A robot tax punishes people

Life is much better today than it ever has been in history. Since the Industrial Revolution, in particular, new technologies and labour-saving devices have benefited the average worker a great deal. Unfortunately, it seems that some people haven’t got the memo yet.

In modern history, humans have demonstrated a fear of technological progress and its consequences. The Luddites took it upon themselves to destroy looms and knitting frames, which they feared would take their jobs, and it appears as though a Labor government would like to revive the primitive practice.

The Labor Party are tipped to back a new ‘robot tax’ which flies in the face of human progress and promises to constrain the ever-rising living standards the past few hundred years have brought us.

The new tax would be aimed at funding the retraining of workers displaced by technology so they can move into jobs of equivalent conditions and pay. In reality, the tax will punish those who innovate and who use innovative technology to the detriment of the average person.

Labor’s mates over at the Australian Workers’ Union are pushing for them to adopt the policy, with national secretary Daniel Walton claiming that automation is a  “once in a lifetime disruptive economic event”. Walton is of the mindset that the government must do something about this supposed social ill.

The solution the AWU is propagating is bound to fail. And while I’m sure Walton’s heart is in the right place, the premise is flawed and the policy will prove costly.

Claiming that workers would be “punished” by increased automation and digitisation, Walton asserts that it is the government’s role to ensure that these people can be “retooled and redeployed” into equivalent jobs and that the government must have necessary revenue to facilitate this.

The idea that workers will be punished by automation and digitisation is inherently flawed. I wonder if Walton uses a washing machine or a dishwasher? These white goods don’t punish anyone who is fortunate enough to own them. In fact, they are the very invention that liberated women from the punitive gender-norms those in the Labor party are quick to condemn.

Should we introduce a tax on household machines, then? Labor and the AWU can’t be happy that they have displaced women from their job in the home. And where should we stop with this tax on technology? Should we tax email for destroying jobs in the postal service? How about automated machines which remove miners from dangerous underground conditions?

A regressive policy of taxing innovation seems like the Labor Party shooting itself in the foot. So why would they support it?

Scaremongers would have you believe that automation will steal your job, and so it must be stopped, restricted and taxed.

This argument was addressed by Tim Worstall last year. He argued that “adaptation to shifting technology is not a dramatic rupture, but a constant process”. While on the face of, it reports that up to a third of jobs will be lost to automation by 2030 seems confronting, this is a simplistic view.

As highlighted in the article, up to 10 percent of jobs are already lost every year in the UK. The beauty of the market economy however is that these are replaced by newly created jobs, with unemployment being the slight difference between the two, which usually comes down to the bad luck of timing.

So, many jobs are created and destroyed each year; technology is constantly improving, and the labour market is constantly adapting. If there were a sudden shift however, would the government be well-equipped to manage and speed up the process of structural unemployment?

Quite simply, no. The idea that a central planner has the foresight to know what kind of jobs individuals should be reskilling for is flawed. If this were the case, why would there be any structural unemployment ever? Central planning cannot match the efficiency of spontaneous order and market forces, the price mechanism, not a beaurocrat, is the fastest way to signal where employees are needed.

And as for claims that the government should ensure that individuals can move into equivalent employment – this is perhaps an even more misleading line.

The rise of technology allows for individuals to move into far superior employment. It allows for safer, cleaner, more efficient workplaces. It reduces the cost of menial tasks, such as washing clothes and dishes, and frees up time to be better spent on more productive or enjoyable things.

So, should the government introduce a new tax on robots? No. Can some supposedly all-knowing, ever-intelligent beaurocrat direct the retooling and redeploying of thousands of workers each year? Certainly not.

As Adam Smith noted in 1759, we should be sceptical of central planners who think they can shape society. It would be folly to allow central planners to place punitive taxes on uses of arbitrary pieces of machinery to raise money for a policy they couldn’t possibly make effective.

Living standards have increased immensely with the rise of technology. Automation shouldn’t be supported for the sake of it, but should be supported as it has proved to be an effective means of allowing individuals to lead better and more meaningful lives.

Automation and technology should be embraced rather than feared: history has shown their value in freeing individuals from menial and dangerous tasks, allowing them to enjoy more leisure time or to move into a safer, better-paid and more productive job.

Cian Hussey

Cian is a Research Analyst at the Mannkal Economic Education Foundation.
Cian Hussey

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1 Comment on "A robot tax punishes people"

  1. Good article Cian.
    There is another argument against automation that I think libertarians should take. I recently finished writing about how central government planning has to lead an unhealthy reliance on technology. https://dunconomics.blog/the-addictive-cost-of-technology
    Kind regards,
    Duncan

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