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Robot future: Before Bill Gates can tax C-3PO, IBM offers a better way forward

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May, 15 2017, 6:15 AM

Editor's note: Geoff Woollacott is a Senior Strategy Consultant and Principal Analyst for Technology Business Research.

HAMPTON, N.H. - We are at the dawn of profound economic change spurred by technological innovation, which The New York Times columnist Thomas Friedman captures in his book “Thank You for Being Late.” The underlying economic disruptions and dislocations are felt across the globe, especially in developed countries, where many political pollsters credit innovation for triggering the populist uprisings that led to the Brexit and President Trump and that have permeated the recent French presidential election cycle.

As technological innovation leads to global uncertainties, individuals and companies seek new best practices to weather the sea change and establish new paths forward.

Bill Gates advocates taxing robots to fund job reskilling initiatives

Bill Gates began publicly discussing the concept of a tax on robots in early 2017. His logic ran that firms that replace workers with robots should continue paying taxes on par with their tax obligations tied to the displaced workers. Additionally, Gates envisions job-reskilling initiatives centered on training dislocated workers to perform human-centric jobs, such as caring for the elderly or working with children, areas with resource demands and that are best suited for humans. As Gates says, “All of those are things where human empathy and understanding are still very, very unique. And we still deal with an immense shortage of people to help out there.” Further, Gates believes these initiatives need to be carried out by the government to push access to these services to people with lower incomes.

Gates wants to slow technology adoption to minimize worker dislocation, arguing that the economic fronts of viable business use cases and the technology enabling those use cases are arriving simultaneously to create a perfect storm that can rapidly displace large swaths of the labor force.

Just as quickly, a series of rebuttals from the usual suspects in the business press have emerged deriding Gates’ suggestion as anathema to the free market and not what the economy requires. This represents a very standard kind of disagreement to any suggestion of altering tax codes.

Bill Gates’ proposal makes sense … in theory

It seems abundantly clear that we do have to alter the tax code. Gates reached for the right tool — taxes — but hasn’t considered how the tool itself needs to change before it can be applied to the problem. A quick history lesson is needed: The country built the tax code with manufacturing businesses in mind shortly after the Great Depression, which was triggered by the shift from agrarian economic fundamentals to manufacturing economic fundamentals. These capital-intensive business models rightfully returned profits back to the investors who put up the money to capitalize the business in the first place. Without the wealthy backer fronting the creation of the assembly line, there was no need for the assembly line worker.

Today, however, a great idea can turn into a startup with very little money. Capital is not the competitive barrier to entry; well-educated workers with new ideas and insights are the barrier to entry in the knowledge economy we’re evolving toward. And, given globalization, well educated workers with new ideas and insights are integral to our national security. The country has to transform how it educates its citizens.

While Gates seems correct in theory, the current political, education and tax climate seems unlikely to cultivate the kind of bipartisan cooperation necessary to effect that change from the public sector.

Society lacks sufficient trust in its elected officials needed for the Gates proposal to work

In “Thank You for Being Late,” Friedman writes about the breakdown of trust in the United States based on his years as a reporter and columnist on national and international issues. In it, he talks of the incredibly divisive and uncompromising political viewpoints that dominate in the Middle East and that he believes have taken hold of the tone of the national debate between Democrats and Republicans.

(By the way, this is a viewpoint with which I agree strongly based on past involvement as a political operative in presidential and congressional campaigns in the late 1970s and early 1980s as well as small town involvement thereafter. Friedman doesn’t use the Middle East comparison lightly — his earliest book, “From Beirut to Jerusalem,” deserved the required-reading recommendations it received in the early 1990s.)

The political rancor alienates citizens of moderate viewpoint. It leads to stalemate and frustration that, in turn, leads to a further reduction in civic trust. In Friedman’s view, civic activity must flow from experimentation, compromise and a willingness to admit fault, to adjust and to continue to push for policy positions improving the greater good.

This kind of civic process, Friedman asserts, remains strong and vibrant in America, albeit predominantly at the local level and occasionally at the state level. Therein lies a better way than the concept of a robot tax for corporations to assist in developing national job-retraining programs and adjusting our national public education system to better equip our children for gainful employment and economic self-sufficiency. The solution appears to rest in the following:

1. Avoid an additional tax policy adjustment aimed at engineering a specific societal outcome.

2. Highlight, promote and scrutinize business initiatives that fall under the classification of corporate responsibility and that are legitimate business expenses lowering corporate tax obligations.

3. Study the respective ventures supported by businesses in partnership with local public sector officials to identify and analyze emerging best practices around education, both for children and for adults in need of skills development.

4. Acknowledge the need to disrupt the education establishment status quo to extend the reach of education deeper into the societal fabric. Let the private sector prove the business case to the public sector. Let citizens hold the public sector accountable to accelerate the rate and pace of change in the education establishment to align with the rate and pace of change that technology accelerates in the job market.

Trust in our government leaders remains at an all-time low. The national debate is one of contention, acrimony, distortion and ad hominem attack. Those who put forth suggestions receive rapid-response attacks rather than thoughtful requests for dialogue and efforts to find common ground through accommodation.

Part Two: IBM acts on a best-in-class way forward via public-private partnerships