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Bill Gates is wrong about taxing robots, and here’s why

The Microsoft founder has suggested imposing an “income tax” on robotic tools that take over human tasks. But the reality of automation isn’t that simple

Bill Gates

Bill Gates. (Michael Gottschalk/Photothek/Getty)

When Bill Gates speaks, people listen – which can be an unfortunate thing, especially when the Microsoft founder espouses ideas like taxing robots.

In a recent interview with Quartz, Gates expressed enthusiasm for a tax on robots – and that includes artificial intelligence – as a way of slowing down the pace at which machines are taking human jobs. The tax proceeds could then be used to retrain human workers into new jobs, he said:

“At a time when people are saying that the arrival of that robot is a net loss because of displacement, you ought to be willing to raise the tax level and even slow down the speed of that adoption somewhat to figure out, ‘OK, what about the communities where this has a particularly big impact? Which transition programs have worked and what type of funding do those require?’”

A number of observers are pointing out problems with the idea.

The Economist notes that slowing down the pace of innovation in the name of human stability mean seem wise on the surface, but it can actually have the opposite effect:

Investments in robots can make human workers more productive rather than expendable; taxing them could leave the employees affected worse off. Particular workers may suffer by being displaced by robots, but workers as a whole might be better off because prices fall. Slowing the deployment of robots in health care and herding humans into such jobs might look like a useful way to maintain social stability. But if it means that health-care costs grow rapidly, gobbling up the gains in workers’ incomes, then the victory is Pyrrhic.

Writing for Fortune, Boston University economist James Bessen makes an even better case for why a robot tax is a bad idea.

Automation may take existing jobs, he writes, but it inevitably allows humans to redeploy into areas of growing demand, which means more jobs overall.

Bessen cites a number of examples: bar code scanners led to an increase in the number of cashiers, automated document discovery led to more paralegals and ATMs led to more bank tellers.

In each case, technological tools allowed businesses to more ably meet growing demand, which led to more employment.

“Although automation will lead to further job losses in manufacturing, warehouse operations, and truck driving, the overall impact of automation across most industries will be to increase employment,” Bessen writes.

“Even though the pace of advances in robotics and artificial intelligence may accelerate over the next two decades, the impact of that change – whether it tends to increase or decrease employment – depends not on the technology, but on demand. And overall, these technologies will boost employment because they are addressing major unmet needs.”

Gates is, of course, a legendary figure in the world of technology, but it’s worth remembering that even geniuses are wrong. This is, after all, a man who in 1994 famously said he saw little commercial potential in the internet for the next 10 years and who predicted that spam would be a thing of the past by 2006.