There was an interesting opinion piece in the Wall Street Journal this morning about the “Bill Gates robot tax”, reflecting a proposal by Mr. Gates to place a tax on robots. The purpose of the tax would be to replace tax revenues if those robots cause a reduction in said revenues through automation of manual labor and a subsequent loss of jobs.
There are two ironic points in this statement by the world’s richest man. The first, well covered in the opinion piece by Mr. Kessler, is that Bill Gates has automated away more manual, boring jobs through his software than probably anyone else in the world, including the iconic Henry Ford. Did Microsoft’s innovation result in apocalypse-level unemployment and a catastrophic loss of tax revenues by the free and not-so-free world? No. On the contrary he created, as did Henry Ford, the opportunity for and reality of exponentially more jobs than he replaced. In addition these jobs are of far higher quality and higher pay than the jobs that were replaced.
Mr. Kessler in his opinion piece discusses the New Luddites, a group that hearkens back to the days of little to no technology when, in their Utopic fantasies, people lived long and bountiful lives of leisure without the evils of the Internet, Facebook and iPhones. These Luddites share common ground with the Malthusians who believe that man’s very existence is the “original sin”, and that any evolutionary advancements by mankind must by definition be assumed to be evil in nature and action.
The second irony that I believe was missed in this opinion piece is that should Mr. Gates want to increase the tax revenues of the world’s governments, he has the singular ability to effect that more so than any other individual in the world. He and his company simply have to stop employing the tax strategies they currently employ to avoid paying their full tax burden. If he really wanted to put his money behind his words he could even, heaven forbid, give a large portion of his significant wealth each year to the governments that he feels would spend his money so wisely.
Mr. Gates has stated previously that the rich should pay more in taxes. If he believes that governments are eminently wise in their ability to spend tax payers’ hard earned dollars, why doesn’t he take the billions of dollars in his foundations and give it to the world’s governments to better the lives of millions of people? The answer is both obvious and simple. Mr. Gates knows that even relatively non-corrupt government bureaucracies excel in their ability to make a billion dollars disappear into thin air with zero to little change in the quality of life of the taxpayers they purport to represent.
So before proposing a tax on both progress and growth, Mr. Gates, please reflect upon the ramifications of your proposal and the reasons why you try to minimize the tax burden on yourself and your shareholders while offering to increase the tax burden on others.
It makes a world of sense that you approached a third-rail topic from the perspective that you did.
My weekend routine is to get up around 4:30 and get in four or five hours of work while the Mrs is asleep, that way I minimize the impact of work on the time her and I spend together- I know this is an innocuous detail- but it is these moments of time, while working and listening to the news- that I let my mind wander. In my wanderings, I wondered to myself why it is always those clamoring for more social benefits to be paid for by the rich, when they themselves refuse a flat consumption tax? If they want so badly, and feel so strongly that there should be these socially supported services, than why do they themselves resist supporting with their own tax contributions? (In response to Assemblywoman Susan Talamantes Eggman’s Assembly Bill 1356 that would tax those making $1M or more)
Similar to the opinion of Mr. Gates, she wishes to levy taxes against anyone else other than herself to pay for what she believes in, but is unwilling to support it herself, just as Mr. Gates is unwilling to support his beliefs with his own tax contribution.
On the topic of the New Luddites/Neo-Luddism, I’ve come to the conclusion that not all people are created equal. If we were, anyone of us could be a world class thinker, scientist, philosopher, musician, athlete… etc… If we were all equal then the liberal philosophy that a “rising tide floats all boats” would be true, and if so, then in the advance of technology, all persons would have equal access to the “better jobs that are created by the advance of technology”. Simply put (in my opinion) there is no equal access to all.
For example, when automation displaced middle tier automotive workers, these workers had three choices:
1. Lateral Move to a Similar Skill Set
2. Move upward in the socio-economic model and compete for work via retraining or advancing their degree/certification
3. Move down (the most common path) in the socio-economic model and further displace another segment of the work-force.
The third option has resulted in more and more people turning what traditionally have been part-time, transitionary service industry jobs into careers. They in turn, push those with less education, certifications, and or skills out of the work-force at that level- where do these people compete? They have the same three options as the middle tier did.
We are not all created equal-whether that is by birth or choices in life. Yes we have equal opportunity, yet not everyone has the same level of common sense to make the right decisions to be qualified for the opportunity. Technology is only going to further separate the wheat from the chaff.
I know my perspective is bleak- but it is an ever growing reality that the divide between the classes is only widening and the demand for “equality” growing. The reality is we are not all equally entitled to the same comforts of others, yet in our era of liberalism and participation trophy’s, people feel entitled to the benefits from the work of others.
This whole conversation of robots and automation brings North Central Positronics to mind… a great read- even if just for an adventure of the mind.
I like your analysis Robert, thank you. Lots of insight in there, so to avoid a blog length reply I’ll just address one astute observation of yours. I agree, as much as it is a socialist dream that all people have equal potential, it has never played out that way. You can’t blame nurture over nature 100% of the time with any credibility while simultaneously ignoring free will. I do subscribe to the idea that a society has a moral obligation to allow Every person to achieve their potential, whatever that may be. The greatest will always be (tautologically) higher achievers than the rest. But everyone else can follow their model, and given a society that allows the ability for unlimited achievement, achieve far great accomplishments than they otherwise would have even conceived. Post-objectivism in a nutshell. 🙂
Well said sir! Perhaps (and not to segue to another topic) the Utopian equation is just that- the tautological formula where a society truly and wholly allows every person to achieve their true potential, whatever it may be. Not every person’s potential is the same- nor are our destinies the same. I’ll save that for another time. My goal is to read at least one of your posts a week until I am caught up.
Thank you Robert!
Amen Eric! And we won’t hold our breath waiting for Mr. Gates to propose taxes on the streamlined efficiency and reduced labor that are a result of his software.
Not likely, Mark. “Some animals are more equal than others.”
Great article Eric. It has always been my opinion that the very rich entrepreneurs like Gates and Buffett talk about making the rich pay more taxes because they want the targets on their backs to shrink in the eyes of the politicians supporting higher taxes. If they support the causes of those politicians then those politicians won’t be so quick to come after their money. Gates’ proposal is in response to the rash of articles that have been floating around Europe all of last year about Artificial Intelligence and new levels of automation taking away more jobs. Since most European countries are quasi if not fully socialist, this presents a huge problem. Some countries, like Finland and the Netherlands are experimenting with providing a “basic income” that will allow people to survive even if they don’t work, and this income would be provided to everyone, even if they did work. As you can imagine, the cost of this is enormous, and socialistic style governments would need to get that money from somewhere. Since it’s the “robots” that are robbing the tax producing jobs, then they should be the targets of any needed taxation. This takes the target off of Mr. Gates’ back and gives the governments a huge population of tax payers depending on how the governments decide to define “robot.”
I think that as long as Bill Gates and Warren Buffett continue to be among the richest men in the world, we will continue to hear ideas such as this coming from them as they continue to deflect attention off of their individual successes and wealth.
Thanks for reading and for the additional insight Sean! One, perhaps too cynical, perspective on why the uber-rich (e.g. Gates, Buffet, Soros) say the rich should be taxed more is that it makes their status even more difficult to attain and therefore more desirable.
“…it makes their status even more difficult to attain and therefore more desirable.”
That is something they do not want us to understand. It explains why they rebuke the flat tax, using the facade of unfairly affecting the poor as their excuse.
Excellent observation sir.