By Geoff Colvin and Ryan Derousseau
February 22, 2017

Three important developments that deserve more attention than they got in the news of the past 24 hours:

Bill Gates proposes robot tax. Microsoft’s co-founder suggested that robots should be taxed like human workers, based on the value of their work. As a matter of tax policy, the notion seems obviously loony. Gates used the example of a human worker making $50,000 who is replaced by a robot; “you’d think we’d tax the robot at the same level,” he said. But of course the robot is brought in only because it can do that same work for less than $50,000. To tax the robot’s owner as a human earning $50,000 would in effect make efficiency illegal. In addition, the principle Gates proposes would seem to require taxing any technology that eliminates human labor, presumably starting with the wheel.

Yet as an insight into societal issues, Gates’s idea illuminates a larger truth. For the first time in history, technology may be – not for sure, but may be – eliminating jobs faster than it creates new ones. If it’s really doing so, then our whole economic and social order will be remade in a disruptive and destabilizing way. Gates is suggesting a way to slow down the process and generate tax revenue to fund job retraining. Regardless of his idea’s merits, the issue won’t go away. Last summer the European Parliament advanced a proposal that robots be deemed “electronic persons” for whom their owners must pay social security tax. That idea sounds similarly loony. But business and government leaders who think so must form their own proposals for addressing an issue that’s sure to intensify.

-Amazon strikes back at Walmart. Amazon offers free two-day shipping, among many other benefits, to Amazon Prime members (who pay $99 a year). Walmart tried a similar $49 membership program but recently dropped it and offered free two-day shipping on orders of at least $35. Now Amazon has dropped its free-shipping minimum for non-Prime members from $49 to $35. Why should you care? Because Amazon vs. Walmart is shaping up as one of the great business battles of all time, with neither side willing to give up an inch of ground. Every move is strategically important. We’re watching a classic case study playing out in real time.

-The aircraft carrier USS Carl Vinson enters the South China Sea. The Navy said the deployment is part of “routine operations,” and no doubt it is, but the Carl Vinson, a so-called supercarrier with 90 aircraft and a crew of 6,000, sends a message wherever it goes. In response, China’s foreign ministry told the U.S. to “refrain from challenging China’s sovereignty and security” in the area. China’s claims around the Spratly Islands and elsewhere in the South China Sea, which an international tribunal at The Hague condemned last year, would give China control over 30% of the world’s shipping, worth $5.3 trillion a year. It seems inevitable that push will come to shove, and the stakes are enormously high.

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