Tuesday, June 20, 2017

Taxing Robots: A Naive Appreciation

First, I wish to make clear that any redistribution of wealth is in itself disruptive and polarizing. It is a brutal admission to the failure of a political economy to provide, at once, prosperity and the general welfare. Taxing robots is such a redistribution of wealth and such an admission of failure. This being said, such a tax or usage fee would manage disruption to the gain of the entire society and should be countenanced given the power and reach of smart machines. Realistically they could replace all but the most talented of us economically in the near future.
We have, since Joseph Schumpeter formally identified it, been in the business of the unprincipled business of managing disruption with a constant eye, and a shifting focus, to both prosperity and the general welfare. It is time, in that cycle, in the face of the enormous potential impact of robots and AI, to shift focus once again to the general welfare. How can this be done without destroying the market basis of material existence?
I see a bipartite process of shoring up the existing employment by mandating a Living Wage and, for all those employed by corporations, mandating affordable stock options for all employees and substantial severance packages including stock and stock options. Had these conditions been met thirty years ago, we would be much better off but still behind the curve of the catastrophic disruptive effect of smart machines. In view of this creative destruction tail wagging the dog of Life, Liberty, and the Pursuit of Happiness, intervention, however unprincipled, is in order.
Secondly, I see room for the mandated issuing of licences to deploy Artificial Intelligence and robots with a significant licencing fee. Would this inhibit disruption? Yes. Does disruption need inhibition? Yes. Unless the cost/benefit of deploying new technology includes the cost of dislocation the accounting cannot hold. Vast economic disequilibrium will occur driving market irrationality. That market insanity is, without qualification, the failure of a capitalist political economy. It requires immediate redress, and, in a heuristic unprincipled fashion, prescriptive remedy to prevent such future events. This is an attempt at such remedy and while these remedies notoriously fail in a shower of unintended consequences, as noted by Adam Smith, the history of these attempts compose a narrative from which patterns can be analyzed and more successful remedies made. As in the old saying, Rome wasn't built in a day.
This licencing fee would be significant enough, but well within what the market will bear, to fund free tuition at  the post-secondary level and a subsistence basic income for those displaced even marginally by new technology. The fee has no basis in theory, is derivative of the injunction to provide for the general welfare, and is strictly a management technique in the measured adoption of innovation. It would provide until such time as stock ownership is common, dividends are given due regard, and wholly irrational market dynamics subside.
This suggestion is not made lightly. I believe that markets allocating resources to relevant talent provide the true basis for reasonable, humane social existence. When they do not provide that basis then that is a market failure and, in consequence, a social failure. We are at present flirting with social decay and facing social disintegration in the near future. This is no time for escapism or kneejerk views of the political economy. This is a time to reason and respond ahead of the curve of innovation.