Othersourcing?!

[Loppan Torkel]

Since robots are taking over our jobs, would you support taxing the actual work being done, even if it was done by a computer, rather than the employee?

How large percentage of your nation's population do you expect to be unemployed in 20 years?
Do you see the still working group of people as likely giving up more of their earnings for taxes to the growing unemployed group?

How will your nation cope with the increased tensions due to the economic crisis and increasing unemployment? Do you have any escape plans or do you feel safe?

 

[Thedrin]

Loppan Torkel:
Since robots are taking over our jobs, would you support taxing the actual work being done, even if it was done by a computer, rather than the employee?

Income - Minus Costs (including wages) = Taxable Income

As wages decrease, taxable income increases, so jobs that disappear and become automated will result in more of a different form of tax. Of course, you can argue about how effective the tax code is and the differences between income taxes and corporate taxes, but there is still a structure for taxing automated jobs.

 

[Loppan Torkel]

Income - Minus Costs (including wages) = Taxable Income

As wages decrease, taxable income increases, so jobs that disappear and become automated will result in more of a different form of tax. Of course, you can argue about how effective the tax code is and the differences between income taxes and corporate taxes, but there is still a structure for taxing automated jobs.

I still see a large sum of money that disappears from the state and that instead remains within the corporation when a person's job is replaced by a machine. Not only does the tax on your income disappear but you'll also probably receive welfare from the state.

 

[El_Machinae]

Yeah, I know that something will need to be figured out. The idea that people become poorer with increased automation is kind of anathema to me. Things aren't working out as they should if the average human isn't either increasing their wealth with the same level of competence, or capable of maintaining their wealth with a decreasing level of work.

 

[Cutlass]

Yeah, I know that something will need to be figured out. The idea that people become poorer with increased automation is kind of anathema to me. Things aren't working out as they should if the average human isn't either increasing their wealth with the same level of competence, or capable of maintaining their wealth with a decreasing level of work.

That's really a policy issue rather than an economics issue in my view. What works is that as machines do more of the work, any given quantity of work is done by fewer people. And so each of those people should earn more money. In doing this, demand in the economy remains strong, and full employment is maintained. The strong demand allows entrepreneurs to create new companies, products, services, and jobs. Individual people and jobs are displaced, but the economy keeps rolling along. Shumpeter, Creative Destruction.

What happens instead all too much of the time is that machines replace jobs, the wages do not rise, demand is weak, there is little creation of good new jobs, wealth gets ever more concentrated, economic crisises result.

Labor is simply too weak to get the wage increases that they have earned, and that the economy needs for stability. Outsourcing is only one of the causes of that. But it is a significant one.

 

[GenMarshall]

No doubt that this sort of thing should be taxes!

 

[Terxpahseyton]

Labor is simply too weak to get the wage increases that they have earned, and that the economy needs for stability. Outsourcing is only one of the causes of that. But it is a significant one.

It would argue that it isn't so much Labor's fault, but the fault of the global competition and the wage war it can lead to. If labor demanded higher wages, a higher share of the profits, than on the long run this might benefit everyone, I agree. But on the short run, other companies on the global market with lower wages will have an advantage. And that is a disadvantage the company with the higher wages may not cope with well (just take a look at GM for instance).

The idea of higher wages by greater productivity only works, if enough companies go along with it. If enough don't, the companies that would maybe won't because of the rightful fear that it will screw them or they do and at some point get in deed sacked. If such a dynamic can manifest itself well enough - and I think that is happening right now - the idea of higher wages by higher productivity may drift further and further away of what is really happening, until such a connection is only a shallow slogan, even though it actually is a good and workable concept.

 

[Dreadnought]

Robots will be exponentially more effective in manufacturing than humans; in fact, I'd support temporary tax breaks for corporations who purchase more robots for their factors. It'll greatly increase production capabilities.

 

[innonimatu]

The idea of higher wages by greater productivity only works, if enough companies go along with it. If enough don't, the companies that would maybe won't because of the rightful fear that it will screw them or they do and at some point get in deed sacked. If such a dynamic can manifest itself well enough - and I think that is happening right now - the idea of higher wages by higher productivity may drift further and further away of what is really happening, until such a connection is only a shallow slogan, even though it actually is a good and workable concept.

This can be solved: "free" market competition between companies should never be allowed across political borders. That way the problem of wages and income distribution could be addressed politically, as it traditionally was, with great success, until the crazy idea of economic "globalization".

 

[Terxpahseyton]

Well "never" strikes me as very likely to not be a reflection of thorough consideration. But in principle I think you are right. Of course there is another solution - greatly increased international cooperation. But that seems unrealistic enough to view a new manner of protectionism as the only solution.
Sadly, such seems still so heretical, it doesn't seem feasible either. Not until the flaws of the current international system become so apparent that I'll hit you in face and fanny. And with it the current appearance of certain economic-liberal holy cows.

 

[Cutlass]

It would argue that it isn't so much Labor's fault, but the fault of the global competition and the wage war it can lead to. If labor demanded higher wages, a higher share of the profits, than on the long run this might benefit everyone, I agree. But on the short run, other companies on the global market with lower wages will have an advantage. And that is a disadvantage the company with the higher wages may not cope with well (just take a look at GM for instance).

The idea of higher wages by greater productivity only works, if enough companies go along with it. If enough don't, the companies that would maybe won't because of the rightful fear that it will screw them or they do and at some point get in deed sacked. If such a dynamic can manifest itself well enough - and I think that is happening right now - the idea of higher wages by higher productivity may drift further and further away of what is really happening, until such a connection is only a shallow slogan, even though it actually is a good and workable concept.

I don't agree. And the reason I don't agree is that productivity is a variable. You would need a real labor cost per unit of output for an actual comparison. Not a wage comparison. Wage comparison really does not tell you anything useful.

Manufacturing, which is a sector of the economy that suffered from early and easy outsourcing, does not show that wages are the determinant of whether a company can be profitable or not. Otherwise, why do nations that have higher manufacturing wages remain successful manufactured goods exporters? Germany, for example.

Capital and labor are substitutes as well as compliments. If labor is more expensive, capital can substitute and real labor cost per unit of production remains low. But if labor is very cheap, the opposite can happen. Ultimately everyone is better off if productivity goes up instead of down.

The trend in the wrong direction is not because of benefits to the economy as a whole, but rather because the opportunity exists to hurt the whole for the benefit of the few.

 

[amadeus]

This can be solved: "free" market competition between companies should never be allowed across political borders. That way the problem of wages and income distribution could be addressed politically, as it traditionally was, with great success, until the crazy idea of economic "globalization".

Wouldn't you then have to prohibit international trade?

 

[innonimatu]

Wouldn't you then have to prohibit international trade?

Of course not. It would only mean that each state would regulate that trade howsoever it deemed best to keep its own economy balanced.

Currently, most governments maintain a position that the best thing is to have "free trade", with no border controls. That's obviously not working: in the vast majority of those countries which embraced it unemployment is now higher that it was before this "free trade" thing, and economic growth is lower or even negative. While the countries which take advantage of it without actually embracing it (protecting their own businesses and controlling access to their markets) are doing well, getting technology and accumulating credits.
But it's such an article of faith among politicians and their economic advisers and consultants that they refuse to admit it.

 

[zjintz]

I can't tell what is going to happen but corporations will be affected too!.

for example look this 3d printer.


Link to video.

Those printers will be cheaper, and eventually we will have those at home and be able to print our 3d-models.

Who knows? may be someday we will download a car file from bittorrent , print it and take a ride. (without a corporation logo on the front).

 

[Archbob]

Of course not. It would only mean that each state would regulate that trade howsoever it deemed best to keep its own economy balanced.

Currently, most governments maintain a position that the best thing is to have "free trade", with no border controls. That's obviously not working: in the vast majority of those countries which embraced it unemployment is now higher that it was before this "free trade" thing, and economic growth is lower or even negative. While the countries which take advantage of it without actually embracing it (protecting their own businesses and controlling access to their markets) are doing well, getting technology and accumulating credits.
But it's such an article of faith among politicians and their economic advisers and consultants that they refuse to admit it.

If by "Vast majority", you mean "Modernized western countries that don't have cheap labor themselves", you are right. But the majority of the world is poor and they benefit from this.

 

[Terxpahseyton]

If by "Vast majority", you mean "Modernized western countries that don't have cheap labor themselves", you are right. But the majority of the world is poor and they benefit from this.

It just isn't as easy as that at all. Such all-too simplified predictions are a typical phenomena of ideological rather than fact-based thinking. Simplicity is viewed as a good character of theories, but it also bares the danger to rather reflect a certain mythology than just empirical data put into context.
Large shares of Africa have been victimized by the free global competition, even though they are poor. Not without the help of lousy governments, sure. But also with the help of global competition pushing nations into the role of consumer and a source of natural resources - which de facto means to bleed them dry for the benefit of the developed world. And that not without the help of organizations like the IMF, who will only hand out their big money to help losers of the global competition for a guarantee that they'll won't use sensible measures of protectionism, for a guarantee that they stay in the position which made them looses in the first place.
The story that global free competition is a win-win situation is an incredible naive fairy tale. This system rests on creating winners and loosers, consumers and producers. And somehow this is supposed to magically balance itself out so that everyone wins? Right.... Of course it doesn't. In the end a common good for all nations by unregulated international cooperation in comparison to what other approaches may offer is not only unlikely, it is infeasible.

 

[Tahuti]

This can be solved: "free" market competition between companies should never be allowed across political borders. That way the problem of wages and income distribution could be addressed politically, as it traditionally was, with great success, until the crazy idea of economic "globalization".

Instead of "canning" economies into national borders, it might be better to form a world-government around the economy instead. It'll have the advantage of having both the effiency of market competition, but'll also grant your wish of full political oversight over economic activities. Politically impossible of course, but thats true for most good ideas, until the status quo is no longer viable.

 

[Terxpahseyton]

I don't agree. And the reason I don't agree is that productivity is a variable. You would need a real labor cost per unit of output for an actual comparison. Not a wage comparison. Wage comparison really does not tell you anything useful.

Exactly because it is a variable, a relative concept we can see just nicely how it relates to the development of wages. And that's exactly what I am talking about.

Wages have a crucial impact on the costs of a manufactured products. And not only relative but absolute productivity is on a steady rise, while real wages aren't (they rather decline, especially in Germany). Are you denying this?

Manufacturing, which is a sector of the economy that suffered from early and easy outsourcing, does not show that wages are the determinant of whether a company can be profitable or not. Otherwise, why do nations that have higher manufacturing wages remain successful manufactured goods exporters? Germany, for example.

Germany has a horrible real-wage-development. Guess why. Germany is not an example of how to master global competition. It is an example of how to adapt to its crappy mechanisms. Mechanism which don't have be as crappy in the first place. And that's where we need to get.

Capital and labor are substitutes as well as compliments. If labor is more expensive, capital can substitute and real labor cost per unit of production remains low. But if labor is very cheap, the opposite can happen. Ultimately everyone is better off if productivity goes up instead of down.

Only if real wages rise accordingly. If they don't, if they shrink, you trade the same and for the lower incomes increasingly worse, for the high incomes increasingly better living standard for more stressful work and some new gadgets in our cars or cell phones. I venture the judgment, that this deal is crap. It isn't hell on earth, it is bearable to a certain degree, but it is still a crap deal. It s not what we could get, but what we are satisfied with for the dogmatic praises of old ideologies.

The trend in the wrong direction is not because of benefits to the economy as a whole, but rather because the opportunity exists to hurt the whole for the benefit of the few.

But such opportunity exists because of the benefits of the economy! Are you saying that it is not the system's fault, but the people's? The systems function is to direct the people. If it fails in that, the system fails, not the people. People just do what people can do. You have no meaningful way to direct that in our pluralistic societies unless by hard policy.