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6 years ago

Is taxing technology a viable option?  

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 Both data and theory suggest that job loss threat due to advanced technologies like Robotics and Artificial Intelligence (AI) is real. The basic purpose of technology development is to delegate roles from human to machines to get jobs done better at lesser cost. So, job loss with the growth of technology is a must. But if the production of better products at lesser cost powered by technology progression expands the demand at faster rate than the job loss rate, the net effect of technology on job is positive. Historically, we have been blessed with better jobs, and also more jobs, although technology progression killed jobs--mostly low value addition ones. Our challenge was to reskill people with new capabilities to operate advanced production equipment to play more productive roles. As a result, income also went up, due to higher productivity. But this time, technology is posing threat to take away the whole task of production from humans. Although demand is expanding, but the rate of job loss is accelerating-widening the gap between jobs lost and created. Unlike the past, deployment of advanced technologies into production is also reducing wage. For example, according to research of two US professors on implications of Robots on US labour market indicates, "one more robot per thousand workers reduces the employment to population ratio by about 0.18-0.34 percentage points and wages by 0.25-0.5 per cent." Basically, the impending threat is that income level of people will keep eroding with the increasing use of advanced technology, leading to layoff. So, a major debate is on over the policy issues to deal with such situation.

How big is the job loss threat? According to many studies published in the recent past, basically all countries are feared to experience 30 to 60 per cent job loss over the next 20 years. The New York Times reported the Ford plant in Hangzhou and Cadillac plants in Wuhan and Shanghai are utilising robots for jobs that less than a decade ago were once handled by humans. In these plants, robots are cheaper than $4 to $6 an hour blue-collar jobs. It's quite alarming that less developed countries are more vulnerable than richer ones.

Another question could be the rate at which job loss is likely to occur. Will it offer us enough time to accommodate change and find alternative means? It seems that high job loss rate will offer us very little time to accommodate and adjust. For example, as an economically viable option, aggressive strategy of killing jobs with robots to reduce the rate of factory relocation in other countries has accelerated robot deployment in China. More or less, 100 million such jobs are the target of being killed in China alone-- already 2 million killed in 2013-2015.

Despite such rapid job loss rate, it's surprising that some politicians, economists and academics are under the impression that history will repeat itself: new technologies will eventually create new and better jobs. But some are getting baffled by the threat of unprecedented threat of massive job loss in a very short period of time, resulting in creating imbalance in social and economic order. To address such threat, one of the common policy recommendations is to impose tax on technology, as suggested by Bill Gates.

Economists such as Professor Benjamin Sachs of Harvard University are also pointing to a proposal for a 'robot tax'. In short, identifying a point in a business's operations where jobs begin to be displaced by robotics/artificial intelligence and levying a tax at that point. The tax revenues could be used to fund unemployment and retraining schemes as well as mitigate some of the lost revenue. Taxing robots is apparently an easy solution for policy makers. It has diverse negative implications. First of all, we need to accelerate advancing technologies like robotics, automation, 3D printing and artificial intelligence as we need to create more wealth from depleting resources causing less harm to the environment. The second point is that it's difficult to implement. As robots are showing up in different forms in the society, often in invisible forms, it is difficult to distinctly identify tax items. As job killing is the basic purpose of advancing technology, should we than tax all technology advancement? Should we start imposing tax on software applications like electronic spreadsheets, as these software products have taken away jobs of bookkeepers or accountants?

Advanced technologies not only pose threat to unemployment, but also increases market power accumulation for monopolies. In a business-as-usual situation, human free monopoly is the destination towards which we are progressing. How to deal with such market power accumulation is also a growing issue. China's massive deployment of robots is no longer a domestic issue, as it opens the opportunity to china to monopolise the global manufacturing market. It's quite understood that robot has become a very timely, strategic tool for China to protect the out-migration of 100 million labor-intensive manufacturing jobs. As China's population is ageing, low cost robots have become a very timely helping hand. But, such job killing strategy to deploy robots is posing threat to global social and economic order, as it will widen trade imbalance and create discontinuity in development pathways of many developing countries. There should be global level trade policy response to deal with such growing threat of monopolisation, creating imbalance.

Virtually, the scope of debate of advanced technologies-- whether we call them robots, 3D printing, sewbot or artificial intelligence-- is gradually getting focused on job loss issues. Taxing may not be a preferred option in all situations, as it will slow down the economic growth. But in certain situations like China's massive deployment of robots posing threat to global social and economic stability, taxing could be an unavoidable solution.

Robotics and AI pose apparently unmanageable challenge to job loss issue. If we are slower than our competitors in adopting automation, we fall behind in offering better products at lesser cost; consequentially, our sale comes down leading to layoff. On the other hand, if we adopt higher level automation to remain competitive, people are replaced with machines.

Slowing down the progression with taxation may not also work in real life. We have basically a very weak option to delay the change. Market force is quite strong to take the advantage of job killing technology to increase profitability. On the other hand, US led protectionism is also contributing to accelerated adoption of automation, as a substitute to immigrant labour force and also offshoring. We need to make social and political forces in favour of us giving adequate space for adaptation, and also supporting those innovations which create alternate job opportunities for people likely to be displaced from existing jobs. We need to change views of major actors about the likely unfolding reality of job loss scenario and to design realistically possible interventions to counter threat and leverage possibilities.

M Rokonuzzaman Ph.D academic, researcher and activist on technology, innovation and policy. [email protected]

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