Tuesday, 3 May 2016

10% of Amazons "workforce" are now robots

Amazon now employs about 230,000 people worldwide and has over 30,000 very cute Kiva robots whizzing about the distribution centres. Press reports suggest they are very keen to grow that number.

Take a look above at the robots in action.

If these Kiva Robots did not exist we can speculate that Amazon would perhaps hire another 30,000 people and pay the payroll taxes etc that would go with that. Perhaps some of the people replaced by the Kiva Robots are now entirely dependent on the government for support in their local jurisdiction.

As a purely theoretical exercise we could assume that these workers would have been paid an average of $25,000 per year which was taxed at an average of 20%. Over ten years this is a loss of $1,500,000,000. No account taken here if additional state support is needed.

From a perfectly reasonable Amazon perspective they are making the supply chain as efficient as possible and meeting the perceived needs of the consumer

With companies such as Rockwell Automation (global sales $7 billion) entirely focused on automating industrial processes it is safe to assume that we are at the start of a pretty rapid acceleration of the shift to automation and robotics operating with a degree of AI.

It must therefore be a very interesting debate with companies such as Amazon as to how much tax they pay in any jurisdiction given that they can massively reduce the tax bill by introducing more robots. No doubt companies such as Amazon will struggle over time with the fairly thin argument about being based in an offshore jurisdiction but they can counter that by stripping out the local workforce and replacing it with robots.

Politicians are in for a pretty tough time as it seems possible that automation on a mass scale will have an even greater impact on the average person than globalisation and the democratic process will start to come under massive pressure if all the wealth becomes too concentrated in the hands of a few global highly automated companies and their shareholders, directors and employees.

The free market philosophy is going to have to work very hard to defend itself if inequality starts to edge up further and the support of the middle class for Trump in the USA suggests tempers are already running pretty hot.

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