Justin's note: South Korea just made history.
Two weeks ago, it introduced a "robot tax." It became the first country to adopt this policy.
Now, to be fair, this isn't a tax at all. But it will make it more expensive for South Korean companies to invest in technology. Under the current law, South Korean companies can deduct up to 7% of how much money they spend on automation equipment or robots. But soon they'll only be able to deduct 2% of their investment.
The government hopes this will encourage companies to hire workers instead of buying robots. Below, I talk to Doug Casey about this radical idea…
Justin: Doug, what do you make of this robot tax? Should governments be discouraging companies from investing in innovation?
Doug: It's incredibly stupid. I'm especially surprised to see the South Koreans be the ones to take the first step in this direction.
South Korea is one of the most technologically advanced countries in the world. It's much more advanced on a per-capita basis than the United States or any place in Europe. Most of the countries in East Asia—most prominently Singapore, Hong Kong, Taiwan, Japan, South Korea, and most recently China—have been advancing at warp speed for decades. That's partially because of their social ethos, but mainly because they're very low-tax, low-regulation jurisdictions—like the US was during its golden age.
So, it's very disturbing to see the South Koreans moving in this direction.
Justin: Why would they do this? And do you think other countries will follow suit?
Doug: Why indeed? The reasons offered have to do with preventing unemployment, heading off social unrest, and garnering more tax revenue. The real reasons however, in my view, are fear of the unknown and ignorance of economics.
There's been a lot of talk about taxing robots. The meme is gaining traction with both the talking heads and the hoi polloi. Bill Gates is a big proponent, which further cements his status as being an idiot savant.
What he wants to do is to not just withdraw the tax benefits for investing in robotic technology, but actually tax robots the way that a human worker would be taxed.