BEIJING: United States President-elect Donald J. Trump has pledged to promote the "America First" doctrine, which is the right platform to boost the US economy. Trump has threatened to raise tariffs significantly on all imports, which are intended to persuade foreign-owned enterprises to open up new factories, warehouses and logistics hubs inside the USA.
Meanwhile, we must also address concerns over prevailing business trends that support the digital transition to fully-automated manufacturing and logistics services. The companies and investors supporting such automation argue that this conversion will increase efficiency, boost mass production levels and lower operational costs in the long-term outlook.
However, it overlooks a crucial societal factor. By moving forward on rapid schemes to invest into robotics, smart technologies, as well as driverless-trucks and tractors, this will inevitably result in factory bosses and logistics operators firing human workers on a massive scale.
Accordingly, Washington must mitigate the dangerous consequences of automation, or we are likely to witness the onset of an economic depression that will wreak havoc on the entire world. Just imagine tens of millions, maybe even hundreds of millions of workers, getting laid and discovering that they got replaced by robots. They won’t reap the financial benefits of this ‘New Economy’ that punishes blue collar workers for not working as cheap as robots.
Tax the robots and offer incentives for hiring humans
Manufacturers and logistics operators have embraced automation, since they have strong profit-motives for it. Why should they hire human workers and pay them living wages when they can purchase a “Made in China” robot laborer that can work 24 hours a day, seven days a week?
But firing workers and hiring robots can have devastating consequences on local factory towns. And if other manufacturers are racing to buy robots to fire human laborers - we are entering the “race to the bottom,” in which manufacturers could go bankrupt or lose substantial market share to business rivals if they refuse to replace human employees with robot staffers.
Therefore, Trump and the US government should consider supporting a proposal to impose higher tax rates on manufacturers using robots. Let’s say a company running a factory lays off its human employees in order to go fully-automated.
Local, state and federal governments should raise taxes on the factory owner. They could charge "Robot Taxes" for each robot purchased or imported. Hence, manufacturers and logistics services operators can still transition to automation and generate profits, but they will be required to pay higher taxes, as well as fund "job training" programs for human beings to help them adapt to the digital economy age.
Trump has already raised concerns over automation
In recent months, the International Longshoremen’s Association (ILA), the union representing dockworkers, had threatened to launch another labor strikes on ports operating on the US side of the east coast and Gulf of Mexico coast in the near future.
The ILA announced a strike last October but it only lasted for a few days with little impact on international trade. The dispute was ignited by the potential installation of cranes that would facilitate the retrieval and storage of freight containers, said John McCown, a non-resident senior fellow at the Center for Maritime Strategy who closely tracks the shipping industry, according to an ABC news report.
Cranes already help to transport containers from a ship and place it in a nearby port terminal. Nonetheless, shipping companies have embarked on plans to utilize additional automated cranes once these goods have reached land, said McCown, as reported by ABC News.
ABC News added that the U.S. Maritime Alliance (USMX), the organization representing shipping firms in negotiations, issued a public statement saying that such automation would upgrade efficiency and boost capacity. Those enhancements would benefit U.S. companies and consumers that rely on purchasing goods from overseas markets.
Yet, Trump after speaking with ILA union leaders at Mar-A-Lago, Florida last Thursday said he will back them and oppose efforts by dock operators to go automated. Trump posted on Truth Social:
“I’ve studied automation, and know just about everything there is to know about it. The amount of money saved is nowhere near the distress, hurt, and harm it causes for American Workers, in this case, our Longshoremen.”
Trump’s decision to protect US dockworkers’ jobs is not only a victory for the ILA but a big win all American blue collar workers.
Make automation great for American workers
Yes, the trends of automated manufacturing and the digital economy could be irreversible, but politicians, thought leaders and senior business executives should ponder the significant impact of replacing human employees with robot laborers.
Manufacturers and logistics services firms feel compelled to go automated as their survival depends on it. Yet, that’s not the right approach for having a sustainable and prosperous economy. When unemployment rates are high that will destabilize the financial markets and consumption.
Manufacturers have boosted the mass production of goods, but many people can’t afford the goods on sale even at lower prices since they are either unemployed or under-employed amid such gloomy economic conditions.
Therefore what can be done for the unemployed? A few experts are suggesting that government should increase social welfare benefits for them but that’s only a temporary fix. We must also recognize the dignity of all employees, including those working on factory floors.
Many Americans are known as the “working poor,” in the sense that they would prefer being employed even in a dirty or dangerous job rather than accept charity or apply for social welfare benefits. But they also struggle to adapt to jobs requiring a degree in higher education or work in the white collar fields.
They like to work with their hands or be physically active, since sitting down and staring at a computer would drive them to serious boredom and they could be prone to misbehaving in the office.
We should not shame such people just because they are ill-suited for an office job. Many of them do wish to become productive members to society and they are much better suited for manufacturing or logistics services jobs.
Hence, Trump should consider a plan to raise taxes on robots and lower taxes on human workers. He can restore the right balance for our working world for today and tomorrow.
(Tom Pauken II., author of US vs. China: From Trade Wars to Reciprocal Deal, AFAI Senior Fellow, Geopolitical Consultant based in Beijing, China)
X: @tmcgregochina
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