Robots as Employees?

In “Will robots displace humans as motorized vehicles ousted horses?” written by an anonymous author from The Economist, an interesting analogy about horses being replaced by tractors and other automated machines is related to what robots could possibly do to the human labor force. Just as the introduction of tractors decreased the equine labor force quite significantly, the introduction of robots into the labor force has shown some similarities that has some people worried. Daron Acemoglu from Massachusetts Institute of Technology and Pascual Restrepo of Boston University decided to conduct research and publish their findings on this topic (Link to full paper can be found here). They found that increasing the number of robots in a certain area of the economy did not raise employment among any group of workers. Even if workers had college degrees, the results were the same. In fact, total job loss in the U.S. was found to be between 360,000 to 670,000 jobs. While that is not overly alarming, there are not as many robots in use in the U.S. economy as there are in other countries. Therefore, this job loss should be noted as possible evidence to the beginning of human labor decline. From Acemoglu and Restrepo’s research, they were able to conclude that the addition of one robot per thousand workers reduces wages across an entire economy by 0.5%. Wage decline is a similar strategy from the horse labor decline, as horse prices greatly decreased in an attempt to combat the introduction of tractors. However, the tractors eventually replaced horses almost entirely, which is exactly what these authors fear could happen with the human labor force.

A possible future robot construction worker.

While much of this seems like a problem that needs to be fixed, in reality robots replacing human labor should be a good thing. Automation in general allows firms and consumers to save money, which in turn can lead to that money saved being spent on other goods or services. In the minds of firms, they do not have to pay wages to as many workers if they choose the automation route. According to Michael Lindley from Concept Systems Inc., Automation also allows a company to continue their competitive advantage, so automation could quite easily replace a large percentage of the work force in the coming years.

I thought these two articles were very interesting, especially the one from The Economist. I knew that robots and automation has been on the rise, but it was interesting to see certain statistics on how inserting robots into the economy negatively affects the human labor force. I thought it was very surprising how as little as one robot per thousand workers reduces the wages across an entire economy by approximately 0.5%. While that is not significant alone, employing multiple robots at once could really do some damage to wages. Automation is important to me as a teacher because I believe it will be one of the main business content areas within the next 10 years. Right now, a lot of the business education curriculum is focused on conducting business with human employees and customers. Evidence from articles like these show that the focus should switch to conducting business with robot employees instead. Including these ideas in my future teaching can help better prepare the next generation of entrepreneurs and business professionals.

Taxing Artificial Intelligence

As technology continues to advance, the idea of taxing companies’ investments toward technological advances has become a popular one. One of the supporters of robot taxation, Bill Gates, believes taxation could help slow down automation’s rapid growth. He thinks rapid automation would be destructive to workers in the workforce. Too many jobs replaced by robots would leave a lot of people in unemployment, which could have negative effects on the economy. While budgeting is a topic covered in many curriculums across the United States, budgeting on a very tight budget without a job is hard for even the most veteran budget makers. In a similar article for Fortune written by David Z. Morris, he writes that Bill Gates wants the proposed tax revenue on robots to help pay for labor force retraining. Workers in certain industries that can be replaced by robots or other technology will need to switch to industries like health services and education that require human workers. However, the author of “Why taxing robots is not a good idea” written for The Economist, who chose to remain anonymous, disagrees with Bill Gates. The author argues that automation is not growing as rapidly as Mr. Gates believes. The author also believes automation could be a good thing for workers because they could have the opportunity to own robots and use the robots’ services as a source of income. In another article, “A Tax on Robots?” Yanis Varoufakis agrees with the author of the article from The Economist. Varoufakis believes taxing robots and other artificial intelligence (AI) will only increase the price of production, and it would lead to companies bundling AI with other machinery. He thinks automation would be beneficial for society as a whole because of the costs that would be saved.

            I thought it was a very interesting concept about implementing a tax on AI. From learning about taxes in my business classes, I understand that nearly everything has a tax on it. Therefore, it makes sense to tax companies on their robots. However, I do not agree with Mr. Gates. I do not think that a tax on AI would slow its growth and popularity. I also think developing different technology to make things easier within the business world is smart financially for both companies and consumers. Costs of production would decrease with robots because companies would not have to pay as many employees, so one can hypothesize that the price of goods would drop if costs did. I think these articles will help in my teaching practice because the idea offered of taxing AI challenged my way of thinking. Challenging the thought process of my students will be important as a future educator. I also think it is important to learn to look at the big picture when trying to implement something like a tax on robots. The companies that are developing these robots are not the only ones the tax affects, and that lesson is important for business students to understand. The biggest surprise for me was how simple Bill Gates seemed to think his plan was. He is a very smart man, but it almost seemed like he was not thinking hard enough about this potential tax and its effects on more than just the companies who create the robots.

References:

The Economist

Bill Gates Video

Fortune

Project Syndicate