According to Henry Hazlitt’s, Economics in One LessonLinks to an external site., in Chapter Twenty-One, “The Function of Profits,”
Profits, in short, resulting from the relationships of costs to prices, not only tell us which goods it is most economical to make, but which are the most economical ways to make them.
This seems like a relatively simple idea most resembled by the free market. In labor markets, firms have replaced human workers with automation, i.e. robots. Other things equal, robots are a more economic/efficient way to make some goods and services. However, Bill Gates, one of the richest men in the world, argues the following:
In a Quartz interview, Bill Gates proposes Robots are taking human jobs. But Bill Gates believes that governments should tax companies’ use of them, as a way to at least temporarily slow the spread of automation and to fund other types of employment. It’s a striking position from the world’s richest man and a self-described techno-optimist who co-founded Microsoft, one of the leading players in artificial-intelligence technology.
In a recent interview with Quartz, Gates said that a robot tax could finance jobs taking care of elderly people or working with kids in schools, for which needs are unmet and to which humans are particularly well suited. He argues that governments must oversee such programs rather than relying on businesses, in order to redirect the jobs to help people with lower incomes. The idea is not totally theoretical: EU lawmakers considered a proposal to tax robot owners to pay for training for workers who lose their jobs, though on Feb. 16 the legislators ultimately rejected it.
“You ought to be willing to raise the tax level and even slow down the speed” of automation, Gates argues. (ZeroHedge, March 2017)
Your assignment for this post is to read Chapter 21 of Henry Hazlitt’s, Economics in One LessonLinks to an external site., and prepare your best economic argument in favor of or against the idea of taxing robots to slow down the speed of automation. Discuss how the tax will increase or decrease efficiency, equity (fairness) and the distribution of income. Your post should be based on positive economics, economic theory and modeling, facts and data, and not based on your opinion.