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Why the UK Should Tax Robots Post-Brexit

by John Brian Shannon

One point that never seems to get enough attention in the UK and other Western democracies is that there are always more job-seekers than jobs available.

It doesn’t matter which country, which decade, which party is in power; There are always more people looking for work than there are jobs available and it remains a permanent condition in Western countries, much like the cosmological constant that defines the universe remains a permanent condition.

Telling people to “Get a job!” to solve their poverty issue or quality of life issue isn’t the answer to handle a force majeure like an eternal shortage of jobs. If everyone who could be employed followed that advice there would inevitably be 10% of the population who would miss out on a job simply because there isn’t the level of demand necessary to employ everyone who wants to work (or who needs to work to pay the bills) in any Western country. (Remember, official unemployment figures show only the number of people receiving unemployment insurance payments, not those who’ve exhausted their UI benefits and still want to work, nor do official figures show those who gave up looking for work and returned to college, or became a homemaker or unpaid intern, etc. There are significant numbers of these people in every Western nation)

Indeed, our Western economic model is predicated on human redundancy which works to keep significant downward pressure on wages, and that helps business to control their labour costs and thereby contributes to the bottom line.

It’s not that companies are evil entities, everything they do in this sphere is legal and is considered normal practice in our economic system. So, if you’re blaming industry for this state of affairs, I’m sorry, you’ve missed the point.

Government regulation over many decades have produced this result and it’s only government regulation that can solve or mitigate the consequences of this unfortunate situation, which has evolved it must be said. Nobody would create such a system from scratch. The system has evolved in piecemeal fashion.

Yet as creaky and wobbly as it is, it works. But it’s costly and it underperforms compared to what could be done.


The Robot-Tax Tour!

With all of that in mind, let’s go on a little tour to show us what rolling all social welfare programmes into one streamlined entity can do for the UK and it’s citizens, and what a low-ish tax on robots could do to pay for that all-in-one social care system:

  1. Imagine a low-ish tax on robots in the UK that accumulates enough annual revenue to pay for the country’s welfare system, disability benefits system, Universal Credit system, is able to top-up the monthly income of poverty-stricken senior citizens to a minimal level, end the need for food banks, solve homelessness and homeless-related costs like policing, court, and incarceration, and do away with the need for many overlapping social welfare programmes at all levels of government.
  2. It’s important to remember that all these programmes are already paid for by various levels of government and that I’m merely proposing to roll all of them together into one super-streamlined programme and have a ‘robot tax’ pay for it.
  3. Let’s also say there is massive duplication of services (there is) in all of these present-day programmes and that such duplication is costly to the various levels of government and to the taxpayer who pays every penny of it through taxation.
  4. The prime beneficiaries of all that paying seems to be industry, which enjoys the benefit of a labour pool permanently mired in a state of ‘job insecurity’ that works to keep workers ‘hungry’ for work and working for wages lower than would otherwise be the case. Shareholders around the world admire your contribution to their annual dividend payments!
  5. At present, robots aren’t taxed in the UK. Yet, these job-stealing marvels produce many times the output of a human being. Which means that if “Robert the human” produces 100 widgets per day, a robot can produce 1000 widgets per day. This means that “Robert” and 10 other people like him can be replaced by ONE ROBOT. But that statistic doesn’t tell the whole story because ONE ROBOT can work much faster than “Robert the human” and it can work for the full 24-hours and produce 10,000 widgets daily; Meaning ONE ROBOT can replace 1000 “Roberts”. The ratio then, is likely around 1/1000. Each robot replaces 1000 workers. See the future more clearly now?
  6. So, if one robot can replace 1000 workers and thousands of robots are going to take almost all manufacturing jobs, almost all agricultural jobs, almost all call centre jobs, and almost all clerical jobs, how many people will become “redundant” by 2033? And the answer according to the highly respected PwC is; 50% of all workers.
  7. Yet, even with those changes on the horizon (remember, this is already happening, it isn’t going to suddenly start in 2030 and be completed by 2033) it’s happening now and not one word about it has been uttered by world governments. Or maybe they know enough to keep quiet about the fact that EACH ROBOT can replace 1000 workers, thereby improving profits for companies. And as long as taxpayers aren’t rioting about it then maybe taxpayers finally accept that they exist, in part, to subsidize corporations.
  8. Another major consideration is that for each 1000 jobs replaced by ONE ROBOT the government is losing the income tax revenue generated by 1000 workers! The government must also pay former workers unemployment insurance payments or Universal Credit / welfare payments, or pay them via other anti-poverty schemes. Perhaps politicians think taxpayers don’t mind paying for all those costly and sometimes overlapping social programmes to support people whose jobs have been replaced by technology? That’s in addition to paying mega-millions to cover the costs of homelessness (in cases of long-term unemployment) and the crime / policing / court costs / incarceration costs that are associated with homelessness, illicit drug use, and other medical and mental health related costs. To put numbers on only a small part of this problem, each UK prisoner costs the taxpayer £81,000 per year to house + free medical + free dental + free prescription medications. Wouldn’t you rather have it that robots paid poverty-stricken people £13,056/yr + free medical + free dental + free prescription medications to help prevent them from ending up in prison in the first place?
  9. It’s not about being a Luddite! It’s about helping industry hire as many robots as they want (guilt-free!) yet taking care of living, breathing human beings in the meantime. That way, UK businesses can thrive as never before, hire only the humans they need, and still have a large pool of human labour to jump-in on an as-needed basis to fulfil those functions that robots can’t easily perform, such as customized or highly specialized orders.
  10. By rolling all UK anti-poverty programmes into one streamlined single-payer system and paying for it via a reasonable tax on robots, human workers can continue to live, eat, and remain housed (and remain ready to work on an as-needed basis) and UK corporations can begin to reap unprecedented profits!

Tax robots in the UK.

2018 looks to be a good year for world’s top industrial robotics companies, with many of them innovating and simplifying the industry. Industrial robotics services are also benefitting, expecting an incremental growth of well over $4 billion by 2021. Image courtesy of Technavio.com


ONE SYSTEM INSTEAD OF MANY

How to accomplish all of that? By switching all anti-poverty programmes in the UK into one streamlined single-payer system that pays every unemployed adult £1088/mo + free medical + free dental + free generic prescription medication. (This option is limited to those earning less than £13,056 per year from all sources, according to their latest income tax return)

LOW-INCOME UNEMPLOYMENT INSURANCE RECIPIENTS PAID BY THE SINGLE-PAYER SYSTEM

Due to previously working at a low wage job, a person receiving unemployment insurance payments may receive less than £1088/mo. from their unemployment insurance plan, therefore in such cases the single-payer administration would simply ‘top-up’ their monthly payment to £1088/mo. + the healthcare benefits listed above.

It would become one step easier by having the single-payer assume full responsibility for payments to that person and the unemployment insurance administrator would simply reimburse the single-payer administration the monthly amount they would’ve paid to that unemployed person anyway. (Limited to unemployed adults earning less than £13,056 per year from all sources, according to their latest income tax return)

LOW-INCOME SENIOR CITIZENS PAID BY THE SINGLE-PAYER SYSTEM

To lift senior citizens out of extreme poverty and to allow them to live a more dignified lifestyle (in return for helping to build the great UK we see today!) and be better positioned to assist younger members of their family, any senior who reports less than £13,056 annual income would have their monthly income ‘topped-up’ to £1088./mo and receive the same benefits as anyone else on the single-payer system. (£1088/mo. + free medical + free dental + free generic prescriptions)

Again, a government or private pension plan is already paying those seniors a predetermined monthly amount. All the single-payer system would do is ‘top-up’ the income of seniors to the £1088./mo (plus the benefits above) and those pension plans would simply transfer those payments to the single-payer administration which would merely ‘top-up’ the difference in the monthly amount and pay the senior directly. (Limited to seniors earning less than £13,056 per year from all sources, according to their latest income tax return)

UNIVERSAL CREDIT AND OTHER ANTI-POVERTY PROGRAMME RECIPIENTS PAID BY THE SINGLE-PAYER SYSTEM

Instead of the many overlapping and inefficient organizations trying to cope with the needs of poverty-stricken UK adults, the single-payer system can work more efficiently to meet the needs of those who otherwise may fall into ill-health, depression, homelessness, crime, or any other poverty-related condition that results in real costs to the UK government and society in general. Those costs are already being borne by UK taxpayers along with a perceived loss of personal security and mobility freedom among the UK population.

All of these overlapping and inefficient social welfare programmes should be ended by 2020 and replaced by a streamlined single-payer system based on the social insurance number and the individual’s latest income tax return. This is commonly known as a ‘reverse income tax’ among economists. Every UK adult who earns less than £13,056 per year (from all sources) would automatically be enrolled in the single-payer system and begin receiving payments the same month they file their tax return.

When every unemployed adult or retired Briton is earning a minimum of £13,056 per year + free medical + free dental + free generic prescriptions (using the reverse income tax/single payer model) AND all of it is paid for by robots that create 1000-times more wealth for their companies than human beings will ever create, that will be the day that the UK scores the biggest win since the National Health Service was founded.

Among the ‘wins’ of the reverse income tax/single payer model would be the end of homelessness and its associated crime component and a corresponding reduction of property insurance rates, and the end of wasteful, inefficient and overlapping anti-poverty organizations (both public and private) for just a few examples of the benefits of the single-payer model.

And all of it paid for by a moderate tax on robots and other job-stealing technologies that (each one of them) can do the work of 1000 human beings — which means that even with the ‘robot tax’ UK businesses will profit as never before!

It would create a better future for individual Britons, for UK business and their bottom line, and for every level of UK government when compared to allowing the status quo to continue unchanged.


Related Articles:

  • New study shows nearly half of US jobs at risk of computerization (University of Oxford)
  • Will Robots Really Steal Our Jobs? (PwC)