Opinion: Automation, innovation and the arrogance of the elite

Microsoft founder Bill Gates
Microsoft founder Bill Gates’ proposal to tax robots would slow down innovation, hurting people with lower incomes the most (source: dpa)

In June 2016, Switzerland held a referendum on whether to introduce a guaranteed basic income (GBI) for all. Under such a system, governments regularly pay out a sum that would cover subsistence to each individual over the course of their entire lives. It was argued that since work was increasingly automated, fewer jobs were available. The measure was rejected by more than 75 percent of voters, despite a strong turnout from the proposal’s supporters.

Billionaire and Microsoft founder Bill Gates made a similar argument to that of the Swiss proposal’s supporters when he suggested the introduction of an income tax on robots, like that on employee wages. Proceeds of this tax would be used to provide a basic income for all to compensate for job losses and to ease inequality.

In January 2017, the European Parliament’s legal affairs committee adopted a report on the consequences of the rise of robots and artificial intelligence. The report recommends that the member states adopt a guaranteed basic income for all, to compensate for the loss of jobs due to new technologies.

Sending the wrong message

It is no wonder that liberal Switzerland rejected GBI, since the values of self-responsibility and personal freedom are very strong in its civil society. Government is kept small and is considered a service provider. It is surprising, however, that Bill Gates, who with Microsoft spearheaded innovation and increased productivity in processes, is advocating measures such as GBI.

Living off public subsidies instead of on personal achievements deprives people of a good part of their dignity and sense of responsibility

GBI will not only discourage innovation, but also send the wrong message concerning the work ethic. Certain parts of society might use this benefit to avoid education and work. It could create a new class of long-term government parasites. Living off public subsidies instead of on personal achievements deprives people of a good part of their dignity and sense of responsibility.

GBI will need financing, and it would result in increased taxes on the new means of production. Taxing robots, as proposed, will mean curbing innovation and, in consequence, reducing prosperity, especially for people with lower incomes.

In a post on LinkedIn, entrepreneur and author Anurag Harsh made a convincing case that we need not fear innovation; that robots will still need human guidance and that new jobs will be created. He quoted Henry Ford as saying, “If I had asked people what they wanted, they would have said faster horses.”

Mr. Harsh also made the following point:

If we compare the jobs of one hundred years ago to the jobs of the present, we would be stunned by the standard of living and the thankless work. Creative directors, content strategists, app developers and social media managers are a product of our times. The mentality of doing what you love is also a product of the epoch. Indeed, hundreds of traditional roles have disappeared over the years, but they have been replaced with new job titles for our digital age.

I remember at the beginning of my career in business some 40 years ago, computers were beginning to be used. Compared to the efficient technology of today, it was a stone age – based on punch cards. Nevertheless, there were worries that computers would drastically reduce the need for accountants. Instead, their numbers multiplied. Today, they have more interesting work and higher-paid jobs.

Increasing prosperity

Let’s take the example of agriculture in Germany: Around 1900, 38 percent of the German population was working in agriculture; in the early 1950s the figure was 24 percent, now it is only about 2 percent. The reduction in the number of people working in agriculture did not cause major unemployment either in the 1950s or today. But there are other effects to consider. In 1900, one person working in agriculture would produce food for four people; in 1950, for 10 people; and today for more than 130. The output per hectare of agricultural land has also multiplied. In 1900, Germans spent an average of about 50 percent of their income on food; today the figure is down to 14 percent.

The workforce freed from agriculture could be used in other areas of economy and society, further increasing the general well-being. With the reduced share of income spent on food, people can buy other goods and services and new sectors can be developed. There are numerous examples, but just consider the health and beauty sector, which has seen a proliferation of services that were almost nonexistent and mostly unaffordable before automation.

A cartoon from circa 1812 depicting luddites destroying weaving machinery
In the 19th century, the Luddites destroyed weaving machinery to protest against technological progress. A tax on robots would be a 21st-century form of slowing innovation to protect workers (drawing circa 1812, source: dpa)

Like past innovations, automation and artificial intelligence will increase prosperity for all. It will complement human intelligence and creativity. It will be a tool, not a substitute for human skills.

Worrying trend

That many people are afraid of progress is normal. However, that groups of people including Bill Gates and the European Parliament want the state to increase its importance by paying general subsistence to everybody is worrying. It will make the population dependent on the state and become a force for corruption – including in democracies. People who accept and permanently rely on a guaranteed basic income will be dependent on the government, which will become too powerful. They are giving up freedom and choice.

A true democracy that preserves the rule of law and protects the citizen against arbitrary encroachments – especially by the state – needs free citizens.

Curbing innovation is protectionist. It aims at preserving a comfortable status quo, but creates a long-term lose-lose situation, because an important stimulator for competition is lost. The job losses in the Rust Belt of the United States came about because not enough effort was put into long-term skill development. This situation was created over a long period by the strong position of the trade unions, which blocked both process innovation and skill development, as well as by many years of political incompetence and societal complacency. The misguided policies of the past contributed more to job losses in the U.S. than Chinese competition.

Myth of total equality

The problems these proposals present are manifold. By reducing innovation, a GBI will slow the expansion of prosperity, or even stop it. It risks creating an uneducated class of people who become accustomed to dependence on the state and are not required to make any effort at self-improvement. This jeopardizes the principle of the “pursuit of happiness.” It also puts democracy and the rule of law in peril by making the state too powerful. It risks creating a small group of powerful, arrogant bureaucrats deciding over the fate of huge groups of people.

Freedom, however, is not a “free lunch.” One must strive for it through effort and achievement

The desire to create a perfect society by implementing technocratic theories has appeared repeatedly throughout mankind’s history. These wishes include the dogma of total equality, a deeply inhuman claim. Free people are created different and should have the freedom to choose. Freedom, however, is not a “free lunch.” One must strive for it through effort and achievement.

The result of “total” equality is a two-class society. A small and prosperous “nomenklatura,” as in the Soviet Union, tells the broad population how to live and be “equal.” Proponents of GBI are ultimately striving for a society envisioned by the leaders of the USSR.

To promote prosperity for all, we need both technological innovation and continuous improvement of skills on all levels. GBI risks depriving many people of their ability to grasp their opportunities.

To believe that a large part of people will not be able to follow transformations is a sign of misguided intellectual arrogance, camouflaged as compassion.

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