Robot Tax

What is this daft discussion about taxing robots as if they are people? Companies are already taxed on the efficiency gains if a robot takes a human’s job.

Company A employs one human to whom they pay $100 to produce one widget that costs $100 and that they sell for $1000. The company earns $800 and pays taxes on it. The human earns $100 and pays taxes on it.

Company B fires its last employee, replacing him with a robot. The robot produces one widget that costs $100 and they sell it for $1000. The company earns $900 and pays taxes on it. Sure, you get to depreciate the robot, but you had to buy it in the first place.

What will rising rates cause?

I get asked almost every week what will happen when rates finally rise.

This is something that most people think they kind of understand, but almost nobody has actually thought through.

The correct answer is that it depends why the rates are going up. Rates, you see, are pretty much always a dependent variable. They do not simply rise randomly and cause chaos in the world. Now, that doesn’t mean they are predictable, since the factors that affect them may not be predictable.

For example, if rates rise because the economy keeps doing wonderfully, unemployment is minuscule, wages are rising, and inflation is at 3%, then I’d guess you’d look at the correlation between rates and the market, and say what a good thing rising rates are, both lines are up and to the right.

However, as we said before, interest rates are essentially a dependent variable. People get confused about this because the Fed can change a couple of rates (either by setting them directly or with open market operations), but working ideally, the Fed isn’t making those decisions in a vacuum.

If we looked at two worlds going forward, one where rates slowly march up as the economy does well and inflation grows, and one where the Fed decides that “just because” we’re going to raise rates by 3%, you can be pretty confident the stock market and economy are going to react relatively poorly to the 3% raise (think taper tantrum), and that the ‘steady as she goes’ timeline is the better one to live in.

Remember, the next time someone asks you what will happen when rates rise, the smart answer is always “that depends on what is causing the rates to rise.”

Goals vs. Systems & Wanting It

People often get confused between goals and systems. If you have goals, you read about how what you really need to get where you want to go is a system. If you have a system, you read about how what you really need are some specific, measurable goals.

The trick that nobody talks about is that what you actually need is both. Setting specific goals that you can check off and feel accomplished by completing is important, and once you have the goal, you have to build a plan to get there, that’s the system.

The piece that people get wrong is when they set the goal, it may be measurable, specific, etc., but it isn’t what they actually want. Setting a goal to run a certain amount of miles in a certain time or make a certain amount of money might sound like what you want, but lots of times it isn’t. And if your goal isn’t really what you want to do, you aren’t going to stick with the system.

In my experience, when it comes to goals (and excellence in general), there are four kinds of people. Those who do ‘it’, those who want ‘it’, those who want to want ‘it’, and everybody else. Surrounding yourself with people who know what they want and then just do what it takes to get there is the ideal. But those people are rare. People who want it can, with the right tools and resources, become people who do it. The most dangerous group isn’t everybody else, they are obviously not who you want to be with. The most dangerous group is those who want to want it. It can be easy to confuse them with people who actually want it — for years at a time. But they don’t want it, they might think they are supposed to want it, and trap themselves into pretending they want it until their whole self-image is as somebody who wants it.