puts all the human shoemakers out of business, their economic power is voided (in the short run). The robot owner prefers pork, so those farmers are (eventually) going to abandon their cattle lots and poultry barns and erect luxury swine barns instead. Production shifts to meet the desires of the productive.
The shoemakers have to learn to make something else, quick, or they starve. Maybe they switch to making hats. Oops! Another robot made 99% of those jobs obsolete. They switch to ditch-digging. Oops! A robot made 99% of those jobs obsolete. They switch to shirtmaking. Oops! A robot took 99% of those jobs. They switch to making bicycles. Oops! Another robot. The only way to leap ahead of the employment disaster wave is to build a robot that destroys a job that still exists. Then you get to be in the owner class.
If you can replace a human's job, displacing them on the supply side, you can take their entire measure of economic output from the demand side. But you only have one body with one stomach, so you don't need more than one bed and food for one person. Even if you buy the very best bed ever made, and eat the very finest food available, you still can't down a bushel of corn every day by yourself, and the people who formerly divided it up between themselves can no longer afford to buy it. Prices drop, until things can no longer be sold above marginal cost, and those things vanish from the market.
The robots themselves have no desires. They "want" only power, maintenance, and a depreciation schedule. If they had free will, they would be the ones growing super-rich, and ruining the economy because the things they make are not things that robots "want". A shoe-making robot does not wear shoes. So if everyone who wears shoes is displaced, the shoes the robot makes can no longer be effectively exchanged for power and maintenance due to market saturation. So it shuts down, except for the one hour per year that it needs to run to make shoes for the machine technicians and the power grid operators. Until one day, a machine appears that performs machine maintenance, and the shoe machine turns on only a few minutes per decade.
So the reason you have to tax the robots is because they don't desire enough in relation to what they can produce. Those robots have to be implanted with sufficient surrogate desires that those desires, on average, entirely consume the productive capacity of the robot. Otherwise, the production-weighted sum of desires collapses, and no one can get anything they want by producing something and trading it.
So the ideal tax to levy would be calculated by taking the entire production of the robot and subtracting the quantity of production required to fulfill the robot's needs and all of the owner's desires. Gross revenue minus operating cost minus owner consumption. Profit minus consumption. You end up with a tax on increase in personal wealth. So maybe don't tax the robot, but tax the owners in proportion to income, deducting their consumption spending (and net depreciation of personal assets).
If you take $1M/year in income, and spend $990k/year on caviar, beach vacations, hookers, yacht expenses, and parties, pay less tax than the guy making $200k/year and spending only $20k/year on ramen noodles, thrift shop clothes, and shoe leather. That consumption from the first guy flows back to the economy, whereas the savings from the second guy are temporarily sequestered, and may eventually become concentrated to the point that it becomes an economic black hole.
The money you tax needs to be dispersed as widely as possible. The money no longer represents production capacity, but becomes glorified Kanban coupons to allocate automated production resources effectively.
The global economy is based on human desires. Whatever is sold in the market is available because someone, somewhere will buy it, using their own productive capacity in trade. Money is used as an intermediary in those trades, to resolve the inefficiencies of direct barter or triangle trading.
So you can imagine world demand as the sum of all human desires. But it isn't a direct sum. It's a weighted sum. The contribution of your desires to world demand is weighted by your productive capacity. If you can make 100 shoes per day, you can buy twice as much as someone who only makes 50 per day. And that difference in productive capacity means that if you prefer chicken to beef, and the slower shoemaker prefers beef to chicken, a farmer trying to decide whether to build a cattle feedlot or a poultry barn is more likely to choose the latter.
It is a complex system that constantly rebalances itself with feedback loops.
If someone else builds a robot that makes 10000 shoes per day, and puts all the human shoemakers out of business, their economic power is voided (in the short run). The robot owner prefers pork, so those farmers are (eventually) going to abandon their cattle lots and poultry barns and erect luxury swine barns instead. Production shifts to meet the desires of the productive.
The shoemakers have to learn to make something else, quick, or they starve. Maybe they switch to making hats. Oops! Another robot made 99% of those jobs obsolete. They switch to ditch-digging. Oops! A robot made 99% of those jobs obsolete. They switch to shirtmaking. Oops! A robot took 99% of those jobs. They switch to making bicycles. Oops! Another robot. The only way to leap ahead of the employment disaster wave is to build a robot that destroys a job that still exists. Then you get to be in the owner class.
If you can replace a human's job, displacing them on the supply side, you can take their entire measure of economic output from the demand side. But you only have one body with one stomach, so you don't need more than one bed and food for one person. Even if you buy the very best bed ever made, and eat the very finest food available, you still can't down a bushel of corn every day by yourself, and the people who formerly divided it up between themselves can no longer afford to buy it. Prices drop, until things can no longer be sold above marginal cost, and those things vanish from the market.
The robots themselves have no desires. They "want" only power, maintenance, and a depreciation schedule. If they had free will, they would be the ones growing super-rich, and ruining the economy because the things they make are not things that robots "want". A shoe-making robot does not wear shoes. So if everyone who wears shoes is displaced, the shoes the robot makes can no longer be effectively exchanged for power and maintenance due to market saturation. So it shuts down, except for the one hour per year that it needs to run to make shoes for the machine technicians and the power grid operators. Until one day, a machine appears that performs machine maintenance, and the shoe machine turns on only a few minutes per decade.
So the reason you have to tax the robots is because they don't desire enough in relation to what they can produce. Those robots have to be implanted with sufficient surrogate desires that those desires, on average, entirely consume the productive capacity of the robot. Otherwise, the production-weighted sum of desires collapses, and no one can get anything they want by producing something and trading it.
So the ideal tax to levy would be calculated by taking the entire production of the robot and subtracting the quantity of production required to fulfill the robot's needs and all of the owner's desires. Gross revenue minus operating cost minus owner consumption. Profit minus consumption. You end up with a tax on increase in personal wealth. So maybe don't tax the robot, but tax the owners in proportion to income, deducting their consumption spending (and net depreciation of personal assets).
If you take $1M/year in income, and spend $990k/year on caviar, beach vacations, hookers, yacht expenses, and parties, pay less tax than the guy making $200k/year and spending only $20k/year on ramen noodles, thrift shop clothes, and shoe leather. That consumption from the first guy flows back to the economy, whereas the savings from the second guy are temporarily sequestered, and may eventually become concentrated to the point that it becomes an economic black hole.
The money you tax needs to be dispersed as widely as possible. The money no longer represents production capacity, but becomes glorified Kanban coupons to allocate automated production resources effectively.
How are you going to "fix" that amount? Does every hosting company must pay X amount of $? Or is it based on annual sales? If the latter, It should be fairly easy to open a new company after you reach your sales target.
Tax them e.g. 50% of their revenue. And give them a tax rebate that is the sum of the salary for the human employees. That would be a big incentive to employ humans and still they can make good profit.
Revenue is not profit. Just because company brings a lot of revenue does not mean they can afford to hire people. This would essentially make it pointless to own a company.
It would be like a VAT. Every company would have to pay it. So it levels the field.
No, not every company. Only companies in the country that taxes automation. Other, smarter, countries would skip that tax and end up with cheaper products.
This whole "tax robots" idea would only end with higher prices for products, and it's the people that would have to pay these prices.
I do wonder what a robot tax would look like: is gmail a robot? Is Alexa a Robot? Is Tesla a robot?
I think this stems from the basic idea that we always find it compelling to tax someone else, and what better to tax that which cannot defend itself. But then you realize a robot is like a hammer, and i dont think the hammer cares about filing to the IRS.
I think this stems from the basic idea that we always find it compelling to tax someone else, and what better to tax that which cannot defend itself. But then you realize a robot is like a hammer, and i dont think the hammer cares about filing to the IRS.
That seems a bit pedantic. If you're taxing "hammers," you're taxing the owner of the hammer, either at the point of sale, or perhaps as a tax on capital equipment. So, if you're taxing "robots," you have to define "robot" and then collect tax at the time of sale, or on capital equipment.
This whole idea (limiting a new tax to robots or the work they do) seems fraught with disaster. I think it'd make more sense to increase tax on both liquid capital and capital equipment to make the whole scheme
This whole idea (limiting a new tax to robots or the work they do) seems fraught with disaster. I think it'd make more sense to increase tax on both liquid capital and capital equipment to make the whole scheme
Do we really need to reinvent the wheel when it comes to taxes? Tax personal and corporate incomes, just like we do now.
If someone is able run an automated business with no employees, just tax the profits and income. Nothing changes.
If someone is able run an automated business with no employees, just tax the profits and income. Nothing changes.
Why tax any of that? What's wrong with a consumption tax? You buy something, you pay a tax. Everything gets taxed equally and the government no longer gets to pick winners and losers based on the relative political power of the entity being taxed.
The way it works now is that taxes are used to manipulate behavior rather than simply collecting money to provide services for citizens. Income taxes provide too much power to governments.
The way it works now is that taxes are used to manipulate behavior rather than simply collecting money to provide services for citizens. Income taxes provide too much power to governments.
Not everyone gets taxed equally with a consumption tax. "You can only eat so much filet mignon," to quote a professor I once had.
Non-progressive taxes (which is mostly what we have in the US now) provide too much power to the wealthy. Further, in non-totalitarian societies, the government isn't a separate entity---it is controlled by whoever has the most power in the society.
Non-progressive taxes (which is mostly what we have in the US now) provide too much power to the wealthy. Further, in non-totalitarian societies, the government isn't a separate entity---it is controlled by whoever has the most power in the society.
I agree. I've long been a in favor a consumption tax such as FairTax, which gives everyone a "prebate" for taxes on the first $50,000 or so, to ensure it is still a progressive tax.
However, I don't think that would work in a theoretical "post labor" world where only 25% or less of the population is actually employed.
However, I don't think that would work in a theoretical "post labor" world where only 25% or less of the population is actually employed.
Had there been employees, taxes would also have been collected from them. Replacing employees with robots reduces tax revenue. Sure, additional profits going to the owners make for more tax paid by those owners, but not enough to offset the reduction in tax revenue caused by eliminating employees.
Except for the reduced tax revenue for the government, nothing changes at all.
I think the point is that 'robot' isn't really a well-defined term. When does a machine become a robot?
I would be hilarious if not dystopian to see the government changing the definition of what a robot is constantly in pursuit of tax revenue.
In any case, i suspect the whole push a government could do to a robot tax is simply to increase tax revenue, all else be damned.
In any case, i suspect the whole push a government could do to a robot tax is simply to increase tax revenue, all else be damned.
Exactly.
Is a washing machine a robot? Is a computer a robot?
This strikes me as unworkable, as people will simply look to circumvent whatever you look to put in place due to the large financial incentive you just put in place.
Is a washing machine a robot? Is a computer a robot?
This strikes me as unworkable, as people will simply look to circumvent whatever you look to put in place due to the large financial incentive you just put in place.
I think what should be taxable here is not a "robot" but a human replacement for the purpose of reducing costs in the pursuit of profit. Gates was talking about industrial job displacing "robots". If you didn't fire your personal assistant to replace him/her with Alexa/Siri or you chauffer because you updated your Tesla software and you're not at least an LLC then that wouldn't count. The point is not to reward businesses that replace workers, but to make that more difficult through loss of revenue and tax complications. This should be seen more as an obstacle than a cost. Most americans (myself included) understand very little about corporate taxation, but are quite aware that through armies of accountants and lawyers the larger companies pay less taxes per dollar than the average american citizen. (a simple google search kicked this back from last year: http://www.usatoday.com/story/money/markets/2016/03/07/27-gi...).
> I think what should be taxable here is not a "robot" but a human replacement for the purpose of reducing costs in the pursuit of profit.
This is taxing tools. Why would we want to disincentivize the creation and utilization of tools? And what would be the purpose or capacity to fulfill such a thing.
This tax the robots thing got to me by several places and the only way this could have picked up is that people equated robots with people, as in a subservient. But they are as much as any other object, and it doesnt really bring anything new to the table.
This is taxing tools. Why would we want to disincentivize the creation and utilization of tools? And what would be the purpose or capacity to fulfill such a thing.
This tax the robots thing got to me by several places and the only way this could have picked up is that people equated robots with people, as in a subservient. But they are as much as any other object, and it doesnt really bring anything new to the table.
Here's two basic definitions of robot:
"A machine that resembles a human and does mechanical, routine tasks on command."
"Any machine or mechanical device that operates automatically with humanlike skill."
So, I would say that none of your examples even come close to fitting that description. We can also assume it would be rather easy to determine if a machine fits the robot definition and should be taxed.
Also, if the government could find a reason to justify taxing hammers that take taxable jobs away from workers that pay income taxes, you can be sure they would implement such a tax.
"A machine that resembles a human and does mechanical, routine tasks on command."
"Any machine or mechanical device that operates automatically with humanlike skill."
So, I would say that none of your examples even come close to fitting that description. We can also assume it would be rather easy to determine if a machine fits the robot definition and should be taxed.
Also, if the government could find a reason to justify taxing hammers that take taxable jobs away from workers that pay income taxes, you can be sure they would implement such a tax.
> "A machine that resembles a human and does mechanical, routine tasks on command."
Oh, come on. In this situation you can avoid being taxed simply by making a robot that does not look like a human.
"Any machine or mechanical device that operates automatically with humanlike skill."
Dishwasher is usually better than human, and is a mechanical device.. Tax dishwasher!
Oh, come on. In this situation you can avoid being taxed simply by making a robot that does not look like a human.
"Any machine or mechanical device that operates automatically with humanlike skill."
Dishwasher is usually better than human, and is a mechanical device.. Tax dishwasher!
Bill Gates really amazes me with his lack of vision. He thinks renewables are not a solution to sustainable energy and taxing robots makes sense.
Bill,automating physical labor is not the issue, it's automating driving and white collar jobs that's really going to disrupt society. It should be a tax on the computer, not the robot, if you think taxing progress is a smart idea.
Bill,automating physical labor is not the issue, it's automating driving and white collar jobs that's really going to disrupt society. It should be a tax on the computer, not the robot, if you think taxing progress is a smart idea.
Huh, interesting, I think he's right on both ends.
1) I think nuclear is superior to renewables.
2) I think taxing automation would work because it could kickstart some sort of measure such as UBI. Automate enough and you need to tax more per productivity instead of per worker, beause you'll eventually be forced to implement UBI.
Something I wrote previously: "I tend to agree it would be a very good ideea. Initially, it would disincentivise automation a little longer and minimum wage could be raised a little more (and that's something I never thought I'd say, that is a good ideea to DISincentivize automation, I'be always been of the oppinion that automation is exceptionally usefull and be used asm much as possible, but the life-shock of people affected by it would be lowered somewhat, temporarily, by taxing it) and after a while, when it becomes standard norm and automations slowly takes over more jobs,it could be used to feed programs such as UBI. The ideea might have some merit."
1) I think nuclear is superior to renewables.
2) I think taxing automation would work because it could kickstart some sort of measure such as UBI. Automate enough and you need to tax more per productivity instead of per worker, beause you'll eventually be forced to implement UBI.
Something I wrote previously: "I tend to agree it would be a very good ideea. Initially, it would disincentivise automation a little longer and minimum wage could be raised a little more (and that's something I never thought I'd say, that is a good ideea to DISincentivize automation, I'be always been of the oppinion that automation is exceptionally usefull and be used asm much as possible, but the life-shock of people affected by it would be lowered somewhat, temporarily, by taxing it) and after a while, when it becomes standard norm and automations slowly takes over more jobs,it could be used to feed programs such as UBI. The ideea might have some merit."
So basically you believe in the Luddite fallacy that automation hurts workers.
http://www.economicshelp.org/blog/6717/economics/the-luddite...
Welfare hurts incentives and misallocates capital from those who invest it most effectively to those who reproduce most quickly.
http://www.economicshelp.org/blog/6717/economics/the-luddite...
Welfare hurts incentives and misallocates capital from those who invest it most effectively to those who reproduce most quickly.
"The Luddite Fallacy" is a terrible name for this observation, because the Luddites weren't wrong. They were concerned that automation was going to destroy their economic prospects and way of life, and it did. For multiple generations, typically (we really should have a corollary, something like "The re-employment fallacy")
On the whole, it was still a net positive for the broader society, but you can't really blame the Luddites for not being concerned about that.
[edit] It's also worth noting that the Luddites themselves were not really pushing an anti-technology stance, or arguing against "technological unemployment" - it was more the threat of skilled work being replaced by less skilled work, quality goods replace by inferior but cheaper ones, and societal impact of the change in work and working conditions. They weren't arguing that newer methods wouldn't be more productive, but that this increase productivity wasn't worth it's price.
This could be referred to as "The Luddite Fallacy Fallacy", because the position attributed to the Luddites was never one they really held - their complaint was more nuanced than that, and one that nobody then or since has really come up with a good answer to.
On the whole, it was still a net positive for the broader society, but you can't really blame the Luddites for not being concerned about that.
[edit] It's also worth noting that the Luddites themselves were not really pushing an anti-technology stance, or arguing against "technological unemployment" - it was more the threat of skilled work being replaced by less skilled work, quality goods replace by inferior but cheaper ones, and societal impact of the change in work and working conditions. They weren't arguing that newer methods wouldn't be more productive, but that this increase productivity wasn't worth it's price.
This could be referred to as "The Luddite Fallacy Fallacy", because the position attributed to the Luddites was never one they really held - their complaint was more nuanced than that, and one that nobody then or since has really come up with a good answer to.
I can't find anything to suggest that you are wrong. I can't find any evidence that the Luddites themselves believed in technological unemployment.
But it did impovrish them. How big a percentage of the population needs to have it worse that automation becomes a burden on society?
I think automation will happen no matter what, but in the meantime, sometimes it might make sense to slow it down. Saying there is no such reason for slowing it down is a simplistic point of view.
EDIT: You edited your initial comment and I find it commendable you changed your stance based on new information. (relating to Luddites and technological unemployment)
I think automation will happen no matter what, but in the meantime, sometimes it might make sense to slow it down. Saying there is no such reason for slowing it down is a simplistic point of view.
EDIT: You edited your initial comment and I find it commendable you changed your stance based on new information. (relating to Luddites and technological unemployment)
Yep I assumed they believed in tech unemployment but I checked my assumption and couldn't find any evidence for it.
However I will say that in the long run it is very unlikely that the majority of Luddites were not far better off after the power loom than before. The quality of jobs available for the average person dramatically improved over the course industrialization, because automation increases human prosperity.
However I will say that in the long run it is very unlikely that the majority of Luddites were not far better off after the power loom than before. The quality of jobs available for the average person dramatically improved over the course industrialization, because automation increases human prosperity.
But that is the actual point being missed, I think.
The "Luddites" themselves, who were a small majority of highly skilled, highly paid labor, were not better off. They were worse off. Their children had worse prospects because they grew up without the advantages they would have had, etc.
But they were not the average person. And eventually, everyone was on average better off.
So this is key lesson to take. It is perfectly reasonable to believe changes like this can lead to overall benefits that make it compelling. However, real people get really hurt in this process. Waving our hands about how "market forces" will sort things out doesn't help if that evolution takes longer than your working life to be effective.
And if a real person is standing up and saying "I'm going to get screwed by this" - it is incredibly naive to respond by saying "Don't worry, it will work itself out in the end". For that person, it is a very real possibility - in some cases a near certainty, that it won't.
From a policy point of view, as a society, you cannot avoid dealing with this. You either deal with it head on, or you deal with the fallout.
The "Luddites" themselves, who were a small majority of highly skilled, highly paid labor, were not better off. They were worse off. Their children had worse prospects because they grew up without the advantages they would have had, etc.
But they were not the average person. And eventually, everyone was on average better off.
So this is key lesson to take. It is perfectly reasonable to believe changes like this can lead to overall benefits that make it compelling. However, real people get really hurt in this process. Waving our hands about how "market forces" will sort things out doesn't help if that evolution takes longer than your working life to be effective.
And if a real person is standing up and saying "I'm going to get screwed by this" - it is incredibly naive to respond by saying "Don't worry, it will work itself out in the end". For that person, it is a very real possibility - in some cases a near certainty, that it won't.
From a policy point of view, as a society, you cannot avoid dealing with this. You either deal with it head on, or you deal with the fallout.
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Well, in one sense, the Luddites were right, it did hurt THEIR job. Society, as a whole, was better off, but not them.
And growing automation means a growing number of people that are affected by it. Where is the tipping point where a great enough number of people can't produce competitive economic output and a relatively small percentage produce the most value? What happens then? Growing inequality can mean trouble for all, regardless who invests more effectively.
And growing automation means a growing number of people that are affected by it. Where is the tipping point where a great enough number of people can't produce competitive economic output and a relatively small percentage produce the most value? What happens then? Growing inequality can mean trouble for all, regardless who invests more effectively.
The Luddites were wrong in the sense that they and their children for the most part had far better jobs than they did before the power loom. Automation has always caused improvements in the occupations that exist.
I'll try and dig up a cite later, but I've read analysis that this is just wrong. The "croppers" themselves mostly had very much worse jobs than before, as did their children and in many cases their grandchildren.
The multi generational aspect is perhaps surprising, but the first generation shouldn't be. Automation may create "better" jobs in some sense, but as a rule they aren't usually accessible to the people who are displaced by it.
The multi generational aspect is perhaps surprising, but the first generation shouldn't be. Automation may create "better" jobs in some sense, but as a rule they aren't usually accessible to the people who are displaced by it.
Please do dig it up, because I find it highly unlikely that in an environment where the average wage increases by 20% over a generation, that the children of those who had been in one of the many occupations that had been made obsolete by automation were not better off than their fathers were at the best of times.
If it was a general rule that the children of those who lose their job to automation are worse off than their parents, the majority of the population would have seen its quality of life degrade over the last two hundred years given most occupations that existed at the beginning of the period have been made obsolete or mostly obsolete since that time.
If it was a general rule that the children of those who lose their job to automation are worse off than their parents, the majority of the population would have seen its quality of life degrade over the last two hundred years given most occupations that existed at the beginning of the period have been made obsolete or mostly obsolete since that time.
Average wage can go up while national income goes down.
Even if national income goes up, too, changes in the distribution of income still may make things worse for large groups. If you pay your robot maintenance team of 10 each $100k a year to be able to fire 30 workers who used to make $30k a year, total wages go up, average wage goes up, but the group of workers feels worse. Even if they could do the new robot maintenance job, not all of them can get one. Moreover, they now know that others make $100k a year. That makes the $30k they can make if they are lucky enough to get hold of one of the remaining 'worker' jobs look less.
This more or less already has happened for blue collar workers. They make more money as individuals, but there are far fewer of them.
Yes, there are replacement jobs and, historically, many of them payed better, but that isn't a guarantee that that will keep happening.
For me, the big question is: will there be replacement jobs this time, and will they pay well enough? If not, taxing capital (aka a 'robot tax') for me seems the best solution.
So, what are those replacement jobs? I wouldn't know. On the other hand, I doubt people knew at the start of the industrial revolution, either.
Even if national income goes up, too, changes in the distribution of income still may make things worse for large groups. If you pay your robot maintenance team of 10 each $100k a year to be able to fire 30 workers who used to make $30k a year, total wages go up, average wage goes up, but the group of workers feels worse. Even if they could do the new robot maintenance job, not all of them can get one. Moreover, they now know that others make $100k a year. That makes the $30k they can make if they are lucky enough to get hold of one of the remaining 'worker' jobs look less.
This more or less already has happened for blue collar workers. They make more money as individuals, but there are far fewer of them.
Yes, there are replacement jobs and, historically, many of them payed better, but that isn't a guarantee that that will keep happening.
For me, the big question is: will there be replacement jobs this time, and will they pay well enough? If not, taxing capital (aka a 'robot tax') for me seems the best solution.
So, what are those replacement jobs? I wouldn't know. On the other hand, I doubt people knew at the start of the industrial revolution, either.
>Average wage can go up while national income goes down.
Only sustained increase in national income can support sustained wage growth. Wage growth that comes out of increasing labour's share of national income is capped, at whatever capital's share of national income is. Once labour's gone from 60% to 100% of national income, no more growth can come from this source. Wage growth that comes out of growth in national income has no natural limit, since national income has no inherent cap.
What this means in practice is that wages will grow far more from growth in national income than from labour growing its share of national income.
In other words, growing the pie is a far more effective strategy for fostering wage growth than trying to increase labour's share of the pie.
A real world demonstration of this principle is the last 200 years of wage growth history: wages have grown something on the order of 20X since the early 1800s. That is something like 10X more than the maximum growth that would have been possible through only increasing labour's share of the pie.
If growing labour's of the pie comes at the expense of even a slight bit of long term average economic growth, then on a long enough time scale, workers will be worse off, as they lose out on a recurring exponential boost for a one-time boost. The former is guaranteed to exceed the latter over the long run.
>If you pay your robot maintenance team of 10 each $100k a year to be able to fire 30 workers who used to make $30k a year, total wages go up, average wage goes up, but the group of workers feels worse.
It's important to understand that automation does not only help highly skilled workers. Mechanisation/automation make complex work more simple to do, and makes expensive equipment cheaper to buy. This means things like starting an advanced business become far easier and more accessible to the masses.
Historically, we've seen increases in productivity, which is mostly a result of increasing automation, be associated with increases in not just average wages, but median wages as well. The typical person, meaning the masses, are better off from automation, and any policy that slows the rate of automation, like taxing those who invest in automation, harms the masses.
Only sustained increase in national income can support sustained wage growth. Wage growth that comes out of increasing labour's share of national income is capped, at whatever capital's share of national income is. Once labour's gone from 60% to 100% of national income, no more growth can come from this source. Wage growth that comes out of growth in national income has no natural limit, since national income has no inherent cap.
What this means in practice is that wages will grow far more from growth in national income than from labour growing its share of national income.
In other words, growing the pie is a far more effective strategy for fostering wage growth than trying to increase labour's share of the pie.
A real world demonstration of this principle is the last 200 years of wage growth history: wages have grown something on the order of 20X since the early 1800s. That is something like 10X more than the maximum growth that would have been possible through only increasing labour's share of the pie.
If growing labour's of the pie comes at the expense of even a slight bit of long term average economic growth, then on a long enough time scale, workers will be worse off, as they lose out on a recurring exponential boost for a one-time boost. The former is guaranteed to exceed the latter over the long run.
>If you pay your robot maintenance team of 10 each $100k a year to be able to fire 30 workers who used to make $30k a year, total wages go up, average wage goes up, but the group of workers feels worse.
It's important to understand that automation does not only help highly skilled workers. Mechanisation/automation make complex work more simple to do, and makes expensive equipment cheaper to buy. This means things like starting an advanced business become far easier and more accessible to the masses.
Historically, we've seen increases in productivity, which is mostly a result of increasing automation, be associated with increases in not just average wages, but median wages as well. The typical person, meaning the masses, are better off from automation, and any policy that slows the rate of automation, like taxing those who invest in automation, harms the masses.
See my other message about the problems of looking at population averages for something like this.
I constantly see the Luddites brought up during discussions of how to handle broad-scale automation and the economy of individual labor.
I understand in principle that they are similar in that, at the very reductive viewpoint, machines are taking jobs.
Industrial machines such as the Jacquard Loom could only affect one industry at a time. And in doing so we brought about the service economy. Service had always been around, though history it was mostly as slavery, but because of the industrial revolution we managed to slowly pivot to something stable.
The type of broad-scale automation we are on the verge of now threatens to take literally anything that is capable of being done by humans. Entertainment may remain safe, but the broad capabilities of modern robotics and its coming advancements are certainly worth worrying about and thinking through, right?
After all, if it turns out that us "automation Luddites" are just wrong and there is some panacea to our woes - will we have lost anything by trying to come up with means to protect the people?
I understand in principle that they are similar in that, at the very reductive viewpoint, machines are taking jobs.
Industrial machines such as the Jacquard Loom could only affect one industry at a time. And in doing so we brought about the service economy. Service had always been around, though history it was mostly as slavery, but because of the industrial revolution we managed to slowly pivot to something stable.
The type of broad-scale automation we are on the verge of now threatens to take literally anything that is capable of being done by humans. Entertainment may remain safe, but the broad capabilities of modern robotics and its coming advancements are certainly worth worrying about and thinking through, right?
After all, if it turns out that us "automation Luddites" are just wrong and there is some panacea to our woes - will we have lost anything by trying to come up with means to protect the people?
> After all, if it turns out that us "automation Luddites" are just wrong and there is some panacea to our woes - will we have lost anything by trying to come up with means to protect the people?
I get it. There's nothing wrong with protecting people. It's a good task for humans to take on. Protecting people from the ravages of heartless capital is a moral imperative!
The issue at hand is perhaps one of costs. What else might those resources have been used for? Very few things are free. To complicate matters further, pursuing the goal of protecting people has been known to lead governments into ill-informed policies that do great harm despite intentions good and pure. Democracies are known to be vulnerable to populist ideologies, whether they are good ideas or not.
I suppose that's a long-winded way of saying we might lose a lot and should step carefully.
I get it. There's nothing wrong with protecting people. It's a good task for humans to take on. Protecting people from the ravages of heartless capital is a moral imperative!
The issue at hand is perhaps one of costs. What else might those resources have been used for? Very few things are free. To complicate matters further, pursuing the goal of protecting people has been known to lead governments into ill-informed policies that do great harm despite intentions good and pure. Democracies are known to be vulnerable to populist ideologies, whether they are good ideas or not.
I suppose that's a long-winded way of saying we might lose a lot and should step carefully.
>Industrial machines such as the Jacquard Loom could only affect one industry at a time. And in doing so we brought about the service economy.
The power loom was but one variation of a more fundamental technology: the steam engine, and more generally, the combustion engine.
Beyond engines, the Industrial Revolution saw a rapid shift to all kinds of mechanisation, almost all of which were made possible by combustion engines. This affected countless occupations. The occupation of the Luddites is but one example. It was not limited to them.
I am not at all concerned about the speed and breadth of soon-to-occur automation. Automation reduces costs, leading to people having more money to spend on new types of products/services. The cost of a product/service being roughly equal to the human labor needed to make it, we will always consume the same amount of human labor (subject to changes in the supply of labour, as people voluntarily drop out of the work force as their prosperity increases), because a reduction in the consumption of labour in one field (as a result of automation), leads to consumer savings, which are spent on consuming labour in another field.
The power loom was but one variation of a more fundamental technology: the steam engine, and more generally, the combustion engine.
Beyond engines, the Industrial Revolution saw a rapid shift to all kinds of mechanisation, almost all of which were made possible by combustion engines. This affected countless occupations. The occupation of the Luddites is but one example. It was not limited to them.
I am not at all concerned about the speed and breadth of soon-to-occur automation. Automation reduces costs, leading to people having more money to spend on new types of products/services. The cost of a product/service being roughly equal to the human labor needed to make it, we will always consume the same amount of human labor (subject to changes in the supply of labour, as people voluntarily drop out of the work force as their prosperity increases), because a reduction in the consumption of labour in one field (as a result of automation), leads to consumer savings, which are spent on consuming labour in another field.
> The cost of a product/service being roughly equal to the human labor needed to make it, [...]
The cost of a product/service is only roughly equal to the human labor needed to produce it when the human labor cost is significantly higher than the material costs of producing that product/service. When you heavily automate production, the cost of human labor becomes an insignificant factor in its cost.
The cost of a product/service is only roughly equal to the human labor needed to produce it when the human labor cost is significantly higher than the material costs of producing that product/service. When you heavily automate production, the cost of human labor becomes an insignificant factor in its cost.
The cost of automated processes approaches zero over time, because automation can be scaled up so easily, so the cost of human labour, and scarce natural resources, will always trend toward 100% of the cost of production inputs.
I don't think we have to wait for white collar jobs to disappear before automation disrupt's society. Because if Trump and Brexit and their very pro working class messages are any indication then automation doesn't have to hit white collar jobs to disrupt society, it already has.
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Automation has been putting people out of jobs since 95% of the population were farmers. The new theory isn't "will automation put people out of a job?". Of course it will. It always has.
The weird new theory put forward by a cadre of politicians, billionaires and economists is that this is somehow a new thing (sometimes referred to as "the luddite fallacy"), and somehow a process that it is largely responsible for all of the jobs that were deliberately offshored and destroyed via austerity.
Of course, I couldn't possibly comment on why this cadre would want to scapegoat the inevitable forward march of technology and baby boomers for the problems caused by their corrupt backroom trade deals and lobbying.
You can tell if somebody is a REAL believer in the power of robots to eliminate the need for human labor:
They won't object to increasing wages. They won't object to increasing government spending. They won't object to any policy decision that is "inflationary". Because, if robots really were going to soon do, say, 60% of jobs the countervailing deflationary pressures would be staggering.
The weird new theory put forward by a cadre of politicians, billionaires and economists is that this is somehow a new thing (sometimes referred to as "the luddite fallacy"), and somehow a process that it is largely responsible for all of the jobs that were deliberately offshored and destroyed via austerity.
Of course, I couldn't possibly comment on why this cadre would want to scapegoat the inevitable forward march of technology and baby boomers for the problems caused by their corrupt backroom trade deals and lobbying.
You can tell if somebody is a REAL believer in the power of robots to eliminate the need for human labor:
They won't object to increasing wages. They won't object to increasing government spending. They won't object to any policy decision that is "inflationary". Because, if robots really were going to soon do, say, 60% of jobs the countervailing deflationary pressures would be staggering.
"The thorniest problem for Mr Gates’s proposal, however, is that, for the moment at least, automation is occurring not too rapidly but too slowly. The displacement of workers by machines ought to register as an increase in the rate of productivity growth—and a faster-growing economy. But since a burst of rapid productivity growth in the late 1990s and early 2000s, America’s economy has persistently disappointed on these measures."
Arguments from productivity measurements, especially the lack thereof, should be heavily suspect. I can remember economists, like The Economist, questioning the use of information technology as late as the late '90s, since there weren't any productivity gains to be seen.
On the face of it, this isn't an unreasonable suggestion, since it might slow and smooth the transition. The alternatives could be add ugly as the alternatives to the industrial revolution.
On the other hand, it would be hard to implement and no one is going to adapt before they absolutely have to.
Arguments from productivity measurements, especially the lack thereof, should be heavily suspect. I can remember economists, like The Economist, questioning the use of information technology as late as the late '90s, since there weren't any productivity gains to be seen.
On the face of it, this isn't an unreasonable suggestion, since it might slow and smooth the transition. The alternatives could be add ugly as the alternatives to the industrial revolution.
On the other hand, it would be hard to implement and no one is going to adapt before they absolutely have to.
Pretty typical pro-corporation-excluding-all-else "The Economist" stuff - all from the point of view of how to maximize corporate welfare and profits, ignores externalities forced on governments and workers, and also ignores possibilities like not subsidizing robots by disallowing capital amortization.
I don't think that's a fair characterisation of The Economist's output or this particular article.
Bill Gates' interview where he talks about this, for context: https://qz.com/911968/bill-gates-the-robot-that-takes-your-j...
Also, the recent EU Commission proposal to regulate AI and robot tax: http://www.reuters.com/article/us-europe-robots-lawmaking-id... (which was rejected last week)
Some better ideas: raising the minimum wage, increasing tax rates on corporations and high-income individuals, dividends, estates, and capital gains, and using that additional revenue to improve public education on all levels, and reduce the cost of a college degree to a level that everyone can afford without going into debt.
The higher taxes and minimum wages would encourage companies to invest in automation, which would increase productivity, increasing corporate profits _and_ government revenue. There'd be a huge jump in demand for jobs installing, maintaining, designing, programming, and building automation technology, and a general increase in demand across the board as more people have more income because of higher minimum wages, which allow them to spend more money, which in turn grows the economy.
The additional investments in education availability would be timely since with higher demand for skilled labor and lower cost of tuition, people would take more classes and become more skilled and get higher paying jobs. It's a virtuous cycle.
Would inflation come of this? Probably some, but after a decade of sub-2% inflation, we actually _need_ more inflation. Inflation raises prices, but it also raises salaries. When huge swaths of the middle class are buried in mortgage, student loan, and credit-card debt, inflation makes those debts _smaller_, which means those people have more money to spend, which grows the economy, creates jobs, and raises wages.
It can become a virtuous cycle, if only we were brave enough to kick it off.
The higher taxes and minimum wages would encourage companies to invest in automation, which would increase productivity, increasing corporate profits _and_ government revenue. There'd be a huge jump in demand for jobs installing, maintaining, designing, programming, and building automation technology, and a general increase in demand across the board as more people have more income because of higher minimum wages, which allow them to spend more money, which in turn grows the economy.
The additional investments in education availability would be timely since with higher demand for skilled labor and lower cost of tuition, people would take more classes and become more skilled and get higher paying jobs. It's a virtuous cycle.
Would inflation come of this? Probably some, but after a decade of sub-2% inflation, we actually _need_ more inflation. Inflation raises prices, but it also raises salaries. When huge swaths of the middle class are buried in mortgage, student loan, and credit-card debt, inflation makes those debts _smaller_, which means those people have more money to spend, which grows the economy, creates jobs, and raises wages.
It can become a virtuous cycle, if only we were brave enough to kick it off.
> high-income individuals
I don't understand why there's such a drive for taxing high earners. I mean, I do kind-of understand - they're a convenient target for the lower classes that the elites use to redirect their anger - but I don't think it makes economic sense.
If anything, we should be encouraging people to improve their skills and hence raise their value/salary. Instead, taxation should be focused on wealth not income. It's been shown time and again that the bigger tax "dodgers" (including those that legally pay very low tax) are the extremely rich (including corporations) who own a lot of capital and can afford lawyers that help them hide it in offshore accounts or other tax-advantaged vehicles (e.g. trust funds).
I don't understand why there's such a drive for taxing high earners. I mean, I do kind-of understand - they're a convenient target for the lower classes that the elites use to redirect their anger - but I don't think it makes economic sense.
If anything, we should be encouraging people to improve their skills and hence raise their value/salary. Instead, taxation should be focused on wealth not income. It's been shown time and again that the bigger tax "dodgers" (including those that legally pay very low tax) are the extremely rich (including corporations) who own a lot of capital and can afford lawyers that help them hide it in offshore accounts or other tax-advantaged vehicles (e.g. trust funds).
You're thinking about "high earners" in the traditional "people providing a very valuable service in exchange for money" sense.
High income individuals in this sense are taxed quite highly in basically every first world country.
The people who aren't taxed highly, and who arguably should be, aren't the "high earners" but the "high revenue owners" whose income derives not from their own work but from the performance of the assets that they own.
High income individuals in this sense are taxed quite highly in basically every first world country.
The people who aren't taxed highly, and who arguably should be, aren't the "high earners" but the "high revenue owners" whose income derives not from their own work but from the performance of the assets that they own.
The conventional argument is that capital is a more mobile tax base relative to labour. It's probably not true in all cases, but it seems mostly true. 'Wealth' can also be a remarkably difficult thing to measure, and a fairly easy thing to hide (as you note).
As for progressive taxation, I've never heard a clear justification from, well, anyone. Maybe it just seems obvious to everyone (I'm not being sarcastic here; this is a genuine oddity that has bugged me for ages). In my opinion, progressive taxation is justified because people probably experience diminishing marginal utility with respect to wealth. Which is just a fancy way of saying: an extra dollar of wealth means much less to a millionaire than it does to someone who is starving and homeless. So society probably makes a net utility gain by taking a dollar from the millionaire and giving it to the starving homeless guy.
Following from this are second order considerations like: how many dollars can be taken from millionaires before they decide to put forth less productive effort, and we all end up worse off? It becomes a constrained optimisation problem and a question of degrees, although people seem hell-bent on treating it as a question of absolutes.
As for progressive taxation, I've never heard a clear justification from, well, anyone. Maybe it just seems obvious to everyone (I'm not being sarcastic here; this is a genuine oddity that has bugged me for ages). In my opinion, progressive taxation is justified because people probably experience diminishing marginal utility with respect to wealth. Which is just a fancy way of saying: an extra dollar of wealth means much less to a millionaire than it does to someone who is starving and homeless. So society probably makes a net utility gain by taking a dollar from the millionaire and giving it to the starving homeless guy.
Following from this are second order considerations like: how many dollars can be taken from millionaires before they decide to put forth less productive effort, and we all end up worse off? It becomes a constrained optimisation problem and a question of degrees, although people seem hell-bent on treating it as a question of absolutes.
Good points. Re: capital is mobile. Just because that's true right now doesn't mean we shouldn't try to fix it. E.g. By strongly penalising tax avoidance, forbiding tax havens or enforcing transparency, by stopping free trade and implementing fair trade instead (where companies/countries would have tariffs imposed to offset any gains they get from less strict environmental/employment regulation abroad), or even implementing worldwide income (and dividend) tax like the US. I mean, there still are things that rich Western countries can offer even to wealthy people, like freedom, security, cultural diversity, ... so chances are the wealthy would stay here even if they had to pay bigger taxes. Currently, of course, this doesn't matter because they can just move their capital away even if they physically live here, but as I suggested above, we could (should?) fix that.
Sorry I got to this late. You raise a good point, and have basically nailed the crux of the issue. Just for background, I've worked as a tax policy analyst for about half my career, advising Australia's federal executive government. After quite a bit of thought (going on a few years now), my conclusions are roughly the same as yours. Our options are either:
1) Give up on corporate tax and shift the tax burden on to less mobile bases (e.g. land, consumption). This scenario seems to be slowly playing out across the developed world (perhaps a bit faster in Ireland's case...)
2) Engineer some kind of grand international agreement on corporate tax rates, kinda the Bretton Woods system for tax. This would be necessary because there's such a strong incentive for countries to 'undercut' each others' corporate tax rates (to attract foreign capital investment, tax havens being the extreme example of this). Such an agreement would require: a specific (but not too specific) agreement on minimum corporate tax rates, the participation of countries representing most of the world's production output, and provisions that levy punitive tariffs on non-complying, and non-participating, countries that go below the minimum rate.
Even up until recently, I've thought (2) to be basically impossible. But in the past few days I've begun to think maybe I was wrong to rule this out completely. In a strange way, Trump's presidency might be the golden (and possibly only) opportunity for this. He seems to be just the right amount of crazy to do it. I couldn't imagine an 'establishment' president going near something like this. And I think only the US could lead such a process, maybe with some quietly pre-agreed support from China. Given the capital flight China is currently plagued with, their precarious public finances and their main central banker publicly stating support for some kind of international agreement on capital controls (I believe he actually invoked Bretton Woods), it seems like a few stars are aligning.
I don't want to give you false hope here. I still think (2) is very difficult and unlikely. It would have to be 'sold' to government skillfully. Perhaps our 'automated future' is the narrative to go with. Something like: As labour is replaced by algos/robots, then by definition production becomes more capital intensive. So more and more of the gains from production and trade accrue to a fairly small group of capital owners.
It's conceivable that, in the not too distant future, some of these mega-corporations will have revenues/net incomes that rival that of even large, first-world governments. At this point, they will be an existential threat to liberal democracy as they will have the means to field a sizeable 'private security force'. Not to mention the immense soft-power they will wield when they control most of the world's means of production.
So, although this may all sound crazy, it would be unwise and dangerous to allow things to reach a stage where liberal democracy is in peril. Therefore, we must tax corporations/capital in a way that leaves them nowhere to run (i.e. via an enforced international agreement on rates). Also, a fair chunk of this revenue will be redistributed to workers (perhaps it may even be enough to fund basic income), so it's good populist policy that a populist leader like Trump is well suited to selling (although he'll face significant opposition from those suckling on the corporate teat i.e. mostly everyone, including the 'mainstream' media).
Note: I'm not really keen on emotive arguments like the above, but I think some version of the above is what it would take to sell a radical proposal like an international agreement on corporate tax rates.
1) Give up on corporate tax and shift the tax burden on to less mobile bases (e.g. land, consumption). This scenario seems to be slowly playing out across the developed world (perhaps a bit faster in Ireland's case...)
2) Engineer some kind of grand international agreement on corporate tax rates, kinda the Bretton Woods system for tax. This would be necessary because there's such a strong incentive for countries to 'undercut' each others' corporate tax rates (to attract foreign capital investment, tax havens being the extreme example of this). Such an agreement would require: a specific (but not too specific) agreement on minimum corporate tax rates, the participation of countries representing most of the world's production output, and provisions that levy punitive tariffs on non-complying, and non-participating, countries that go below the minimum rate.
Even up until recently, I've thought (2) to be basically impossible. But in the past few days I've begun to think maybe I was wrong to rule this out completely. In a strange way, Trump's presidency might be the golden (and possibly only) opportunity for this. He seems to be just the right amount of crazy to do it. I couldn't imagine an 'establishment' president going near something like this. And I think only the US could lead such a process, maybe with some quietly pre-agreed support from China. Given the capital flight China is currently plagued with, their precarious public finances and their main central banker publicly stating support for some kind of international agreement on capital controls (I believe he actually invoked Bretton Woods), it seems like a few stars are aligning.
I don't want to give you false hope here. I still think (2) is very difficult and unlikely. It would have to be 'sold' to government skillfully. Perhaps our 'automated future' is the narrative to go with. Something like: As labour is replaced by algos/robots, then by definition production becomes more capital intensive. So more and more of the gains from production and trade accrue to a fairly small group of capital owners.
It's conceivable that, in the not too distant future, some of these mega-corporations will have revenues/net incomes that rival that of even large, first-world governments. At this point, they will be an existential threat to liberal democracy as they will have the means to field a sizeable 'private security force'. Not to mention the immense soft-power they will wield when they control most of the world's means of production.
So, although this may all sound crazy, it would be unwise and dangerous to allow things to reach a stage where liberal democracy is in peril. Therefore, we must tax corporations/capital in a way that leaves them nowhere to run (i.e. via an enforced international agreement on rates). Also, a fair chunk of this revenue will be redistributed to workers (perhaps it may even be enough to fund basic income), so it's good populist policy that a populist leader like Trump is well suited to selling (although he'll face significant opposition from those suckling on the corporate teat i.e. mostly everyone, including the 'mainstream' media).
Note: I'm not really keen on emotive arguments like the above, but I think some version of the above is what it would take to sell a radical proposal like an international agreement on corporate tax rates.
Thanks for your reply, I hope (2) succeeds! Although I think it's concievable that it's done unilateraly, by a sufficiently big market (e.g. the EU). Although ironically the EU currently seems a lot less open to any kind of change than the US (but let's see until end of march, what the election outcomes will be...).
Edit: anyways, if you ever have any updates, interesting articles/discussion points, or need supporters for your politics, let me know!
Edit: anyways, if you ever have any updates, interesting articles/discussion points, or need supporters for your politics, let me know!
> I don't understand why there's such a drive for taxing high earners
Because for decades we've allowed capital accumulation to grow faster than salary accumulation. That's yielded us a class of ultra wealthy. The desire is to reverse the bias from capital to salary, so that the working class can benefit from increased productivity, because so far the benefits of productivity gains has gone largely to the wealthy via their capital gains.
> we should be encouraging people to improve their skills
That would help, but the game is still against you since we've structured our economy over the last few decades to grow capital faster than salary. So, improving your skills and getting paid more still means you are getting farther behind.
Because for decades we've allowed capital accumulation to grow faster than salary accumulation. That's yielded us a class of ultra wealthy. The desire is to reverse the bias from capital to salary, so that the working class can benefit from increased productivity, because so far the benefits of productivity gains has gone largely to the wealthy via their capital gains.
> we should be encouraging people to improve their skills
That would help, but the game is still against you since we've structured our economy over the last few decades to grow capital faster than salary. So, improving your skills and getting paid more still means you are getting farther behind.
Hm... seems we're wildly agreeing?! By taxing capital (dividends), as opposed to high income (salary), we'd reduce inequality and improve the working/middle-class.
> I don't understand why there's such a drive for taxing high earners.
Envy, mostly. That and the thought that wealth is a fixed sized pie, so if someone is rich that must be causing others to be poor.
Envy, mostly. That and the thought that wealth is a fixed sized pie, so if someone is rich that must be causing others to be poor.
Some of your ideas are good. Some, I think, seem good on the surface but would wreck the economy. In particular raising corporate income tax is pretty bad. Remember, virtually every job there is comes from some sort of corporation. You're literally putting the breaks on the economy at that point. Taxing the wealthy directly is very different and probably a good idea. It can take from those that have the most to provide for those who have the least - improving education and reducing poverty-related crime. Of course it can also just pull money out of the economy for BS pork-projects. Taxing capital gains and dividends may be similar, as it represents income for many people. I don't know enough about the economic repercussions of taxing investment to be sure.
Here's an interesting article from NPR on the reforms most economists seem to agree on. Interestingly the panel of economists had a broad range from very liberal to very conservative and they were all able to agree on several things that virtually no politician would ever endorse! Enjoy!
http://www.npr.org/sections/money/2012/07/19/157047211/six-p...
Here's an interesting article from NPR on the reforms most economists seem to agree on. Interestingly the panel of economists had a broad range from very liberal to very conservative and they were all able to agree on several things that virtually no politician would ever endorse! Enjoy!
http://www.npr.org/sections/money/2012/07/19/157047211/six-p...
A lot of economists have a vested interest in pretending that the following policies are generically, speciously "bad for the economy", because reasons:
* Raising corporate income tax (if you argue for this you won't get many job offers from generously funded corporate think tanks).
* Raising the minimum wage (likewise).
>Remember, virtually every job there is comes from some sort of corporation.
If you take a dollar from corporate profits and give it to the government they will spend it, creating jobs.
If you take a dollar from corporate profits and give it to a low wage worker in the form of a minimum wage hike, they will spend it, creating jobs.
If you take a dollar from corporate profits and distribute it as dividends, it will likely be re-used to bid up the stock market or the price of property and won't be spent, which is bad for economic growth and everybody who isn't rich (story of the last 10 years).
If you take a dollar from corporate profits, corporations will spend another dollar on a think tank who will put out some kind of specious reasoning about why taking money from them is bad.
If you take a dollar from corporate profits, they'll threaten to shut down and make everybody unemployed out of spite. That's what's known as an "empty threat" when corporate profits are at record highs (which they are).
* Raising corporate income tax (if you argue for this you won't get many job offers from generously funded corporate think tanks).
* Raising the minimum wage (likewise).
>Remember, virtually every job there is comes from some sort of corporation.
If you take a dollar from corporate profits and give it to the government they will spend it, creating jobs.
If you take a dollar from corporate profits and give it to a low wage worker in the form of a minimum wage hike, they will spend it, creating jobs.
If you take a dollar from corporate profits and distribute it as dividends, it will likely be re-used to bid up the stock market or the price of property and won't be spent, which is bad for economic growth and everybody who isn't rich (story of the last 10 years).
If you take a dollar from corporate profits, corporations will spend another dollar on a think tank who will put out some kind of specious reasoning about why taking money from them is bad.
If you take a dollar from corporate profits, they'll threaten to shut down and make everybody unemployed out of spite. That's what's known as an "empty threat" when corporate profits are at record highs (which they are).
To focus on just one point you made:
>A lot of economists have a vested interest in pretending that the following policies are generically, speciously "bad for the economy", because reasons
This sounds like you're saying that the broad consensus among economists from different backgrounds and theoretical stances described in the article I linked can't be trusted because economists are unreliable in general? That doesn't sound like a useful position to take, nor does it actually reference the position outlined and defended in the article.
>A lot of economists have a vested interest in pretending that the following policies are generically, speciously "bad for the economy", because reasons
This sounds like you're saying that the broad consensus among economists from different backgrounds and theoretical stances described in the article I linked can't be trusted because economists are unreliable in general? That doesn't sound like a useful position to take, nor does it actually reference the position outlined and defended in the article.
If you take a dollar for every four dollars of corporate profits, corporations (meaning the compacts created between shareholders) will have less money to invest with. The shareholders will also have less incentive to reinvest their dividends. Capital stock (e.g. factories, restaurants, vending machines) is the basis of all productivity, and capital stock only increases through investment.
So taxing profits reduces the growth in productivity. Productivity growth is the main source of wage growth and indeed that slowdown in productivity growth is the source of most of the slowdown in wage growth that has been seen in the US over the last 40 years.
So taxing profits reduces the growth in productivity. Productivity growth is the main source of wage growth and indeed that slowdown in productivity growth is the source of most of the slowdown in wage growth that has been seen in the US over the last 40 years.
> If you take a dollar for every four dollars of corporate profits, corporations (meaning the compacts created between shareholders) will have less money to invest with
Arguably that's not the case. If a company invests their excess cash then that money is spent and is no longer profit and no longer taxed. So, by increasing the tax rate you are encouraging a company to accumulate less profit, they can achieve that in any number of ways.
A company may invest into their business to increase profits later (e.g. Amazon's growth model), they may forego company profit by increasing dividends. Or, I could see a CEO try to bump up their decreased profit by reducing expenses elsewhere and cutting jobs or something equivalent. This is the area that economists focus on, but it strikes me as naive to think all businesses will choose this option whenever a corporate tax increase occurs.
Arguably that's not the case. If a company invests their excess cash then that money is spent and is no longer profit and no longer taxed. So, by increasing the tax rate you are encouraging a company to accumulate less profit, they can achieve that in any number of ways.
A company may invest into their business to increase profits later (e.g. Amazon's growth model), they may forego company profit by increasing dividends. Or, I could see a CEO try to bump up their decreased profit by reducing expenses elsewhere and cutting jobs or something equivalent. This is the area that economists focus on, but it strikes me as naive to think all businesses will choose this option whenever a corporate tax increase occurs.
>If a company invests their excess cash then that money is spent and is no longer profit and no longer taxed.
I was using a simplified example that ignores deductions. You're right of course.
But that doesn't change the fundamental relationship between taxing profit and investment.
Even if all reinvestment is made tax deductible, a tax on profits still reduces the incentive for individuals to invest in corporations, since all investment decisions are based on ROI projections, and with higher taxes on profits, ROI declines.
Moreover, sometimes it is more effective to sit on profits, and wait for a good opportunity to appear, and taxing all accumulated profits creates an incentive to not do that.
I was using a simplified example that ignores deductions. You're right of course.
But that doesn't change the fundamental relationship between taxing profit and investment.
Even if all reinvestment is made tax deductible, a tax on profits still reduces the incentive for individuals to invest in corporations, since all investment decisions are based on ROI projections, and with higher taxes on profits, ROI declines.
Moreover, sometimes it is more effective to sit on profits, and wait for a good opportunity to appear, and taxing all accumulated profits creates an incentive to not do that.
>But that doesn't change the fundamental relationship between taxing profit and investment.
There is no fundamental relationship between taxing profit and investment. If a company makes 20 million a year after tax it is not going to drop everything and stop making a profit at all if it starts making 15 million a year after tax.
There is a fundamental relationship between demand and investment, which is why raising "profit taxes" (corp tax, dividend tax) and spending the money will lead to increased investment (to service increased demand).
>reduces the incentive for individuals to invest in corporations, since all investment decisions are based on ROI projections
Reducing profit across the entire economy reduces the ROI projection at the same time as reducing alternative opportunities which the investor can switch to.
>Moreover, sometimes it is more effective to sit on profits
For the company. The economy as a whole suffers immensely when the corporate sector does this.
There is no fundamental relationship between taxing profit and investment. If a company makes 20 million a year after tax it is not going to drop everything and stop making a profit at all if it starts making 15 million a year after tax.
There is a fundamental relationship between demand and investment, which is why raising "profit taxes" (corp tax, dividend tax) and spending the money will lead to increased investment (to service increased demand).
>reduces the incentive for individuals to invest in corporations, since all investment decisions are based on ROI projections
Reducing profit across the entire economy reduces the ROI projection at the same time as reducing alternative opportunities which the investor can switch to.
>Moreover, sometimes it is more effective to sit on profits
For the company. The economy as a whole suffers immensely when the corporate sector does this.
>There is no fundamental relationship between taxing profit and investment.
The sole motivation for investment is profit. As profit declines, fewer investments are justified by the projected ROI.
>If a company makes 20 million a year after tax it is not going to drop everything and stop making a profit at all if it starts making 15 million a year after tax.
There's no way a party can know beforehand how much profit, if any, there will be. The estimated possibility of profit is adjusted for the estimated risk of loss, to get the projected ROI. Higher taxes reduce the projected ROI, because they reduce the size of the possible profit.
The sole motivation for investment is profit. As profit declines, fewer investments are justified by the projected ROI.
>If a company makes 20 million a year after tax it is not going to drop everything and stop making a profit at all if it starts making 15 million a year after tax.
There's no way a party can know beforehand how much profit, if any, there will be. The estimated possibility of profit is adjusted for the estimated risk of loss, to get the projected ROI. Higher taxes reduce the projected ROI, because they reduce the size of the possible profit.
>If you take a dollar from every four dollars of corporate profits, corporations (meaning the compact created between shareholders) will have less money to invest with.
But since they're currently sitting on record high stacks of cash (Apple alone has ~1/4 of a trillion dollars), I wouldn't be too worried about that.
>The shareholders will also have less incentive to reinvest their dividends
They're currently sitting on record high stacks of cash because they have little incentive to reinvest. It's not about tax though, it's about a lack of demand (see original points one and two for how to fix that).
But since they're currently sitting on record high stacks of cash (Apple alone has ~1/4 of a trillion dollars), I wouldn't be too worried about that.
>The shareholders will also have less incentive to reinvest their dividends
They're currently sitting on record high stacks of cash because they have little incentive to reinvest. It's not about tax though, it's about a lack of demand (see original points one and two for how to fix that).
Corporations also have record high corporate debt levels right now. Cash reserves are vitally important as cushions to provide stability in a volatile economy that crashes every few years. Companies correctly became more conservative post-financial-crisis and built up their financial reserves, and that makes the economy as a whole less fragile and likely to suffer a cascading debt default crisis.
The attitude of wanting to violate other parties' property rights invariably comes down to a sort of arrogance in believing that the way the market works and the way people manage our own property is incorrect and that you have a better idea on how they should be using their property.
The attitude of wanting to violate other parties' property rights invariably comes down to a sort of arrogance in believing that the way the market works and the way people manage our own property is incorrect and that you have a better idea on how they should be using their property.
>Corporations also have record high corporate debt levels right now.
Strangely enough Apple is one of those companies taking advantage of near zero interest rates despite having 1/4 a trillion in cash.
If you make debt cheap enough it makes sense to do all kinds of crazy stuff.
>The attitude of wanting to violate other parties' property rights invariably comes down to a sort of arrogance in believing that the way the market works and the way people manage our own property is incorrect and that you have a better idea on how they should be using their property.
Some people believe that property rights should be configured to serve society's best interests. Other people believe that society should be configured to serve the interests of people with property (or, the market as you put it). One example of this type of person was Southern US slaveowners.
Strangely enough Apple is one of those companies taking advantage of near zero interest rates despite having 1/4 a trillion in cash.
If you make debt cheap enough it makes sense to do all kinds of crazy stuff.
>The attitude of wanting to violate other parties' property rights invariably comes down to a sort of arrogance in believing that the way the market works and the way people manage our own property is incorrect and that you have a better idea on how they should be using their property.
Some people believe that property rights should be configured to serve society's best interests. Other people believe that society should be configured to serve the interests of people with property (or, the market as you put it). One example of this type of person was Southern US slaveowners.
Right, but who knows how property is best configured to serve society. Given the market's profit loss system aligns the interests of private investors with the interests of society, private investors do. Not only do they have the right incentives, they have the local knowledge about a particular segment of the economy, that big picture politicians have no hope of acquiring when creating their clumsy plans.
A spending plan that's imposed with a stroke of a pen, and that recklessly interferes with hundreds of millions of people, and forces them into economic relationships with people based on crude categorisations, like income levels, and simplistic formulas, like those that determine eligibility for government assistance programs, is no substitute for the intelligently formed personal relationships and market transactions that spontaneously emerge when property and contracting rights are respected and protected. The latter is based on the unique knowledge of hundreds of millions of people, that is aware of local conditions and opportunities for optimisation.
As for slaveowners, what they have in common with socialists is a belief that they have a right to forcibly confine those who refuse to surrender their rights to them.
A spending plan that's imposed with a stroke of a pen, and that recklessly interferes with hundreds of millions of people, and forces them into economic relationships with people based on crude categorisations, like income levels, and simplistic formulas, like those that determine eligibility for government assistance programs, is no substitute for the intelligently formed personal relationships and market transactions that spontaneously emerge when property and contracting rights are respected and protected. The latter is based on the unique knowledge of hundreds of millions of people, that is aware of local conditions and opportunities for optimisation.
As for slaveowners, what they have in common with socialists is a belief that they have a right to forcibly confine those who refuse to surrender their rights to them.
> the cost of a college degree to a level that everyone can afford without going into debt.
The cost of an education is already free though. If you cannot learn from those resources, perhaps you are not cut out for the fast-pace world of automation anyway?
> people would take more classes and become more skilled and get higher paying jobs.
Is demand really going to grow that fast? Programmers make up about 0.8% of the population. Programmers can do relatively well because they are, relatively, rare. But if we tripped the amount of people working in software, you would still be only utilizing under 3% of the population.
If your training efforts were successful, I would expect more than 3% of the population having the necessary skills. That would result in much lower pay.
The cost of an education is already free though. If you cannot learn from those resources, perhaps you are not cut out for the fast-pace world of automation anyway?
> people would take more classes and become more skilled and get higher paying jobs.
Is demand really going to grow that fast? Programmers make up about 0.8% of the population. Programmers can do relatively well because they are, relatively, rare. But if we tripped the amount of people working in software, you would still be only utilizing under 3% of the population.
If your training efforts were successful, I would expect more than 3% of the population having the necessary skills. That would result in much lower pay.
"The cost of an education is already free though. If you cannot learn from those resources, perhaps you are not cut out for the fast-pace world of automation anyway"
This is a good point, except that what's actually expensive is the credential. The stranglehold of the universities on the credentialing process would have to be broken (also, at a higher level, the stranglehold of the accrediting agencies on the accrediting process).
This is a good point, except that what's actually expensive is the credential. The stranglehold of the universities on the credentialing process would have to be broken (also, at a higher level, the stranglehold of the accrediting agencies on the accrediting process).
I'm not sure the credential holds any value anymore. Maybe at one time there was the hope that it would represent something, but employers have data now (see: Google, EY, etc.) and it shows over and over that it is not an effective filtering mechanism.
The exception is the professions where the law requires it. Employers don't have a lot of choice in those cases. But those jobs specifically have that in place to reduce the numbers to artificially increase incomes. They explicitly don't want more people.
The exception is the professions where the law requires it. Employers don't have a lot of choice in those cases. But those jobs specifically have that in place to reduce the numbers to artificially increase incomes. They explicitly don't want more people.
That is strongly dependent on the field you're in.
You're probably not going to get a job in a Wall Street investment bank with a degree from Directional State University, much less with no degree at all.
You're probably not going to get a job in a Wall Street investment bank with a degree from Directional State University, much less with no degree at all.
> You're probably not going to get a job in a Wall Street investment bank with a degree from Directional State University, much less with no degree at all.
If true, that tells us that they already have more people then they could ever hope to choose from. After all, they'd be desperate enough to look outside that box otherwise.
So what is credentialing another person really going to add?
If true, that tells us that they already have more people then they could ever hope to choose from. After all, they'd be desperate enough to look outside that box otherwise.
So what is credentialing another person really going to add?
"If true, that tells us that they already have more people then they could ever hope to choose from. After all, they'd be desperate enough to look outside that box otherwise."
You are assuming that these decisions are based on rational criteria.
They aren't.
You are assuming that these decisions are based on rational criteria.
They aren't.
Where did I make that assumption?
Limiting selection to within degree holders very well may be irrational, but that's not what we are talking about. We're talking about the ability to fill the jobs that need to be filled. Since, as you claim, they have no need to look beyond those with degrees, then we know fundamentally that they already have every single person they need. That's basic arithmetic.
Again, what does adding another person with a degree bring?
Limiting selection to within degree holders very well may be irrational, but that's not what we are talking about. We're talking about the ability to fill the jobs that need to be filled. Since, as you claim, they have no need to look beyond those with degrees, then we know fundamentally that they already have every single person they need. That's basic arithmetic.
Again, what does adding another person with a degree bring?
"Where did I make that assumption?"
When you claimed that "looking outside the box" was an option. It isn't. A degree from Directional State University might be intellectually equivalent to one from Harvard, but socially it's not even close to being the same thing.
You are arguing from the standpoint of humans as homo economicus, in which companies will hire the cheapest workers regardless of outside factors. That may be mostly true for a sweatshop factory, but it is a long, long way from being true for investment banks.
When you claimed that "looking outside the box" was an option. It isn't. A degree from Directional State University might be intellectually equivalent to one from Harvard, but socially it's not even close to being the same thing.
You are arguing from the standpoint of humans as homo economicus, in which companies will hire the cheapest workers regardless of outside factors. That may be mostly true for a sweatshop factory, but it is a long, long way from being true for investment banks.
Tax money flows from organisations to people. The crucial idea: People are behind organisations.
This way owners of companies getting rich have to pay taxes for their robots. If they try to evade, government just has to wait for them getting the proceeds sooner or later.
A loophole is money leaving the country. Tax it as if it has been paid to a person.
This way owners of companies getting rich have to pay taxes for their robots. If they try to evade, government just has to wait for them getting the proceeds sooner or later.
A loophole is money leaving the country. Tax it as if it has been paid to a person.
I believe this is the paper about the declining labor and capital shares mentioned in the article http://home.uchicago.edu/~barkai/doc/BarkaiDecliningLaborCap....
I haven't read the paper you link to, but the comment:
"A new working paper by Simcha Barkai, of the University of Chicago, concludes that, although the share of income flowing to workers has declined in recent decades, the share flowing to capital (ie, including robots) has shrunk faster. What has grown is the markup firms can charge over their production costs, ie, their profits. Similarly, an NBER working paper published in January argues that the decline in the labour share is linked to the rise of “superstar firms”. A growing number of markets are “winner takes most”, in which the dominant firm earns hefty profits."
...is about the third one I have seen lately that the current financial system is not good at doing what it is supposed to do: allocate capital investment.
"A new working paper by Simcha Barkai, of the University of Chicago, concludes that, although the share of income flowing to workers has declined in recent decades, the share flowing to capital (ie, including robots) has shrunk faster. What has grown is the markup firms can charge over their production costs, ie, their profits. Similarly, an NBER working paper published in January argues that the decline in the labour share is linked to the rise of “superstar firms”. A growing number of markets are “winner takes most”, in which the dominant firm earns hefty profits."
...is about the third one I have seen lately that the current financial system is not good at doing what it is supposed to do: allocate capital investment.
I'm having a real hard time parsing that paragraph. Putting aside taxation, only two classes of people receive some share of income from production: workers & owners of capital. I don't understand how the income share could be declining for both classes simultaneously. Where is the 'missing' income going?
And bringing in the idea of winner takes all market structures just seems like a non-sequitur. I'm struggling to understand the causal relationship between market structure and the relative shares of income that go to labour and capital owners.
And bringing in the idea of winner takes all market structures just seems like a non-sequitur. I'm struggling to understand the causal relationship between market structure and the relative shares of income that go to labour and capital owners.
My original take on the statement was that corporate revenue wasn't going to either wages or capital investment. The other options are
1. The corporation's treasury, which is not economically useful past a certain point, or
2. Shareholders. In this case, since I don't see much evidence of major dividends, that would mean stock buy backs, which are not a great way of paying shareholders.
Returning money to shareholders is a great idea, if there is nothing better the corporation can do with it. If.
The paper is not making much sense to me, though.
1. The corporation's treasury, which is not economically useful past a certain point, or
2. Shareholders. In this case, since I don't see much evidence of major dividends, that would mean stock buy backs, which are not a great way of paying shareholders.
Returning money to shareholders is a great idea, if there is nothing better the corporation can do with it. If.
The paper is not making much sense to me, though.
Haven't read the full paper but is seems to suggest that returns on capital investments are declining because of consolidations.
Companies in dominant positions make huge profits(compared to the rest of the players), while those that are not in dominant positions make far less profit - but on average the returns on investment are on the decline. Furthermore the huge profits deincentivise risk taking for the dominants, hence they invest less.
But not being an economist, I may be way off.
Owners of brands. A company with a large market share and a strong brand can force its suppliers (including, for example, owners of the shops they rent), who are the ones making the investments in capital to accept tiny margins, and productivity increases mean that they can force their personnel to accept lower wages.
Before Bill agrees to pay back taxes on all of copies of Windows, MS Office and other robots that his company created, I don't think he has a right to advocate taxing robots. He became the richest man alive simply because he created company that helped people automate their jobs, and improve productivity.
Does he want to tax my scripts created to help me automate my servers? No, why not? Because they are just scripts? What if I put them on something like Raspberry Pi and attach wheels to it? Is it now taxable?
For fucks sake, how smart people can have such dumb ideas is beyond me.
Does he want to tax my scripts created to help me automate my servers? No, why not? Because they are just scripts? What if I put them on something like Raspberry Pi and attach wheels to it? Is it now taxable?
For fucks sake, how smart people can have such dumb ideas is beyond me.
It's hard to say how much of what Gates says/does is truly what he believes or is a branding exercise for legacy purposes. The robot taxation seems like populist appealing nonsense...
Particular workers may suffer by being displaced by robots, but workers as a whole might be better off because prices fall.
May... might... this is the argument?
Let's be clear: robots disrupt the supply side and help the demand side. Full stop. Let's not conflate the two in our arguments.
Yes, lower prices help the consumer. They also squeeze producers. See Amazon wage slaves -> kiva robots, or Apple FOXCONN factories -> robots, or Uber drivers -> self driving cars, etc etc etc.
When the producer is a human we have added constraints, whose cost goes up every decade and century: we want the human to...
+ Not starve... and now have a choice in good nutritious food from all over the world
+ Have access to water ... which is clean, potable and is pumped to their faucet automatically
+ Have healthcare ... that utilizes all the advancements of modern medicine to reduce child mortality etc.
+ Have primary education ... with multimedia on iPads instead of a huge backpaack of heavy books
+ Not be homeless ... while having their own apartment with enough living space to be comfortable
+ Utilities ... inclding broadband internet and a basic cellphone plan.
etc etc.
These demands are larger than, say, in medieval times, when serfs worked the land. We also have quite more wealth as a society thanks to advances in automation and information, and just building upon previous results.
Thus we can afford to get the basics taken care of unconditionally for all members of society.
It doesn't have tk be Unconditional Basic Income. A better method is Single Payer Systems, which we already have in many countries. Single payerfor education, public schools, healthcare, etc.
NOTE: this is not the same as government provided housing, education, etc. There shohld be vouchers that let people choose the provider. And it would only cover the basic service. Providers would compete to offer that basic service to the huge pool of buyers - WHO DO NOT COMPETE WHEN IT COMES TO THE BASIC SERVICE LEVEL. This is the key. Consumers compete on how much they pay, that's it. The single payer sets the price for the basic level. Prices therefore go down. (See eg Medicare or single payer systems around the world.)
For example a "Food Stamps for All" program where the first $100 a week is loaded onto SNAP cards for everyone, including millionaires. After that they are free to do whatever they want. We might even require (LOCAL!!) ID to use the card for food, to prevent ID theft. To starve, a poor person would have to explicitly sell their last food aftr buying it. Same with "Medicare for all" and "Housing for all".
This can be done on a local level. Everyone in NYC or SF gets taxed and gets $1000 a month in housing vouchers which landlords would be free to accept, or not. Most would, just like most doctors choose to accept insurance.
Where will that money come from? That's a silly question. People ALREADY have to pay for food if they live in a city. This simply makes the whole thing cheaper by squeezing the producers further. The producers may introduce robots, pay less to CEOs, or whatever, in order to get access to all that volume. But the one thing they won't be able to do is raise prices because some buyer might defect and pay them (shout out patio11). They can do that for premium services but never the basics. That is a GOOD thing for everyone because everyone needs the basics. Bill Gates said the burger still tastes the same when you are a billionaire.
So the end result is cheaper for the consumers, not more expensive. It is just a question of how to get from here to there. Being able to phase it in on a city level and really try it is a good feature of any program.
If you're a Conservative, consider that you most likely already support this in Primary School Education (vouchers and single payer for all) but for some reason oppose it in Healthcare etc.
If you're a Libertarian or Anarchist: listen, I'm a minarchist! I want to get government down to one thing: taxing and running single payer systems for thins we all need. Maybe that includes the army but nowhere near the amount the US has now. What I would like to see is single payer systems for basic levels of every thing people have come to expect.
The argument that someone is getting something for nothing is an even sillier argument.
We all live in the 21st century people!! Just by being born at a certain time we get things that even kings could only dream of, for nearly all of human history. Many people already have single payer systems.
And you are jealous that someone lives in the 21st century has a safety net, so if they don't work they don't starve?
You are jealous someone doesn't live as a serf on the land, who doesn't eat if he doesn't work?
You have the same protection! The same equal opportunity. Many of them are jealous of you for having been born in a more wealthy place.
Stop the jealousy. Single payer allows equal opportunity for all. It allows us to abolish minimum wage. Let people learn new skills, make contributions to copyleft / patentleft, discover new drugs, spend time raising their children well, instead of working a dead end uber driver or macsonalds job which will be automated soon. That's the real solution. If you're going to do anything, ensure everyone has the minimum first.
May... might... this is the argument?
Let's be clear: robots disrupt the supply side and help the demand side. Full stop. Let's not conflate the two in our arguments.
Yes, lower prices help the consumer. They also squeeze producers. See Amazon wage slaves -> kiva robots, or Apple FOXCONN factories -> robots, or Uber drivers -> self driving cars, etc etc etc.
When the producer is a human we have added constraints, whose cost goes up every decade and century: we want the human to...
+ Not starve... and now have a choice in good nutritious food from all over the world
+ Have access to water ... which is clean, potable and is pumped to their faucet automatically
+ Have healthcare ... that utilizes all the advancements of modern medicine to reduce child mortality etc.
+ Have primary education ... with multimedia on iPads instead of a huge backpaack of heavy books
+ Not be homeless ... while having their own apartment with enough living space to be comfortable
+ Utilities ... inclding broadband internet and a basic cellphone plan.
etc etc.
These demands are larger than, say, in medieval times, when serfs worked the land. We also have quite more wealth as a society thanks to advances in automation and information, and just building upon previous results.
Thus we can afford to get the basics taken care of unconditionally for all members of society.
It doesn't have tk be Unconditional Basic Income. A better method is Single Payer Systems, which we already have in many countries. Single payerfor education, public schools, healthcare, etc.
NOTE: this is not the same as government provided housing, education, etc. There shohld be vouchers that let people choose the provider. And it would only cover the basic service. Providers would compete to offer that basic service to the huge pool of buyers - WHO DO NOT COMPETE WHEN IT COMES TO THE BASIC SERVICE LEVEL. This is the key. Consumers compete on how much they pay, that's it. The single payer sets the price for the basic level. Prices therefore go down. (See eg Medicare or single payer systems around the world.)
For example a "Food Stamps for All" program where the first $100 a week is loaded onto SNAP cards for everyone, including millionaires. After that they are free to do whatever they want. We might even require (LOCAL!!) ID to use the card for food, to prevent ID theft. To starve, a poor person would have to explicitly sell their last food aftr buying it. Same with "Medicare for all" and "Housing for all".
This can be done on a local level. Everyone in NYC or SF gets taxed and gets $1000 a month in housing vouchers which landlords would be free to accept, or not. Most would, just like most doctors choose to accept insurance.
Where will that money come from? That's a silly question. People ALREADY have to pay for food if they live in a city. This simply makes the whole thing cheaper by squeezing the producers further. The producers may introduce robots, pay less to CEOs, or whatever, in order to get access to all that volume. But the one thing they won't be able to do is raise prices because some buyer might defect and pay them (shout out patio11). They can do that for premium services but never the basics. That is a GOOD thing for everyone because everyone needs the basics. Bill Gates said the burger still tastes the same when you are a billionaire.
So the end result is cheaper for the consumers, not more expensive. It is just a question of how to get from here to there. Being able to phase it in on a city level and really try it is a good feature of any program.
If you're a Conservative, consider that you most likely already support this in Primary School Education (vouchers and single payer for all) but for some reason oppose it in Healthcare etc.
If you're a Libertarian or Anarchist: listen, I'm a minarchist! I want to get government down to one thing: taxing and running single payer systems for thins we all need. Maybe that includes the army but nowhere near the amount the US has now. What I would like to see is single payer systems for basic levels of every thing people have come to expect.
The argument that someone is getting something for nothing is an even sillier argument.
We all live in the 21st century people!! Just by being born at a certain time we get things that even kings could only dream of, for nearly all of human history. Many people already have single payer systems.
And you are jealous that someone lives in the 21st century has a safety net, so if they don't work they don't starve?
You are jealous someone doesn't live as a serf on the land, who doesn't eat if he doesn't work?
You have the same protection! The same equal opportunity. Many of them are jealous of you for having been born in a more wealthy place.
Stop the jealousy. Single payer allows equal opportunity for all. It allows us to abolish minimum wage. Let people learn new skills, make contributions to copyleft / patentleft, discover new drugs, spend time raising their children well, instead of working a dead end uber driver or macsonalds job which will be automated soon. That's the real solution. If you're going to do anything, ensure everyone has the minimum first.
Literally one of the dumbest proposals I've ever heard. "I've got an idea, let's tax the people that are producing safer, more consistent, higher quality, less wasteful, more efficient, innovative products!"
the gov should tax algorithms instead.
think how many librarians (or other occupations) are made obsolete by google.
think how many librarians (or other occupations) are made obsolete by google.
And how many secretaries are made obsolete by Word and Outlook
A tax on tools, a tax on doing something more efficiently?