Modern-Day Luddites Want to Tax Robots

Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

“If a human worker does $50,000 of work in a factory, that income is taxed. If a robot comes in to do the same thing, you’d think we’d tax the robot at a similar level.”

— Bill Gates

South Korea is very different from its hostile northern neighbor in two ways. First, it has maintained open and friendly relations with the western world. Second, the country has a reputation for having some of the most advanced technology not related to warfare within its borders.

That second difference recently led to South Korea indirectly imposing a robot tax. I say indirectly because the country hasn’t imposed a tax on robots themselves, but on the acquisition of robotic technology. Simply put, South Korea has reduced the deduction that companies within the country can spend on automation equipment (including robots) from 7% to 2% of their investment.

Now, I’m willing to admit that public opinion about robotics takes one of two stances – either it is the next best thing or it is eventually going to replace all human jobs. Most people, though, are still figuring out their initial stance on robots and not even thinking of government regulation.

However, even as South Korea imposes a robot tax, the same issue is being considered in America. Bill Gates has spoken out in favor of a direct robot tax, and a San Francisco official has been advocating a robot tax just this week.

On the other hand, Doug Casey recently wrote, “What would have happened if government had decided to do something about the rise of the cotton gin during the first Industrial Revolution? Or mechanical weaving machines, which unemployed millions of “cottage industry” spinners and weavers working with primitive foot-powered looms in their shacks? The Bessemer furnace, the steam engine, the railroad and a thousand other technologies in the first industrial revolution?”

Back in the time of the Industrial Revolution, these technophobes were known as Luddites. In the early 19th century, British workers wanted to destroy the cotton machines to save their jobs.

I remember back in the 1960s how some pundits warned about the threat of “automation.” It never materialized. More new jobs were created than old jobs destroyed. It is no different today. Robots are replacing workers when it’s more productive to do so. That means workers are free to do other work, resulting in new jobs. It all comes down to a question of faith — how much faith do you have in the creative disruption of capitalism?

I also believe that the way labor and human effort itself is viewed will play a big role in determining the world’s approach to this issue. Karl Marx and other Socialist thinkers have tried to quantify all labor in terms of the end result – that a man is worth only what he can produce (also known as the Labor Theory of Value).

Meanwhile Adam Smith in his book The Wealth of Nations says that, “Labour was the first price, the original purchase-money that was paid for all things. It was not by gold or by silver, but by labour, that all the wealth of the world was originally purchased; and its value, to those who possess it, and who want to exchange it for some new productions, is precisely equal to the quantity of labour which it can enable them to purchase or command.”

Which mindset would you rather work under?

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Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

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