Comment 61461

By A Smith (anonymous) | Posted March 24, 2011 at 12:57:46 in reply to Comment 61451

You're missing the point. In decades prior, we could spend only 2.5% of GDP on automation and produce GDP gains of 5% a year. Today, we spend 4X as much on business machines and yet economic growth is less than 2%.

We may be investing in more automation, but it isn't translating into more output of goods and services.

It may be like the person who drops his calories down too far and then gets fatter because his metabolism slows down. If we replace the person with businesses and calories with humans, it may just be that in trying to cut waste, businesses are actually destroying their customer base.

By raising taxes on M/E, businesses could still buy them, but they would only be the ones with the greatest return on investment. In other words, the machine would have to be so much better than the human, that it would be stupid not to buy it. In this way, the quantity of machinery would likely go down, but the quality would go up.

The net effect would be that business would have more money to pay in salaries, dividends, or lower prices for consumers, while the average business machine would be more valuable than is currently the case.

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