Robots that replace human workers should be taxed

Progress in robotics and so-called ‘weak AI’ suggests that a new wave of automation is coming, though the date of its arrival is still uncertain. Whereas earlier waves of automation mostly displaced working-class jobs (e.g. on assembly lines) the next wave will displace jobs with at least some cognitive (i.e. non-routine) aspects — which is one way of describing middle-class or white-collar jobs.

Nobody knows how quickly or how comprehensively this next displacement will be, but it’s clear that if some of the predictions are accurate a significant proportion of the middle-class might be hollowed out, which in turn could have serious implications for democracies (since a stable middle class has historically been one of the bulwarks of social and political stability).

The problem is compounded by the nature of digital technology (Thesis 1) and the fact that a smallish number of large tech companies are currently the leaders in these AI technologies. Deployment of them could result in massive productivity gains — and therefore increased efficiency and profits for the owners of the technology. But if nothing changes, the state will be left to pick up the pieces of this wave of automation. It will be the old story: profits privatised; costs nationalised.

The policy question then is: how are the social and economic costs of large-scale automation to be funded. Various proposals are already on the table — for example the idea of a universal basic income. Another is that when workers (who pay taxes) are replaced with robots then their owners should also pay a ‘robot tax’.

Further reading

Carl Benedikt Frey and Michael Osborne, “The Future of Employment: How Susceptible are Jobs to Computerisation?”, Martin School, Oxford University, 17 September 2013. http://www.oxfordmartin.ox.ac.uk/downloads/academic/The_Future_of_Employment.pdf

Richard Susskind and Daniel Susskind, The Future of the Professions: How Technology Will Transform the Work of Human Experts, Oxford, 2017. Amazon UK: http://amzn.to/2y3vgbu

Erik Erik Brynjolfsson and Andrew McAfee, The Second Machine Age – Work, Progress, and Prosperity in a Time of Brilliant Technologies, W.W. Norton, 2016. Amazon UK: http://amzn.to/2y2oIJZ

Elizabeth Kolbert, “No Time: How Did We Get So Busy?” New Yorker, 26 May, 2014. https://www.newyorker.com/magazine/2014/05/26/no-time

Lorenzo Pecchi and Gustavo Piga, Revisiting Keynes: Economic Possibilities for Our Grandchildren, MIT, 2010. Amazon UK: http://amzn.to/2z5wWkT

The Economist, “Automation and anxiety: Will smarter machines cause mass unemployment?”, 25 June 2016. https://www.economist.com/news/special-report/21700758-will-smarter-machines-cause-mass-unemployment-automation-and-anxiety