Should We Tax Robots-Dr. Stephen Day : simplebooklet.com

ELEMENTARY LEVEL ECONOMICS INQUIRYSHOULD WE TAX ROBOTS?C3 Framework IndicatorD2.Eco.13.3-5. Describe ways people can increase productivity by using improved capital goods and improving their human capital.Staging the Compelling QuestionShow a video clip from a Bill Gates interview on taxing robots. Ask students what actually is meant by a “robot,” and discuss the possible advantages and disadvantages of increasing technology in our society.Supporting Question 1 Supporting Question 2 Supporting Question 3What is the effect of technology in the workplace?What is the effect of technology at home?What is the effect of technology on employment in the U.S. economy?Formative Performance TaskFormative Performance TaskFormative Performance TaskMake a Venn Diagram comparing and contrasting the pictures of mid-century and contemporary factoriesCreate a productivity report using data from the survey.Make a claim about the relationship between manufacturing and employment.Featured Sources Featured Sources Featured SourcesSource A: Picture of a factory in the 1960sSource B: Picture of a factory in the 2010sSource C: Excerpt from the transcript of an interview with Bill Gates Source A: Data taken from a survey of the students’ parentsSource A: U.S. Unemployment rate since 1975Source B: U.S. Manufacturing: Output vs. Jobs Since 1975 Summative Performance TaskARGUMENT: Should we tax robots? Construct an argument (e.g., detailed outline, poster, essay) that addresses the compelling question using speciﬁc claims and relevant evidence with information from contemporary sources. EXTENSION: Interview an adult in the community about how technology is changing work. Taking Informed ActionsUNDERSTAND: Examine the ways that their local economy is changing. ASSESS: Consider options for helping others to know how the local economy is changing and suggests ways that the community can adjust.ACT: Present ﬁndings to local business or political leaders.166 • Teaching the C3 Framework: Part Two

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INQUIRY DESCRIPTION“You ought to be willing to raise the tax level and even to decrease the speed” of automation. So said Microso founder Bill Gates in a February 2017 interview cited below. Gates is concerned about an issue that is befuddling politicians and economists all over the world—as innovation advances it replaces human work for many jobs. To be sure, it creates a lot more wealth. But wouldn’t a tax designed to slow down innovation give people time to change jobs? And couldn’t the income government got from such a tax help people who have lost jobs? Maybe. But such a tax could also discourage wealth-creation, and people need new wealth to increase their standard of living. What to do?Two ideas animate this issue. Technology and productivity increase our standard of living. at is, they allow us to make more and better goods and services. But, technology and productivity also change the kind of work that we do—some jobs disappear, but other jobs are created. Losing a job is usually a very dicult experience.STRUCTURE OF THE INQUIRY “Should We Tax Robots?” Answering the question requires students to understand a few things about how technology aects us as individuals and as a community. Technology holds the potential to increase people’s standard of living, that is, their wealth. In that sense, “robots” might be thought of simply as improved “technology.”In this inquiry, students will collect and analyze data that is close to home—literally. ey will survey their parents about which jobs in their house are done by hand, which are done by machines, and which are not done at all. e class can then analyze the data to see how innovation has aected people’s lives in the past and present, and theorize as to what might happen in the future. is exercise, combined with the use of the economic concepts of productivity, capital resources, opportunity cost, and scarcity and several easy-to-access primary sources will help students form an educated response to the compelling question, “Should we tax robots?”e core of the inquiry is designed to take three 50-minute class periods. Doing the extension work and community action would require more time. e sources that are provided in this lesson will help make these concepts vivid for students.STAGING THE COMPELLING QUESTIONStage the compelling question by showing a video clip of Bill Gates, the founder of Microso, as he suggests that the U.S. government put a tax on robots (https://qz.com/911968/bill-gates-the-robot-that-takes-your-job-should-pay-taxes) A transcript of excerpts from the interview is in Sidebar 1 on page xxx.Help students build background knowledge about eect of technology on productivity though a guided discussion focused on two questions: (1) What is productivity? and (2) What is the eect of technology on productivity?Should We Tax Robots? • 167

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Productivity measures how many goods and services (output) are produced with a given amount of resources (input).” In other words, productivity is how much you can make with what you have to work with. In the illustration below, we can see how capital resources (in this case technology) can actually make our human resources (the students) more productive. Supporting Question 1 e rst supporting question is, “What is the eect of technology in the workplace?” To address this question, students compare and contrast two pictures (Sources A and B) using a Venn diagram. e rst picture is of a factory oor in the 1960s, while the second is of a factory oor in the 2010s. While there are some similarities—students may point out that the oor is well-lit, well-organized, and spacious—the obvious dierence is the lack of human workers in the second picture compared to the rst. e second picture is lled with robot workers (though there is one human engineer barely visible in the background). On both factories and farms, the work that used to be done by humans is now largely done by machines. Many workers have been slow to get new jobs. Bill Gates, the founder of Microso, has proposed a solution: put a special tax on “robots” (technology) that replace human work, and use the money from the tax to create new jobs (see Sidebar 1). In this inquiry, students will investigate whether this is a good idea. Is Bill Gates on to something? Or is a special tax unnecessary for the creation of new jobs?To understand these questions, students will need to study the eects of labor-saving technology on human work. Sometimes technology is a substitute for a job, while other times technology is a complement to a job, making a worker more productive. In the past, these eects have been dicult to predict. For example, Eli Whitney believed that The San Jose assembly plant of Ford Motor Company at Milpitas, California, 1964.WESTERN PUBLIC RELATIONS OFFICE, FORD MOTOR COMPANYSpot welding of car bodies with industrial robots at the BMW plant in Leipzig, Germany, 2005.BMW WERK LEIPZIG168 • Teaching the C3 Framework: Part Two

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SIDEBAR 1Excerpts from an Interview by Bill Gates with Quartz in February 2017 on RobotsQuartz: What do you think of a robot tax? This is the idea that in order to generate funds for training of workers, in areas such as manufacturing, who are displaced by automation, one concrete thing that governments could do is tax the installation of a robot in a factory, for example.Bill Gates: Certainly there will be taxes that relate to automation. Right now, the human worker who does, say, $50,000 worth of work in a factory, that income is taxed and you get income tax, social security tax, all those things. If a robot comes in to do the same thing, you’d think that we’d tax the robot at a similar level.And what the world wants is to take this opportunity to make all the goods and services we have today, and free up labor, let us do a better job of reaching out to the elderly, having smaller class sizes, helping kids with special needs. You know, 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.So if you can take the labor that used to do the thing automation replaces, and ﬁnancially and training-wise and fulﬁllment-wise have that person go off and do these other things, then you’re net ahead. But you can’t just give up that income tax, because that’s part of how you’ve been funding that level of human workers.Quartz: And so you could introduce a tax on robots…Bill Gates: There are many ways to take that extra productivity and generate more taxes. Exactly how you’d do it, measure it, you know, it’s interesting for people to start talking about now. Some of it can come on the proﬁts that are generated by the labor-saving efﬁciency there. Some of it can come directly in some type of robot tax. I don’t think the robot companies are going to be outraged that there might be a tax. It’s OK.Quartz: Could you ﬁgure out a way to do it that didn’t dis-incentivize innovation?Bill Gates: Well, at a time when people are saying that the arrival of that robot is a net loss because of displacement, you ought to be willing to raise the tax level and even slow down the speed of that adoption somewhat to ﬁgure out, “OK, what about the communities where this has a particularly big impact? Which transition programs have worked and what type of funding do those require?”You cross the threshold of job-replacement of certain activities all sort of at once. So, you know, warehouse work, driving, room cleanup, there’s quite a few things that are meaningful job categories that, certainly in the next 20 years, being thoughtful about that extra supply is a net beneﬁt. It’s important to have the policies to go with that.People should be ﬁguring it out. It is really bad if people overall have more fear about what innovation is going to do than they have enthusiasm. That means they won’t shape it for the positive things it can do. And, you know, taxation is certainly a better way to handle it than just banning some elements of it. But [innovation] appears in many forms, like self-order at a restaurant—what do you call that? There’s a Silicon Valley machine that can make hamburgers without human hands—seriously! No human hands touch the thing. [Laughs]Quartz: And you’re more on the side that government should play an active role rather than rely on businesses to ﬁgure this out?Bill Gates: Well, business can’t. If you want to do [something about] inequity, a lot of the excess labor is going to need to go help the people who have lower incomes. And so it means that you can amp up social services for old people and handicapped people and you can take the education sector and put more labor in there. Yes, some of it will go to, “Hey, we’ll be richer and people will buy more things.” But the inequity-solving part, absolutely government’s got a big role to play there. The nice thing about taxation though, is that it really separates the issue: “OK, so that gives you the resourc-es, now how do you want to deploy it?”Interview by Bill Gates with Quartz Media in February 20017. Accessed at https://qz.com/911968/bill-gates-the-robot-that-takes-your-job-should-pay-taxesShould We Tax Robots? • 169

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the invention of his cotton gin would make slave labor in the United States go away. Unfortunately, the opposite happened. e demand for enslaved workers increased. What happened? e cotton gin turned out to be a complement, rather than a substitute for human work.In this inquiry, students will review graphs that show the relationship between the rise of technology in the workplace and the availability of jobs. ey will also collect data from their parents to nd out whether or not robots are in danger of replacing housework! e results of their inquiry will help them understand and take a position on this pressing issue in our country.Students should be able to go through these sources and Supporting Question 1 quite quickly. One point of this supporting question is for the teacher to underscore the problem posed by Bill Gates: that robots can replace human workers. But another point is that the robots in the second picture probably make at least as many (and almost certainly more) products than the humans in the rst. e teacher can lead students to this realization by asking, “which factory do you think creates more products?”e teacher may also wish to show another pair of photos, this time of an oce from the 1960s and one from the 2010s. ese pictures would probably have fewer drastic dierences. e point of this would be to show that some jobs are less aected by automation than others. On the other hand, many technology experts insist that in the future, machines will automate these jobs too.Supporting Question 2 e second supporting question—“What is the eect of technology at home?”—and the accompanying formative task help students to make connections between what they are learning in class and what is happening in their homes. e task involves students collecting survey data from adults outside the classroom so they can analyze it as a class the next day (see Sidebar 2).Students gather data from a survey of their parents or other adults, and compile the data as a class, Students then graph the data and answer analysis questions. ese can be done individually, in groups, or as a class. Questions may include the following,1. Which category has the lowest total? e highest?2. What percentage of housework has not been done recently?3. What is the average number of votes for each category for each household surveyed?4. e class next door has 15 students. If they did the same survey, how could we predict the numbers they would get for each category? Answer: Multiply the average number of responses per category by the number of students in the other classroom. 5. How many tasks are done by hand (H) compared to both machines (M) and contractors (C) combined? Equation: H - (M + C). Use this question to transition to the next section. 170 • Teaching the C3 Framework: Part Two

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SIDEBAR 2Survey on the Effect of Technology at Home and at Work(Note: The data gleaned from the survey will be the source students use to answer the supporting question.}Name ___________________________________________ Person Interviewed _______________________________ 1. For the following household tasks, please mark each one with the letter that best describes how the task was done in the last year. H = mostly by hand (some tools may be used, like a broom or spray bottle) C = contractor (for example a plumber or landscaper) M = mostly by machine (for example a dishwasher) ND = not done in the last six months O = other or not applicable _ Fold clothes _ Wash clothes _ Wash dishes_ Load/unload dishes _ Take children to school _ Pull weeds _ Fertilize and weed-protect lawn and plants _ Organize basement, cellar or attic _ Power-wash sidewalk _ Check ﬁre extinguishers _ Organize closet _ Coach a youth sport or teach other lessons _ Fix little things that have broken, like cabinet hinges or toilet ﬂushing mechanism _ Volunteer at children’s school _ Other community volunteering _ Thoroughly research local/state political candidates before voting _ Organize ﬁles _ Write letters to family _ Do budget _ Search for coupons and other good deals _ Clean out gutters _ Trim trees and bushes _ Clean bathroom _ Wash car _ Clean fridge _ Plan meals _ Clean the rug or ﬂoor _ Resolve disputes between children _ Entertain children _ Go through pictures and memorabiliaTally for each category:H: _C: _M: _ND: _O: _Should We Tax Robots? • 171

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ere are two crucial understandings from this analysis to which the teacher will need to guide students. First, technology and productivity increase our standard of living. To support that idea, ask students, “What are some things that your mom or dad might do if a robot replaced some work around the house? Would they do more work or more rest?” Technology and productivity also change the kind of work that we do—some jobs disappear, but other jobs are created. To help students get this second point, guide them in brainstorming the following question: “If a robot or another person helped you do a job around the house, how could that actually give you more work to do?” Possible answer: My parents would assign me a new chore to do! Explain to students that there is an analogy between housework and jobs in the economy. In both cases, work is a “cost” rather than a “benet.” In both cases, work is done to satisfy some goal (e.g. an economic want). And in both cases, the replacing of some work leads to opportunities for new work. On the other hand, we tend not to enjoy housework, while people depend on jobs. Supporting Question 3 With supporting Question 3— “What is the eect of technology on employment in the U.S. economy?”—students analyze two graphs of manufacturing work done in the United States. “Manufacturing” is a broad part of the economy that involves creating physical goods. ough not all manufacturing is done in factories, that will be the most vivid example for students.e rst graph shows that overall employment in the U.S. has not really gone down, even if manufacturing employment has (see page xx). e second shows that manufacturing output has gone up, even though the percentage of Americans employed in manufacturing industry has gone down (see page xxx). ere does not seem to be a close relationship between the overall unemployment rate and the loss of jobs in manufacturing. 1980 1985 1990 1995 2000 2005 2010 2015Civilian Unemployment Rate345678910PercentCHART 1U.S. Unemployment Rate Since 1975 172 • Teaching the C3 Framework: Part Two

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As a formative assessment task, students make a claim about the relationship between manufacturing and employment. A key takeaway should be that increased productivity has made manufacturing jobs not as necessary—but that people have found new opportunities. e following questions may be used to prompt discussion about the graphs. ▷ What has happened to manufacturing output? Answer: It has gone up. ▷ What has happened to manufacturing employment (the number of people it takes to make what we make)? Answer: It has gone down. ▷ Based on what we have studied so far about technology, explain how is it possible that the amount of things created has increased, while the number of workers has decreased. Answer: Technology has made the workforce more productive. ey can make more things with fewer workers. ▷ Has the number of people unemployed in the United States (those without jobs) gone up as they have lost manufacturing jobs? Answer: No. ough the unemployment rate goes up and down, it does not seem to be closely related to the people losing jobs in manufacturing. ▷ How is it possible that the number of factory jobs has gone down, but the number of people out of work has stayed mostly the same? Answer: e people who have lost manufacturing jobs have found other jobs. ▷ Do you think people who lost manufacturing jobs were happy with losing their job, since other opportunities seem to be available? ere are many possible answers. However, the teacher should point out that in the 2010s, it oen took a long time—sometimes months—for people who lost manufacturing jobs to nd new jobs. is in-between time was oen very dicult for people.1980 1985 1990 1995 2000 2005 20101975Civilian Unemployment Rate0102030405060708090100110Percent, IndexOutput in Manufacturing in the United StatesPercent of Employment in Manufacturing in the United StatesCHART 2U.S. Manufacturing Output and Employment, Compared with the Civilian Unemployment RateShould We Tax Robots? • 173

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SUMMATIVE PERFORMANCE TASKBy now, students will have examined the argument of Bill Gates about the reason to tax robots, studied the opportunities for improved technology and productivity in home life, and analyzed the eect of productivity on the U.S. manufacturing sector. ey should be familiar enough with the core disciplinary concepts that they can use them.As a result of their study of primary sources that uncover the eects of technology on productivity, students are prepared to make an argument in response to the compelling question, should we tax robots? Students’ arguments will likely vary, but could include any of the following: ▷ Yes, put a tax on machines that take human work. at can slow down the pace at which people need to change jobs, and provide money that the government can use to help people make the change. ▷ No, don’t tax machines that save time and increase productivity. People’s well-being comes from productivity, so discouraging productivity is the last thing you want to do. ▷ Tax some machines but not others. Bill Gates pointed out “robots” as the machines that should be taxed—we should pick and choose which machines most act like humans and tax those. Aer all, if humans pay taxes for their work, robots should too.As an extension activity, students interview another adult in the community using the following questions: “How has technology helped you do your job better?” and “How do you think you might need to adjust to new technology in your job?” Both these questions get at the essential tension of technology changing the work we do, which can be both benecial and painful.Students take informed action by extending their study to their local economy and even presenting their ndings publicly. As an initial step in understanding the problem, students may examine the ways that their local economy is changing. As a next step, they may consider options for helping others to know how the local economy is changing and suggest ways that the community can adjust. Students can conclude their work by presenting their ndings to local business or political leaders. 174 • Teaching the C3 Framework: Part Two

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ABOUT THE VIRGINIA COMMONWEALTH UNIVERSITY CENTER FOR ECONOMIC EDUCATIONThe Virginia Commonwealth University (VCU) Center for Economic Education exists to advance economics and personal ﬁnancial literacy among Central Virginia’s teachers and students, in partnership with the Virginia Council on Economic Education (VCEE). It accomplishes these goals primarily through teaching, research and publications, student programs, and advocacy. The Center works in partnership with local classroom teachers, and has used a design-based research approach to developing authentic curriculum and assessments for the Classroom Mini-Economy program. Free resources from this can be found at http://www.vaminieconomy.org.It reaches about 100 teachers each year with multi-day professional development institutes, and engages hundreds more teachers with shorter sessions that focus on relevant, engaging lessons and strong content knowledge. The Center also reaches several thousand students through VCEE’s academic competitions such as the Stock Market Game, and the Governor’s Challenge in Economics and Personal Finance. The Center’s annual feature event is the Mini-Economy Market Day, in which about 1,500 elementary-age entrepreneurs gather at VCU to see how their classroom businesses fare in the hustle and bustle of a play-money market. ABOUT THE AUTHORThe author of this chapter is Stephen H. Day. Originally from West Lafayette, Indiana, he taught high school social studies in North Carolina before taking a position at Virginia Commonwealth University. He is passionate about helping students learn an economic way of thinking.Should We Tax Robots? • 175

Should We Tax Robots-Dr. Stephen Day

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