February 21, 2017
Yes, as Un-American as that may sound, Bill Gates is proposing a tax that would undermine Donald Trump’s efforts to speed the rate of economic growth. Gates wants to tax productivity growth (a.k.a. “automation”) slowing down the rate at which the economy becomes more efficient.
This might seem a bizarre policy proposal at a time when productivity growth has been at record lows, averaging less than 1.0 percent annually for the last decade. This compares to rates of close to 3.0 percent annually from 1947 to 1973 and again from 1995 to 2005.
It is not clear if Gates has any understanding of economic data, but since the election of Donald Trump there has been a major effort to deny the fact that the trade deficit has been responsible for the loss of manufacturing jobs and to instead blame productivity growth. This is in spite of the fact that productivity growth has slowed sharply in recent years and that the plunge in manufacturing jobs followed closely on the explosion of the trade deficit, beginning in 1997.
Manufacturing Employment
Source: Bureau of Labor Statistics.
Anyhow, as Paul Krugman pointed out in his column today, if Trump is to have any hope of achieving his growth target, he will need a sharp uptick in the rate of productivity growth from what we have been seeing. Bill Gates is apparently pushing in the opposite direction.
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