Justin’s note: South Korea just made history.
Two weeks ago, it introduced a “robot tax.” It became the first country to adopt this policy.
Now, to be fair, this isn’t a tax at all. But it will make it more expensive for South Korean companies to invest in technology. Under the current law, South Korean companies can deduct up to 7% of how much money they spend on automation equipment or robots. But soon they’ll only be able to deduct 2% of their investment.
The government hopes this will encourage companies to hire workers instead of buying robots. Below, I talk to Doug Casey about this radical idea…
Justin: Doug, what do you make of this robot tax? Should governments be discouraging companies from investing in innovation?
Doug: It’s incredibly stupid. I’m especially surprised to see the South Koreans be the ones to take the first step in this direction.
South Korea is one of the most technologically advanced countries in the world. It’s much more advanced on a per-capita basis than the United States or any place in Europe. Most of the countries in East Asia—most prominently Singapore, Hong Kong, Taiwan, Japan, South Korea, and most recently China—have been advancing at warp speed for decades. That’s partially because of their social ethos, but mainly because they’re very low-tax, low-regulation jurisdictions—like the US was during its golden age.
So, it’s very disturbing to see the South Koreans moving in this direction.
Justin: Why would they do this? And do you think other countries will follow suit?
Doug: Why indeed? The reasons offered have to do with preventing unemployment, heading off social unrest, and garnering more tax revenue. The real reasons however, in my view, are fear of the unknown and ignorance of economics.
There’s been a lot of talk about taxing robots. The meme is gaining traction with both the talking heads and the hoi polloi. Bill Gates is a big proponent, which further cements his status as being an idiot savant.
What he wants to do is to not just withdraw the tax benefits for investing in robotic technology, but actually tax robots the way that a human worker would be taxed.
The rationale behind this is that since robots could replace from 15 to 35% of all human jobs within the next ten years, something must be done to slow that trend. And generate tax revenue to put those newly unemployed people on welfare or whatnot.
These people want to slow down the rise of the robots. And taxes will certainly do that by discouraging businesses from investing in them. But what’s even worse, Gates wants to use the income from the tax on robots to increase welfare benefits for the unemployed. Which is especially stupid, because you get the things that you encourage. And when you pay people for not working, or you make it possible for them to not work, that’s exactly what they’re going to do.
So, it’s a very, very bad trend, promoted by Gates, and implemented by the South Koreans.
Justin: Should the government do anything to prevent robots from taking people’s jobs?
Doug: No, there’s absolutely nothing that the government should be doing about this.
What would have happened if government had decided to do something about the rise of the cotton gin during the first Industrial Revolution? Or mechanical weaving machines, which unemployed millions of “cottage industry” spinners and weavers working with primitive foot-powered looms in their shacks? The Bessemer furnace, the steam engine, the railroad, and a thousand other technologies in the first industrial revolution?
In those days, technophobes were known as Luddites; they wanted to destroy the new machines in order to save their unproductive jobs. If they’d succeeded, we’d all still be primitive benighted peasants.
Any government interference withdraws capital from productive areas of the economy, and redirects it to some politically favored parts of the economy. Robots and artificial intelligence (AI) are the friend of the average man; they catapult the average standard of living much higher.
Justin: So, you’re saying the government should just get out of the way?
Doug: The government should withdraw itself not just from robots and artificial intelligence (AI), but from the economy in general. The State is, by its nature, a coercive institution. And coercion of any type should be kept to a minimum in any society. That means the State should be limited to protecting you from domestic coercion with police. Foreign coercion with an army. And facilitating the adjudication of disputes with a court system. In today’s world, however, it does none of those things effectively—but tries to do everything else.
I find it most disturbing that even in today’s world, when much more is known about economics than ever, that people still look at government, which is a coercive force, as something that should involve itself in the economy. It’s very discouraging.
Justin: So, what should people do if the government stays out of this? How can they prepare for the robotics age?
Doug: There’s no question that robots and AI are going to hugely expand. Their power is increasing at the rate of Moore’s Law. In other words, the power of computing is doubling roughly every 18 to 24 months, while the cost halves. This is also true in the areas of biotech, nanotech, and genetic engineering. These technologies are going to fundamentally transform the very nature of life itself.
In a decade or two, robots will be more intelligent, more innovative, and perhaps even more thoughtful than humans. They’re not just going to be the odd-looking mechanical beast that can perform a few parlor tricks like today. Soon, there will be not just mechanical robots, but biological robots. Who knows what will come after that.
We’re really on the cusp of the biggest revolution in world history. I look forward to it. It will cure disease and old age. The avalanche of new wealth that will be created will effectively eliminate poverty. Mankind’s wildest dreams and ambitions can be realized. People who are trying to slow this process down are worse than stupid—they’re criminal.
So, what should you do about it?
The first thing you have to remember is that there’s no need for unemployment in the world. Everybody—myself, you, and all the other seven billion people in the world—have an unlimited desire for goods and services.
So, theoretically, anybody could be able to work 24 hours a day, seven days a week, providing goods and services that other people want. The presence of robots will just make that easier, more efficient and more profitable.
And there are always going to be things that people can do better than robots. Point number one. So, there’s no need to be unemployed.
Justin: What’s the other reason?
Doug: Point number two is that the intelligence of computers and robots is increasing exponentially.
This will liberate people to do things—most of which we haven’t even thought of yet—that they’ll still be able to do better than machines. Years ago, IBM came up with the slogan “Machines should work, people should think.” The world is moving towards that ideal at the speed of Moore’s Law—as long as government, and busybodies like Gates, don’t slow down progress.
Not so long ago you were working 12 hours a day, loading 16 tons of coal in an underground coal mine, just to keep body and soul together; by the time you got home, you were just too tired and didn’t have time to do any creative, productive work. Unless the trend indicated by Bill Gates and the South Koreans continues, in a generation we’ll think of today’s world as being almost as oppressive and backward. Much of the work we do today is “dog work.” Good riddance to it.
I believe the trend to robotics and AI is a very favorable thing from both a humanist and a spiritual point of view. It’s immensely favorable from an economic point of view as well.
The problem—if there is one—is that government will try to use these robots to control the populace. And the military will be the biggest user of these things everywhere.
So, it’s very dangerous. The movie The Terminator will be much more predictive than previously imagined.
Justin: That’s certainly a threat to consider. But what about the opportunity here? Have you personally invested in any robotics or AI companies?
Doug: No, I haven’t, because although most of the reading that I do is about either science or history, and I’ve got a reasonable theoretical grip on these things, I don’t feel like I have enough personal tactical competence in these areas to decide which company’s going to be a winner. It’s something I might look into more, exactly which companies are actively involved in these areas. Because it might be an excellent place to place some bets. Everybody wants to find the next Apple, Google, or Microsoft.
Justin: Absolutely. A lot of money is going to be made in that space. So, let us know if you find any investments. Thanks for taking the time to speak with me today, Doug.
Doug: My pleasure.
Reprinted with permission from Casey Research.