Lauren Gonzales. Period 03. Honorbound.
The constant technological innovation contributing to the increasing productivity of America’s firms is leading us into uncharted territory as far as regulations go. While this seems like a good advancement, there are negative externalities that come with it. Robots are replacing humans to do jobs better and faster than before which is putting these people out of work. For them, robots are not very appreciated. To combat this, some people propose a tax on robots. This could discourage further innovation, or, as Bill Gates believes, “Perhaps rapid automation threatens to dislodge workers from old jobs faster than new sectors can absorb them. That could lead to socially costly long-term unemployment, and potentially to support for destructive government policy” .
An article in The Economist wrote about the issue and said, “Economists typically advise against taxing such things, which allow an economy to produce more. Taxation that deters investment is thought to make people poorer without raising much money” . The issue is that the even with a tax on robots, workers who have been let go would be worse off, but workers as a whole would become more productive. They would be motivated to do their jobs better or they could help operate the robots themselves. Either way, the market would suffer if the government stifled the production of more complex and talented robots. In Liberty and Property the author Ludwig von Mises writes, “It is customary to see the radical innovations that capitalism brought about in the substitution of the mechanical factory for the more primitive and less efficient methods of the artisans’ shops. This is a rather superficial view. The characteristic feature of capitalism that distinguishes it from pre-capitalist methods of production was its new principle of marketing. Capitalism is not simply mass production, but mass production to satisfy the needs of the masses” . Since we are a capitalist society in America, it is important to remember that individual firms are doing their own work the best they can in order to maximize their own profit. If this is going to happen, the businesses will choose investing in robots over keeping one hundred employees because it will allow them to put more money into their pockets. If one robot can do the work of all of a firm’s workers in less time then those workers will be let go. However, the economy will adjust and prices will fall. This is because the companies will not be spending so much on paying employees and the price of their goods can go down if they are producing three times as many by using a robot. The low prices will help these people while they are looking for more work, but that time they spend unemployed will be tough.
A tax on robots would not help stop this because then prices will remain the same or increase and our overall technological potential will not be met. The rising number of robots in America can be intimidating because it is so new but our capitalist society and economy will benefit from it as long as they are not taxed. This is a topic that should be discussed more among politicians and business owners as well as employees so that the best agreements are reached.
- Economist.com. Accessed April 28, 2017.
- Ludwig von Mises. Liberty and Property. Accessed April 28, 2017.