Bill Gates Proposes Tax On Robots And Experts Rebut It

Bill Gates, the founder of Microsoft recently said in an interview that some kind of income tax must be created for robots that replace humans in the jobs. He added that automation must be slowed down to give time for the human workers to get adjusted to the new work environment. He also proposed that tax disincentives must be introduced to overcome the burden imposed by displacement through technology.

Several tech companies are worried about automation that takes away jobs from human workers. In fact, the concept of automation has been replacing human workers ever since the industrial revolution. The introduction of robots to certain jobs will make the humans obsolete. This means that workers who have been enjoying steady paying jobs will be out of work suddenly and they need to acquire new skills to get settled in another well-paying job.

Gates’ proposal on taxing robots has significant problems because it can create more trouble for tax authorities in differentiating income from robots and other artificial intelligence machines that are part of the automation process. Industrial capitalism has made it difficult to differentiate between capital and property. As a result, a majority of the wealth is accumulated by owners rather than workers. Workers who already suffer from long working hours and poor minimum wages will be forced to live with welfare when their jobs are replaced by robots.

In the next 20 years, computer automation will take over a majority of human jobs and there is no doubt it. High-skilled workers capable of operating and controlling the robots will be in much demand while the low-skilled workers should be satisfied with the welfare. They should also learn new skills and redirect their efforts to another industry that requires their contribution.

Limiting the innovation and slowing down automation will only result in limited economic opportunities for everyone involved. Technology has been replacing human jobs for several decades now. In the 1950s, there were 500,000 steelworkers while currently there are only 100,000. When driverless trucks become increasingly common, more than 3.5 million truck drivers would lose their job.

Supporters of automation claim that slowing down innovation will make the economy much weaker. When the products and services are affordable and within reach, demand will increase. This will naturally increase the employment opportunities, but the human workers must upgrade their skills to keep up with the technology. The job opportunities will fade away only when the demand decreases because that had been the case in the past.

In the information technology industry, there is a huge demand for automation which is supposed to help with more employment. When ATMs were introduced, the demand for bank tellers also increased 2% annually as it was less expensive for banks and easily reachable for users. Perhaps, a more sensible approach would be to introduce Universal Basic Dividend (UBD) program which uses returns from all capital investments to give back to the public, thereby sharing the prosperity.

Congress Is Keen On Killing Auto IRA Plans

During the Obama administration, the states are encouraged to create auto IRA programs that enable employers without a retirement plan to deposit a part of the workers’ paycheck automatically into a retirement account. Currently, five states are pursuing this initiative. It is a voluntary program, allowing employers to choose whether they want to contribute. The auto-IRA plans are liked by many because only about 50% of the private sector companies have some form of retirement savings coverage. The auto-IRA plans provide an opportunity for workers to save money even if their employers don’t have a retirement plan.

One of the main concerns for the auto-IRA programs is the coverage by the Employee Retirement Income Security Act. It is a consumer protection offered by the federal government for the retirement plans. Without the ERISA coverage, states must ensure protection. Some lawyers argue that the program won’t be covered by ERISA. To clear the issue, the Department of Labor finalized ‘Savings Arrangements Established by States for Non-Government employees’ rule cleaning that the auto-IRA plans are not covered by ERISA. This has encouraged several states to adopt the plan.

Now, the Trump administration is favorable for the Republicans and the congress is trying its best to dissolve the new rule. Canceling the new rule won’t affect the program altogether. It will only create uncertainty for the program and this can discourage the states from offering auto-IRA programs. A few states including Oregon is ready to launch the program and canceling the rule now will only make the states discuss the repercussions with the lawyers.

A number of private employers are not interested in participating in the popular 401K retirement program. The auto-IRA program only serves as an alternate retirement plan if the employers wish to help their workers to save money. It is important to note that this is not a mandatory program and the state will only make it possible for the employers to encourage their workers to save money. The businesses need not participate in the program if the workers are not interested in saving money for the future.

The auto-IRA program is not a perfect program and it has invited criticism from several financial institutions such as the Chamber of Commerce. The state run auto-IRA programs will be implemented differently in different states and this will result in fewer protections for the investors.

The supporters of the program argue that even though the auto-IRA program is not a substitute for the 401K program, it is vital to encourage retirement security. Those who argue against it consider Wall Street profits greater than workers’ retirement plans. However, the Republicans believe that the new ruling will not help the states and cities to encourage middle-class families to save. Those who oppose the program argue that the states and cities have their own alternatives in place and a new law will only have a negative effect. The AARP has commented that while the program is not perfect, any kind of coverage is better than no coverage at all for retirement planning.

UK Starts To Experience Inflation Pressure As Retail Sales Decline

The UK retail sales data is one of the important measures of inflation in the country. Despite the economic crunch, the retail sales data saved UK’s economy in the final quarter of 2016. However, the current numbers are not so promising for the nation. For the third month, the UK retail sales continue to decline. This means that consumers are not spending money on purchases because they start to feel the pressure of rising inflation rates.

In December, the sales of retail goods in stores reduced by 2.1%. Continuing the trend, the sales declined by another 0.3% in January. The market was anticipating an increase of 1%. In the past three months, the sales declined by 0.4%, recording the worst performance since 2013. The household spending was increasing in the last few months of 2016 and the economy was stabilizing to some extent.

However, the new data reveals that the Britons experience reduced purchasing power. As the prices continue to rise, the British households don’t spend as much as they used it. The cooling in household expenses was not surprising but the reality is harsh to comprehend. The UK economy relies heavily on consumer consumption. When the buying power of the Britons reduce, it could disrupt the economy in new ways.

The consumers of UK played a major role in making the economy resilient after Brexit voting. The current data shows that the people have lost the power to support the economy as the prices continue to increase. Consumers in the UK will have a hard time in 2017 as several things that were previously affordable become suddenly expensive. The declining retail sales number has a direct effect on the value of Pound. It lost 0.7% against the US dollar.

In the previous month, inflation reached an alarming rate of 1.8%. There is nothing the UK could do to reduce the inflation rates and it is set to increase all through 2017. The Brexit negotiations are going to be difficult as the consumers find it hard to deal with increasing import costs. The price of the retail goods increased 1.9% on annual basis and it is the highest increase since 2013. The slowdown of the economy is mainly caused by increased prices of food and fuel. It also forces the Pound to decline in the international market.

The total sales of household goods, food, and other products purchased online reduced greatly in January. As a result, the total sales was just 1.5% higher than the previous year. This resulted in the weakest annual growth. In fact, excluding the auto fuel, the total sales decreased by 0.2% per month.

Inflation is forecasted to rise this year and economists worry that it can easily reach 3%. The wage growth is not encouraging as it increases only by 2.6%. As a result, the British households will have less income to spend on household products. The BOE figures are not encouraging either. Investors expect that the BOE will increase the interest rate from a record low of 0.25% to cope up with the pressure.

Dakota Access Pipeline Moves Forward Towards Completion

The Dakota Access Pipeline project which was stopped during the administration of Barack Obama is granted approval for completion by the Trump White House. The construction of 1,172-mile long underground oil pipeline began in 2014 and it has been controversial ever since. Numerous native Americans from Iowa and Dakota protested against the project due to the environmental impact of the project. In particular, the native tribes Meskwaki and Sioux opposed the construction of the pipeline on their sacred land. President Trump’s executive order has prompted the US Army Corps of Engineers to ease the final approval for the completion of the project.

The Dakota Access project was halted due to the delay in approvals. Now that the project has received all the required federal authorizations, the construction will be expedited to complete the pipeline. The major cause of the protest is that the pipeline has to pass through Sioux land which was promised to the native tribe in the Treaty of Fort Laramie in 1851. Later, the land was taken away from the tribe.

The Standing Rock Sioux tribe receives a major portion of its drinking water from the Missouri river. The pipeline crosses over Lake Oahe and this has raised water contamination issues. Large protests have been organized at the lake Oahe site to express the displeasure of the native tribes. The Army Corps assure that the entire pipeline is constructed underground and cautious measures are taken to prevent any kind of contamination.

Earlier in July, the Standing Rock Sioux Tribe sued the Army Corps for $3.8 billion, challenging that the claimed federal owned land actually belonged to the tribe according to the 1851 treaty. However, the pipeline company and Army Corps have submitted papers to court revealing that a standard review process was undertaken.

Trump directed the Army to review approval requests to operate the Dakota Pipeline through his executive order. Subsequently, the Army Corps granted easement as there was sufficient information available to grant the approval. The Standing Rock Sioux Tribe, however, demands that the alternate route must be considered by the Army Corps. Jan Hasselman, Earthjustice attorney represents the Sioux tribe and he commented that Trump’s order is a violation of treaty rights. The Sioux tribe has promised to take legal action to obtain a ban on the construction of the pipeline.

The supporters of Dakota Access Pipeline are focused on the economic boom that the pipeline can bring about. It can help with a sales revenue of $156 million and income tax revenue. The construction will also bring about 8000 to 12000 new jobs in the region. The pipeline once constructed can move about 470,000 barrels of crude oil per day across the entire Midwest. While Obama tried to end the protest by stopping the construction, Trump’s government has taken action in favor of the energy companies. This means that the Trump administration has a different outlook on the environment and energy issues. The tribe accuses that the new government favors the corporate companies while denying the basic rights of indigenous tribes.

German Exports Rebound, Post Six-Year-High Rise

Data show German exports experienced their highest rise in over six years in August, potentially cooling fears over a slowdown in the world’s third largest export economy.

Germany recorded a 5.4 percent increase in seasonally-adjusted exports in August, according to Federal Statistics Office data released on Monday. The rise exceeded figures forecast by analysts and was the highest monthly rise seen since May 2010.

Imports by the European economic powerhouse also recorded an increase of 3 percent, which reverses the decline recorded in the month before.

In a survey by Reuters, financial analysts had predicted a 2.2 percent rise in exports and 0.7 percent increase in imports.

imports

The improvement in exports helped Germany’s seasonally-adjusted trade surplus to reach €22.2 billion in August. That is an improvement over the €19.4 billion trade surplus reported in July. The performance also exceeded analysts’ forecast of €20 billion.

German exports had weakened in recent months threatening their role as the main driver of the European country’s economic growth. Following the release of the unimpressive July exports data, there were fears that the economy would slow down in the third quarter.

However, the latest figures do not seem to point at any slowdown. Exports are now expected to drive an expansion in the third quarter. The improvement in exports is said to have come as a result of economic expansion in China.

Economic experts cautioned however that world trade still remains weak. A potential “hard” Brexit is considered among the greatest risks that still need to be dealt with.

“This is a welcome amendment. But world trade remains very weak. And there are new risks – for instance that of a hard Brexit,” HSBC Trinkaus’ Thomas Schilbe said, as reported by Business Insider. “The economy in China has stabilized. This is good for producers of capital goods.”

Germany’s total exports to the rest of the European Union in August stood at €54.3 billion, which was a 10 percent boost over the figure for the same month last year. Exports to non-EU countries jumped 9.6 percent from a year ago.

Recent volatility in German export figures has been attributed to the effect of the U.K. referendum. The British market accounts for about 7 percent of exports from Germany.

Data from the leading European market has been reflecting fluctuations since Britons decided in the June referendum that the U.K. should leave the EU. This significantly contributed to low industrial production figures in Germany in July. Industrial production in the country slumped to its lowest level in about two years during the month.

But industrial production rebounded strongly in August, posting its biggest rise since January.

“The light is green for the German economy to thrust into growth in the second half of the year,” Thomas Gitzel, chief economist at VP Bank, said. “The overall growth rate in 2016 could come in better than expected.”

Signs of improvement have made the German government to raise its 2016 growth forecast for the economy to 1.8 percent, up from an earlier 1.7 percent. If that were to be realized, it would be the highest expansion recorded in about five years.

Tim Kaine Supports CFPB’s Payday Loan Proposal

Tim Kaine is backing the Consumer Financial Protection Bureau (CFPB)’s attempt to rein in the payday loan industry with the very first federal regulatory framework for short-term, high-interest loans.

The Virginia Democratic Senator and Vice-Presidential candidate wrote in a letter to CFPB director Richard Cordray that he supports the proposal. He averred to the consumer federal watchdog agency that he thinks the new rules and regulations would better help consumers and protect the most vulnerable.

“The issue of predatory lending is not new nor will it improve without strong action from the CFPB. Too many consumers are stuck in high-cost debt traps. I applaud the CFPB for taking action to end these harmful business practices,” stated Kaine. “I remain encouraged by the CFPB’s focus on predatory payday lending and hope the final rule will be strong to protect consumers.”

Tim Kaine

Prior to the unveiling of the CFPB’s proposal, Kaine urged the CFPB to implement new payday loan rules. Kaine wanted the CFPB to prevent predatory lenders from taking advantage of the impecunious.

During his time as governor, Kaine had installed a payday loan alternative program in which several lenders catered to state employees. The initiative allowed Virginian workers to borrow low sums of cash at minuscule interest rates. This was lauded by state Democrats, while Republicans argued that it was unfair for non-public sector workers. The program is called the Virginia State Employee Loan Program, a unique partnership between the Virginia State Employee Assistance Fund and the Virginia Credit Union.

Kaine has also offered his support for updating the Military Lending Act (MLA). Hillary Clinton’s running mate endorsed the Department of Defense (DOD)’s plan to revise the MLA that would close loopholes that can shield military members and their families from so-called abusive financial practices. (http://www.kaine.senate.gov/press-releases/warner-kaine-back-plan-to-better-protect-military-families-from-abusive-financial-practices)

In December 2009, Kaine published an op-ed in the Wall Street Journal, encouraging the United States government to replicate the Mother of States’s actions on tackling the payday loan industry.

Here is what Kaine opined in the newspaper:

“One thing is clear: As lawmakers craft their proposals for reforming America’s financial system, payday lending should be part of the equation. In the meantime, the option remains open to employers both public and private to offer an alternative that guarantees a meaningful payoff for our families and communities.”

When President Barack Obama took office, one of his mandates was to restrict payday loans. Proponents have celebrated the U.S. president for this goal, referring to the concept that the impoverished are most affected by the industry because of high interest rates, excessive fees and other charges.

This past spring, the CFPB unveiled a payday loan proposal that would complement state initiatives. It received mixed reactions as some said it went too far while others said it didn’t go far enough. Those who crafted the 1,200-page rule noted that it could go into effect as early as next year. However, it has met some opposition from some members of Congress, who want it delayed by two years.

Verizon Reportedly Wants a Price Cut on Yahoo Deal

Verizon had been widely reported to be interested in acquiring Yahoo, but it appears that a possible deal now hangs on an agreement of a discounted price with the popular Internet company.

People familiar with the matter told the New York Post that the leading telecommunications company now wants a slash of about $1 billion off the price agreed for the proposed Yahoo acquisition. This follows recent reports of hacking and privacy breaches by the popular email service provider.

The acquisition deal was originally valued at $4.83 billion.

Two weeks ago, Yahoo revealed for the first time a hacking incident that had occurred in 2014. Names and passwords associated to at least 500 million accounts were estimated to have been stolen in that incident. The breach, which also possibly gave hackers access to users’ telephone numbers and even security questions and answers among others, is considered one of the largest-scale ever.

yahoo headquarters

The company was again in the spotlight few days ago when reports emerged that it had built a program to scan through all of its customers’ incoming emails for U.S. intelligence agencies. It did so in compliance with an order by a secret Foreign Intelligence Surveillance Court to detect signatures used by terrorists.

Verizon has plans to combine its subsidiary AOL with Yahoo to enable it compete more favorably against heavyweights, such as Google and Facebook, who get the bulk of digital advertising dollars. But it now feels that the value of Yahoo has reduced as a result of the recent scandals and, as such, desires a discount, sources say.

AOL CEO Tim Armstrong is believed to be displeased about lack of disclosure on the hack. He also appears to be ready for a Verizon pullout from the acquisition deal.

“In the last day, we’ve heard that Tim is getting cold feet,” a source told the New York Post. “He’s pretty upset about the lack of disclosure and he’s saying can we get out of this or can we reduce the price?”

One of the sources revealed that Armstrong flew to the West Coast few days ago to pitch a case for a price reduction to Yahoo executives. But the Internet company is said to be against any move to reduce the $4.83 billion agreed in July, saying a legal deal was agreed by the parties and the terms cannot now be changed.

Discussions on a possible price cut are ongoing. The requested discount is very likely to be discussed at the next board meeting of Yahoo holding in about two weeks’ time.

Speaking to the CNBC on Wednesday, Yahoo’s former interim Chief Executive Ross Levinsohn seemed to support the request by Verizon for a discounted price. He said it made sense from a business standpoint.

The combined Yahoo-AOL user base will stand at about one billion in the event of a deal being concluded in the first quarter, the NY Post reports. Verizon’s target is for this to increase to two billion by 2020.

Full integration of AOL into Verizon has yet to be completed several months after its acquisition by the telecom giant.

Walmart Increases Stake in Chinese Online Retailer JD.com

A securities filing by American retail giant Walmart indicates it has almost doubled its stake in the Chinese e-retailer JD.com as part of its drive to penetrate the market in the Asian country.

Walmart revealed in a filing with the Securities and Exchange Commission on Wednesday that it had increased its stake in JD to around 10.8 percent. This represents a significant increase on the stake it already controlled in the second-largest Chinese online retailer.

In June, the U.S. retailer had acquired about 5.9 percent stake in JD after selling its Chinese e-commerce marketplace, Yihaodian, to the company.

Walmart

Sources familiar with the deal told the Wall Street Journal that it could confer observer status on Walmart at JD’s board meetings. The only strategic partner of the leading Asian retailer that maintains a seat on its board at the moment is Tencent Holdings Ltd, a very popular social networking company in China which owns the WeChat messaging platform.

Foreign retailers such as Walmart have not had it easy cracking into China, a country whose e-commerce market has grown to become the largest in the world with domestic companies like Alibaba and JD dominating. The U.S. retailer would hope the linkup with one of the largest online retailers in the highly populous Asian country can help with its long-term strategy there.

“This stepped-up investment in JD has been part of our plan, as we continue to be a passive investor,” Walmart spokesperson Jo Warner said in an email statement. “We believe this strategic alliance will help us grow e-commerce even faster in China.”

Online retail spending in China hit $589 billion in 2015, according to Cambridge, Massachusetts-based market research firm Forrester Research. That amount was significantly larger than the $334 billion recorded in the U.S.

JD is second only to Alibaba in the Chinese e-commerce space in terms of gross merchandise volume. The company’s stock price gained more than five percent in after-hours trading following news that Walmart had increased its stake in it. The price stood at more than $29.50 around 6:30 p.m. in New York on Wednesday. It has been on a rise since the Yihaodian online grocery marketplace was acquired by the Chinese retailer in June.

The stake obtained by Walmart in the earlier deal with JD was valued at around $1.5 billion. The value of its stake in the company has now risen above $7.8 billion, according to Forbes.

It was reported at the end of September that Walmart was in talks to invest in India’s largest e-commerce company, Flipkart Online Services Pvt. The largest American retailer was supposedly considering an investment of between $750 million and $1 billion in the ecommerce business which started in 2007.

However, no concrete deal has come out of the reported Flipkart talks so far.

The second half of this year has been a somewhat busy one for Walmart. It bought the online retail startup Jet.com for $3.3 billion in August.

Walmart shares have gained about 17 percent in 2016. Price dropped to $71.67 per share on Wednesday, but later added eight cents in after-hours trading, according to the WSJ.