Why the UK Should Tax Robots Post-Brexit

One point that never seems to get enough attention in the UK and other Western democracies is that there are always more job-seekers than jobs available.

It doesn’t matter which country, which decade, which party is in power; The fact that there are always more people looking for work than there are jobs available is as eternal as the cosmological constant that drives the universe. It’s a permanent condition.

Telling people to “Get a job!” to solve their poverty issue or quality of life issue just isn’t the answer to handle a force majeure like an eternal shortage of jobs. If everyone who could be employed followed that advice there would inevitably be 10% of the population who would miss out on a job simply because there isn’t the level of demand necessary to employ everyone who wants to work (or who needs to work to pay the bills) in any Western country.

Indeed, our Western economic model is predicated on human redundancy which works to keep significant downward pressure on wages, helping businesses to control their labour costs and thereby contribute to the bottom line.

It’s not that companies are evil entities, everything they do in this sphere is legal and is considered normal practice in our economic system. So, if you’re blaming industry for this state of affairs, I’m sorry, you’ve missed the point.

Government regulation over many decades have produced this result and it’s only government regulation that can solve or mitigate the consequences of this situation, which has evolved it must be said. Nobody would create such a system from scratch. The system has evolved in piecemeal fashion.

Yet, as creaky and wobbly as it is, it works. But it’s costly and it underperforms compared to what could be done.


The Robot-Tax Tour!

With all of that in mind, let’s go on a little tour to show us what rolling all social welfare programmes into one streamlined entity can do for the UK and it’s citizens, and what a low-ish tax on robots could do to pay for that all-in-one social care system:

  1. Imagine a low-ish tax on robots in the UK that accumulates enough annual revenue to pay for the country’s welfare system, disability benefits system, Universal Credit system, is able to top-up the monthly income of poverty-stricken senior citizens to a minimal level, end the need for food banks, solve homelessness and homeless-related crimes like policing, court costs, and incarceration costs, and do away with the need for many related and overlapping social welfare programmes at all levels of government.
  2. It’s important to remember that all these programmes are already paid for by various levels of government and that I’m merely proposing to roll all of them together into one super-streamlined programme and have a ‘robot tax’ pay for it.
  3. Let’s also say there is massive duplication of services (there is) in all of these present-day programmes and that such duplication is costly to the various levels of government and to the taxpayer who pays every penny of it through taxation.
  4. The prime beneficiaries of all that paying seems to be industry which enjoys the benefit of a labour pool permanently mired in a state of ‘job insecurity’ that works to keep wages lower than would otherwise be the case. Shareholders around the world admire your contribution to their annual dividends! (Doesn’t really do it for you, does it? Congratulations! That means you’re a payer)
  5. At present, robots aren’t taxed in the UK. Yet, these job-stealing marvels can produce many times the output of a human being. Which means that if “Robert the human” produces 100 widgets per day, a robot can produce 1000 widgets per day. This means that not only “Robert” but 10 other people like him can be replaced by ONE ROBOT. But, that’s an example that doesn’t tell us the whole story. It doesn’t, because ONE ROBOT can work much faster and can work longer hours to produce 10,000 widgets per 24-hour day — because, unlike humans, robots can work a full 24-hours per day, 365 days per year — meaning that ONE ROBOT is really replacing 1000 “Roberts”. The ratio then, is likely to be around 1/1000. Each robot replaces 1000 workers. See the future more clearly now?
  6. So, if one robot can replace 1000 workers and thousands of robots are going to take almost all manufacturing jobs, almost all agricultural jobs, almost all call centre jobs, and almost all clerical jobs, how many people will become “redundant” by 2033? And the answer, according to the highly respected PwC is; 50% of all workers.
  7. Yet, even with those Earth-shattering changes on the horizon (remember, this is already happening, it isn’t going to suddenly start in 2030 and be completed by 2033) it’s happening now. And not one word has been uttered by world governments. Perhaps politicians think taxpayers don’t mind paying for all those costly and overlapping programmes? Or maybe they know enough to keep quiet about the fact that EACH ROBOT can replace 1000 workers, thereby giving industry better profits and keeping downward pressure on wages. And as long as taxpayers aren’t rioting about it then maybe taxpayers accept that they exist, in part, to subsidize corporations. I suspect that the whole social model, labour construct and industrial strategy has so much internal inertia that it would require the power of 10 Death Stars to make even an incremental change for the better — therefore, no politician in their right mind would dare attempt it.
  8. Another consideration here… is that for each 1000 jobs that are replaced by ONE ROBOT, the government is losing the income tax revenue generated by those 1000 workers, it must also pay some of them unemployment insurance payments, or welfare, or Universal Credit, or pay them via other anti-poverty schemes. That’s in addition to paying mega-millions to cover the costs of homelessness (in cases of long-term unemployment) and the crime / policing / court costs / incarceration costs that are associated with homelessness and drug use. ONE ROBOT equals (potentially) 1000 homeless individuals, or at the very least, 1000 unemployed people.
  9. It’s not about being a Luddite! It’s about helping industry hire as many robots as they want (guilt-free!) yet taking care of living, breathing human beings. That way, UK businesses can thrive as never before, hire only the humans they need, and still have a large pool of human labour to jump-in on an as-needed basis to fulfil those functions that robots can’t easily perform, such as customized orders for example.
  10. By rolling all UK anti-poverty programmes into one streamlined single-payer system and paying for it via a reasonable tax on robots, human workers can continue to live, eat, and remain housed — and still be ready to work on an as-needed basis, and UK corporations can begin to reap unprecedented profits!

Tax robots in the UK.
2018 looks to be a good year for world’s top industrial robotics companies, with many of them innovating and simplifying the industry. Industrial robotics services are also benefitting, expecting an incremental growth of well over $4 billion by 2021. Image courtesy of Technavio.com

ONE SYSTEM INSTEAD OF MANY

How to accomplish all of that? By switching all anti-poverty programmes in the UK into one streamlined single-payer system that pays every unemployed adult £1088/mo + free medical + free dental + free generic prescription medication. (This option is limited to those earning less than £13,056 per year from all sources, according to their latest income tax return)

LOW-INCOME UNEMPLOYMENT INSURANCE RECIPIENTS PAID BY THE SINGLE-PAYER SYSTEM

In some cases, a person receiving unemployment insurance payments may receive less than £1088/mo. from their unemployment insurance benefit due to previously working at a low wage job, and the single-payer administration would simply ‘top-up’ their monthly payment to £1088/mo. + the healthcare benefits listed above.

It would become one step easier by having the single-payer assume full responsibility for payments to that person and the unemployment insurance administrator would simply reimburse the single-payer to only the exact amount they would’ve paid that unemployed person anyway. (Limited to unemployed adults earning less than £13,056 per year from all sources, according to their latest income tax return)

LOW-INCOME SENIOR CITIZENS PAID BY THE SINGLE-PAYER SYSTEM

To help lift senior citizens out of poverty and to allow them to live a more dignified lifestyle (in return for helping to build the great UK we see today!) and be better positioned to assist younger members of their family, any senior who reports less than £13,056 annual income would have their monthly income ‘topped-up’ to £1088./mo and receive the same benefits as anyone else on the single-payer system. (£1088/mo. + free medical + free dental + free generic prescriptions)

Again, a government or private pension plan is already paying those seniors a predetermined monthly amount. All the single-payer system would do is ‘top-up’ the income of seniors to the £1088./mo (plus the benefits above) and those pension plans would simply transfer those payments to the single-payer administration which would merely ‘top-up’ the difference in the monthly amount and pay the senior directly. (Limited to seniors earning less than £13,056 per year from all sources, according to their latest income tax return)

UNIVERSAL CREDIT AND OTHER ANTI-POVERTY PROGRAMME RECIPIENTS PAID BY THE SINGLE-PAYER SYSTEM

Instead of the many overlapping and inefficient organizations trying to cope with the needs of poverty-stricken UK adults, the single-payer system can work more efficiently to meet the needs of those who otherwise may fall into ill-health, depression, homelessness, crime, or any other poverty-related condition that results in real costs to the UK government and society in general. Those costs are already being borne by UK taxpayers along with a perceived loss of personal security and mobility freedom among the UK population.

All of these overlapping and inefficient social welfare programmes should be ended by 2020 and replaced by a streamlined single-payer system based on the social insurance number and the individual’s latest income tax return. This is commonly known as a ‘reverse income tax’ among economists. Every UK adult who earns less than £13,056 per year (from all sources) would automatically be enrolled in the single-payer system and begin receiving payments the same month they file their tax return.

When every unemployed adult or retired Briton is earning a minimum of £13,056 per year + free medical + free dental + free generic prescriptions (using the reverse income tax/single payer model) AND all of it is paid for by robots that create 1000-times more wealth for their companies than human beings will ever create, that will be the day that the UK scores the biggest win since the National Health Service was founded.

Among the ‘wins’ of the reverse income tax/single payer model would be the end of homelessness and its associated crime component and a corresponding reduction of property insurance rates, and the end of wasteful, inefficient and overlapping anti-poverty organizations (both public and private) for just a few examples of the benefits of the single-payer model.

And all of it paid for by a moderate tax on robots and other job-stealing technologies that (each one of them) can do the work of 1000 human beings — which means that even with the ‘robot tax’ UK businesses will profit as never before!

It would create a better future for individual Britons, for UK business and their bottom line, and for every level of UK government when compared to allowing the status quo to continue unchanged.

Written by John Brian Shannon


Related Articles:

  • New study shows nearly half of US jobs at risk of computerization (University of Oxford)
  • Will Robots Really Steal Our Jobs? (PwC)

Will a ‘No Deal’ Brexit Harm UK Manufacturing?

Certain pro-EU commentators paint a picture of either a catastrophic Brexit crash-out (Hard Brexit) or a ‘non-Brexit’ where the UK would retain few of the rights gained by a full Brexit but would still be chained to the responsibilities of EU membership (Soft Brexit) whether via the so-called ‘Norway’ model or the ‘Norway-plus’ model, or via any other model such as the ‘Canada’ model.

Those same commentators excitedly cite potential UK manufacturing job losses in the post-Brexit timeframe even though the UK is primarily a service based economy (80.2% in 2014 and rising) and they forget to factor-in the astonishing changes occurring every day in Britain’s manufacturing sector.


UK Manufacturing = Less Than 10% of GDP

Manufacturing in the UK accounts for less than 10% of GDP (2016) and provides jobs for 3.2 million workers (2016) but a recent PwC report says that by 2030 half of all UK manufacturing jobs could be automated. That’s less than 12-years from now. And it could happen much faster and on a much larger scale than that.

Repeat; Up to half of all UK manufacturing jobs will be lost within 12-years. It’s uncertain whether British workers are aware of these looming changes.

Economic impact of artificial intelligence on the UK economy
The economic impact of artificial intelligence on the UK economy. Image courtesy of PwC. Click on the image to view or download the PDF report.

What’s Great for UK Businesses Won’t be Great for Foreign Workers

In 2018, of the 3.1 million UK manufacturing workers (a stat that falls with each passing year as automation increases) we find that over half of manufacturing workers in the UK are citizens of other countries — primarily from eastern Europe, but also western Europe.

So, expect UK-based eastern European workers to be replaced by automation.

Increasing automation and Artificial Intelligence (AI) will cause UK companies to choose between UK-born workers and eastern European workers, and it’s likely that hundreds of thousands (perhaps millions) of eastern Europeans will be returning home with plenty of UK coin in their pocket. (And why not, they earned it)

I hope you didn’t expect the UK to lay-off its own British-born workers in order to protect the jobs of eastern European-born workers as automation proceeds, did you? Would EU companies show that level of courtesy to UK workers in the European Union, were the situation reversed?

Profits for UK manufacturing companies are projected to rise significantly as automation and AI become one with the system, while UK-born manufacturing workers should find themselves at 100% employment.

What’s not to like?


UK Manufacturing Job Losses Due to Automation – Not Brexit

If you’re one of the EU elites who fear that hundreds of thousands of eastern European workers in Britain will lose their UK manufacturing jobs due to Brexit you couldn’t be more wrong.

Let’s be perfectly clear; Half of all UK manufacturing jobs will be lost to automation by 2030 — and it won’t be on account of Brexit!


Summary

The narrative that says the UK economy will be severely damaged on account of manufacturing job losses due to a Hard Brexit is a complete and utter fantasy.

Every day from now until 2030, automation and AI will replace eastern European workers, Brexit or no Brexit. Meanwhile, British-born manufacturing workers will find themselves at full employment.

It’s all good!

Written by John Brian Shannon


Related Articles:

  • How will artificial intelligence affect the UK economy? (PwC)
  • The economic impact of artificial intelligence on the UK economy (PwC)
  • What would be the cost to the UK of regulation by a foreign power and major competitor? (BrexitCentral.com)
  • Why the UK Needs a Tax on Job-Stealing Robots (kleef.asia)

Why the UK Needs a Tax on Job-Stealing Robots

Q: Why does the UK need a tax on job-stealing robots?
A: To pay Universal Credit to millions of soon-to-be-replaced workers.

And why do we need Universal Credit in one of the richest countries on the planet?

Because unemployment skyrocketed due to the recession in the 1980’s, it skyrocketed again when millions of UK jobs began to be offshored in 1990, and again when millions of immigrants arrived in Britain looking for work.

And because automation and robotics are about to change the world more than all of the above combined!


Bye Bye UK Jobs (Offshoring)

Since 1990, but beginning in earnest around 2000, UK businesses began outsourcing much of their manufacturing to Asian and non-Asian countries that offer low-cost labour.

This had an immediate and positive effect on company profits in Britain and resulted in just as immediate job losses in the UK as millions of ‘man-hours’ shifted to Asia. Consequently, the unemployment rate shot up, and eventually, many of those formerly employed people ended up on some kind of social assistance, or moved back home to Mom and Dad’s house, or they lived a precarious life staying with friends until they could land a job.

Those who didn’t find a job or who weren’t able to stay at Mom and Dad’s house, or weren’t able to mooch off their circle of friends any longer, ended up homeless; either on social assistance or not.

And as some of you already know unemployment insurance benefits only last for so long.

A sad thing about homelessness is that it causes a dramatic rise in crimes like theft, vandalism, hooliganism and other social ills as the homeless watch those fortunate enough to have a job/a home/a warm bed, etc., and resent their success. It’s not evil you’re seeing, it’s human nature.

You’d feel the same way if your company terminated your employment and by the time you got out looking for work there were millions more job applicants than jobs available.

But for UK companies, offshoring jobs scored a solid 6 out of 10 as a means to improve profit.


Enter, The Immigrant Workforce

Some UK companies decided to hire the immigrant workers that arrived on Britain’s shores by the millions and were willing to work for a lower hourly rate than native Britons.

For many companies, this was an even better solution than offshoring jobs which sometimes resulted in questionable quality or problems related to timely delivery of products that were produced offshore and then shipped to Britain.

Some British companies were able to lay-off hundreds of workers on a Friday and have their immigrant counterparts start work on the following Monday without skipping a beat. Of course, there may have been language barriers or quality control issues at first, but on the main cutting their labour costs by one-half (or more) worked wonders for profitability, if not always productivity.

For UK companies, hiring low-cost immigrant workers, probably scores around 8 out of 10 as a means to improve profit.


Rise of the Machines (Job-Stealing Robots)

In the corporate world, the quest to lower costs and increase profits never fades.

That is why cars replaced horses, ships were fitted with powerful engines instead of sails, it’s why jobs were (and still are) offshored to countries that can manufacture items at the lowest cost, and it’s why jobs were taken from British workers and given to low-cost immigrant workers in the UK.

But the big daddy of them all is just around the corner as human workers are replaced by machines.

For companies, this cost savings/quality improvement represents the greatest business opportunity to arise since the Neolithic Period when Trog first sold Grok a bag of salt he’d dug out of the ground.


Once Human Labour Becomes Redundant, Then What?

In robotized factories, labour costs are almost microscopic when compared to the other costs of doing business. Quality can improve by orders of magnitude and companies can devote even more time, money, and effort to sales and marketing to keep all those machines busy 24-hours per day, 365-days per year, without sick days, arguments with superiors, or paid holidays.

Almost any job can be done by robots, even policing can be done via millions of cameras set up around the country and monitored by small groups of people in a control room hundreds of miles away. In the case of a stolen car for example, as soon as the theft is reported to a website, the website programme can then steer the stolen vehicle to the side of the road and shut off the engine, and an automated tow truck could go out to recover the vehicle. We’re almost there now…

And robots never go on strike for better wages.

Companies that replace most of their workers with automation represent the best way yet to improve build quality, to lower costs, to operate 24-hour production runs that last 365-days of the year, and to increase profits.

Hey, who needs a large Human Resources department when only 5 employees work in a 5 million square foot factory and all executive positions are hired via a points-based website?

For UK companies, hiring robots scores a perfect 10 out of 10 as a means to improve profit.


Almost HALF of all U.S. Jobs Lost to Automation by 2033 (PwC Report)

This is a lot closer to happening than most people think.

“A 2017 report from PricewaterhouseCooper predicted that 30 percent of jobs across the nation will be automated in the next 15 years.

Predictions for outside of the U.K. aren’t any better. In the U.S., job loss estimates range from 33 percent of jobs by 2030 to 47 percent of jobs by 2033. Around 137 million workers in Southeast Asia could lose their jobs to automation within the same period.” — Futurism.com


Shall We Prepare For That Eventuality or Wait for Something Magical to Happen?

Waiting until then to do something about it isn’t responsible leadership. Neither is hoping that something magical will occur to solve our self-made problems.

If the 1% own all the automated factories and services but nobody except the kids of the 1%’ers have jobs, to whom will those companies sell their goods?

As more and more people are replaced by machines and as their unemployment insurance runs out and as fewer and fewer humans are required to operate a company, more and more people will find themselves on Universal Credit in the UK — so we better start NOW to make it sustainable!

The benefits for companies to automate are such that automation is coming no matter what, therefore, taxing job-stealing robots to support people on Universal Credit is the only relevant option.

Yes, the Protestant work ethic; A truly great thing.

But if machines are doing all the work, humans will become largely redundant insofar as work is concerned and companies will still need people to purchase their wares — otherwise what’s the point of all that automation?


Avoiding a Societal Crash Bigger Than the 1929 Stock Market Implosion

It’s almost too late to address this looming crash. But if politicians got energized this societal catastrophe could be managed, if not quite averted.

Automation WILL happen, it’s not something that can be ignored. Change is coming. And we’d better be ready.

For now, it’s a relatively simple fix;

Theresa May’s government needs to increase Universal Credit payments to (the anti-poverty standard metric of) £1088 per month, to include full medical and dental coverage, and provide full prescription medicine coverage — with no barriers to enter the Universal Credit system other than applicants must be adults who reside in the UK and earn less than £1088 per month.

This monthly amount and the healthcare benefits that go along with Universal Credit should also automatically apply to the country’s senior citizens to ‘top-up’ their pension to that amount, if they report less than £13,056 (from all sources) on their annual tax return.

In this way, every automated vegetable farm can sell its produce, every automated dairy can sell its milk, every rancher can raise their livestock, and every automated delivery company can get paid for their investment in all that amazing technology, because, well, at the end of the day, people need to eat and producers need to get paid.

And the UK can pay for it all without changing the existing tax regime other than adding a 5% tax on the daily output of every robot and automated system in the country.

Will companies go for it? You know they will.


How to Pay For It

Once people see they can exist without starving to death courtesy of their £1088 per month+benefits, people may decide they can earn a (taxable) living from their own home-based business — hand-painting landscapes on canvas, or running (taxable) Airbnb accommodations from their home, or becoming a (taxpaying) tour guide. Who knows. But artists, lodgers, public speakers, or those who create anything desirable or those who sing or play a musical instrument (well) may become well-rewarded for their unique and creative talents and pay taxes once again.

A 5% tax on robots and other automation devices or systems that work 24-hours per day, 7-days per week, 365-days per year without labour strife, without complicated accounting, without employer contributions to pension plans etc., without sick days and so much more — or pay a number of humans to fulfill that task?

It’s really a no-brainer. Humans can’t begin to compete with automation. What matters is keeping all those consumers alive and purchasing which after all, is what makes the economy function.

Companies will make so much more profit they won’t mind paying a 5% tax on the daily output of every robot and other automated device. Quality will improve, production and productivity will go through the roof, and companies and countries that get on it first will find the largest possible benefit.

Here’s to automation and to artistic endeavors!

Written by John Brian Shannon


Want to get up to date on Brexit? Click Here.