Why not a robot tax?

Plus: Why I think more journalists should be on TikTok

Hi friends,

This is a long newsletter, but a lot’s been going on the past few months. Apologies for the navel gazing, but if any editors would like a more fully-fleshed out story on how journalists today are adapting to the changing industry, I’m happy to write it! :)

Anyway, I still do a lot of actual reporting/interviews, and I realized you all might find some of the “cutting room floor” info interesting, so I’m including some below.

In today’s issue:
1. Is it time for a robot tax?
2. Thoughts on 10 months of freelancing
3. On my radar

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okay but if all the robots were this cute…

Is it time for a robot tax?

One of my gigs is writing the weekly newsletter for The Rest Is Politics:US, a politics podcast featuring the BBC’s Katty Kay and Anthony Scaramucci. Typically I do not listen to explicitly political podcasts because I find them insufferable but I like Katty and Anthony’s dynamic and their conversations are pretty interesting.

The newsletter has evolved quite a bit since I started working on it ~October, and I like what it’s turned into because it features more of my reporting and writing. :) Last week, I wrote robot taxes, which you’re likely to start hearing a lot more about as layoffs nominally related to AI keep occurring.

I cannot figure out how to link to individual issues of the newsletter, so I am copying and pasting my essay below (TRIP:US please forgive me!). You can also subscribe here if you’re so inclined, it comes out on Wednesdays.

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Listen to prevailing narratives and there are clear winners and losers in today’s AI infiltration of the economy: workers will see, potentially, tens of millions of jobs eliminated, while companies and shareholders reap the productivity and labor cost-savings gains.

But Gerry Tsoukalas, an information systems professor at Boston University and one of the authors of a new paper called “The AI Layoff Trap,” says over-automation can end up hurting workers and companies, and having vast negative ripple effects throughout the economy.

Tsoukalas relates the situation to ordering an expensive steak at a dinner where everyone’s splitting the tab evenly.

If your companions order less costly meals, you get a great steak at a cheaper price. But if everyone orders the same steak, you will end up paying more than you can afford. AI layoffs, he says, work the same way.

“The company that automates keeps the full cost saving” of the labor it’s no longer paying for, Tsoukalas says. That’s like ordering the fancy steak. But every company then has the same incentive to automate. “And everyone ends up with weaker demand, because the customers they rely on are the workers they just fired.”

In Tsoukalas’s model, firms end up hurting themselves just as much as they hurt workers. If enough people lose their jobs to automation, no one is left to buy any company’s products. Businesses, he says, are acting rationally by automating, but ultimately “competing themselves into a corner”. The problem is not AI itself, but rather every company implementing it at the same time with no guardrails.

To prevent that trap, Tsoukalas and his coauthor, Brett Hemenway Falk, a research professor at the University of Pennsylvania, modeled different solutions, including investing in workforce retraining, increased collective bargaining and implementing universal basic income.

But the method they found to be the most effective at not just being a bandaid but at actually preventing the widespread layoffs in the first place is a Pigouvian automation tax — or as Anthony called it on the podcast this week, a robot tax.

“Real skilled policymakers are talking about wage insurance,” Anthony said. “If you’re going to be using the AI, you have to pay into a pool so that when you fire the worker, the worker can have supplemental income for a period of time until they can get retrained or find another job.

“Like it or not, we have to come up with a robot tax,” he added. “When you’re replacing a worker with the software, you have something in there that helps equalize things, because if you don’t have that you won’t be able to have a layer of cushioning for the economy.”

Essentially, a robot tax would be a levy on a company for every job it takes from a human worker and automates with AI.

The framework for exactly how the tax would be implemented still deserves more study, says Tsoukalas. But at a high level, companies could pay a small fee when they replace a worker with AI, which could be enforced by the IRS.

It would be self-limiting, he says: As laid-off workers find new jobs, the robot tax would shrink, and eventually phase itself out as the economy adjusts. But it would be enough of a deterrence to prevent companies from instituting widespread layoffs all at once.

“No amount of retraining, income support or bargaining will slow the arms race; only a tax on automation itself changes the calculus that drives it,” the paper reads.

Though the so-called robot tax hasn’t received significant attention in public policy debates, Tsoukalas and Falk aren’t the first to propose it.

Microsoft co-founder Bill Gates floated the idea as far back as 2017, and politicians including Sen. Bernie Sanders and former New York City mayor Bill de Blasio have suggested similar taxes.

And in a recently released list of policy proposals, OpenAI called for a wholesale modernization of the US tax code.

“As AI reshapes work and production, the composition of economic activity may shift — expanding corporate profits and capital gains while potentially reducing reliance on labor income and payroll taxes,” OpenAI’s plan reads. “Policymakers could rebalance the tax base by increasing reliance on capital-based revenues…and by exploring new approaches such as taxes related to automated labor.”

Tsoukalas is generally pro-AI, he says, and he uses the technology every day. But he has been observing his students’ fear of displacement before they can even enter the workforce. The technology is already being used to replace entry-level roles and he fears that the AI industry as a whole is losing the public’s trust.

“That’s not just a policy risk. It’s an existential risk,” he says. “The companies that get ahead of this will end up in a very different position from the ones that don’t.”

A robot tax could help not only his students and other young workers, but also prevent the public from turning its back on the tech. People would feel less like they’re being left behind if policymakers took a serious approach to stemming job losses.

Rather than focusing on what to do after AI has supplanted workers, his paper argues that the government can act now to stop major displacement before it begins. His paper is one big “if”, he says. Companies and policymakers still have time to influence the ultimate outcome.

“In our model, a fee like this would directly reduce the pressure to over-fire,” he says. “And if we’re right, both workers and firm owners would end up better off, because over-automation in the model is hurting everyone, including the companies doing it.”

The cutting room floor: UBI, innovation, and the wrong takeaways

I shared some general thoughts on this study and my interview on TikTok (more on that below), and naturally everyone got hung up on my throwaway line that the researchers found that universal basic income (UBI) wouldn’t solve the problem they were interested in solving: preventing mass AI layoffs that end up hobbling the entire economy.

What the researchers say is that UBI is good for cushioning the people who get hit with a layoff, which does matter. But on its own, “UBI is a painkiller, not a cure.” But it can work in concert with the automation tax to help the workers (hopefully fewer of them) who do lose work because of AI. When I asked Tsoukalas about it, his response is pretty intuitive:

UBI is a check to households. Which is nice if you’re a household. But it doesn’t change the math a company runs when it’s deciding whether to replace the next worker with AI. They’re comparing what the worker costs to what the AI costs, and that comparison doesn’t change whether or not the government is sending checks to people. So you still get the layoffs. You still get the lost spending. And in our model, there’s even a scenario where UBI can make things worse. If firms can freely enter the market, the extra consumer spending from UBI attracts more firms in, and a more crowded market automates harder. So UBI might end up partially working against itself. That doesn’t cancel out its benefits, but it complicates the picture. Think of it this way. UBI is like putting buckets under a leaky ceiling. It catches the water, which matters, but it doesn’t fix the leak.

I also kind of feel like people are crazy if they think our current political leaders will pass anything close to UBI. They barely want people to get unemployment benefits.

Here is another point from Tsoukalas I thought was interesting. I asked him what his response is to people who say a tax like this on AI will “stifle innovation,” which is the argument against every type of tax on businesses:

It gets the direction backwards. A tax like this doesn’t punish innovation. It just makes companies account for the damage their layoffs impose on the rest of the market. Carbon taxes didn’t stop energy innovation. They helped it. Same idea here. One more thing. In our model, this kind of tax should be self-limiting. As laid-off workers find new jobs, the right tax rate shrinks on its own. So you don’t need it forever. It phases itself out as the economy adjusts.

And here is his response to what he wants readers to take away from his research:

That the real story isn’t AI versus workers. It’s companies competing themselves into a corner. In our model, seeing the problem coming doesn’t stop it. More competition makes it worse. Better AI makes it worse. UBI, retraining, profit-sharing, companies trying to negotiate with each other, none of those seem to touch the underlying problem. The only thing that does, in the model, is making companies pay for the damage their layoffs do to others. Until that happens, the race doesn’t end. Not because anyone’s a villain. Because everyone is rational and they are caught in a trap.

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Thoughts on 9-ish months of freelancing

It feels both significantly longer and shorter than 9 months since I was laid off from my full time journalism job. I’ve done quite a bit over that time!

The Purse

The biggest thing is that The Purse has significantly expanded. We launched a stand alone site and publish (almost) every week day, and I launched three series of my own: Work History, Meal Plan, and 30-Something (is that too many?). We are posting more on Instagram, on LinkedIn, and attempting to do so on TikTok. We have brand partnerships (including a big one with Babylist that is the reason I can pay my bills), editorial partnerships, sponsored events, book offers, and more ideas than we know what to do with. We’re making pitch decks, taping podcasts, designing our own featured images and social posts, and hiring freelancers and consultants…it’s all actually pretty crazy!

99.9% of this is happening because of Lindsey Stanberry and how much everyone loves her; she’s just bringing me along for the ride and I am very grateful. (I also work really hard and am wearing a lot of new hats, promise!) I have a lot of thoughts on journalists needing to do all of this which I may expand on at some other time.

Also, shoutout to my husband Chris who does so much design work for us. The Purse would not be the same without him—nor would Money Moves!

Events

Aside from The Purse, one of the things I was most excited to do outside the constraints of corporate media was to try out new roles and learn new skills. To that end, I worked with Semafor from October(ish) to last week on Semafor World Economy, their 5-day (!) conference in Washington D.C. Events are a very important piece of the journalism revenue pie right now, so I wanted to get more hands-on experience working on them.

All love to the events team who put together something truly impressive, I sincerely don’t know how you all do it every day—I’m still recovering from that event and all of the work and time it required. Pretty much everything went off without a hitch, and we somehow got ~400 CEOs/government officials on stage on time over the 5-day period.

But this taught me that I really am just an editorial girl at heart. I couldn’t help but be jealous of the journalists doing the actual interviews on stage—that’s where I want to be!

To that end, Lindsey and I want to host a retirement mini-conference/panel discussion/talk, so hmu if you know how to do that. Something else I’ve realized as a freelancer (and editor at The Purse) is that I can simply just do what I want, I don’t need management’s permission. So I am putting this out into the world because writing down what I want has been working out pretty well.

Other writing

As mentioned above, I am working on the TRIP:US newsletter, which sort of helps accomplish another of my freelancing goals: Publish non-money related stories.

Look, I know retirement/taxes/investing/wealth management inside and out, but sometimes you just want to have a little fun. For TRIP, I’ve now written in-depth about the aforementioned robot tax (money related, but also policy), Americans’ changing views on Israel, Trump’s un-presidential rhetoric, and political violence in the US.

So, not exactly fun, although it’s been a really nice change of pace to cover something I don’t know intimately and interview new sources. Learning! That’s why I got into this biz in the first place.

That said, I would like to publish something actually fun, and by that I mean something on culture/food/fashion/writing/books/TV/relationships/family…how do I do this?

And then of course, I have published money-related stories in The Washington Post (rip?), The New York Times, and Kiplinger. Now that I have more time post-Semafor, I plan to get back to pitching editors more regularly, though it is hard to tell if there are any left.

TikTok

Many months ago, I said I wanted to start posting on TikTok. It took me a few months to actually do it, but I have been more or less posting vids consistently for the past two months (minus the past two weeks when Semafor consumed my life/I was trying to catch up with everything else).

It’s been really interesting to see what works there and what maybe doesn’t, and how people react to my verbal words versus written.

Shooting short-form video content is difficult! It’s hard to say exactly what you want to say, especially when talking specifics about financial/economic topics, straight to camera with limited “ums,” mess ups, etc. This has never been a skill I’ve practiced or particularly wanted to hone (I am deathly shy…is that surprising?) but TikTok is where the audience is.

There are many reasons I am posting on TikTok, most to do with the demise of traditional journalism you all probably know about. I could only get annoyed at so many videos with bad financial advice or dumb takes on “the media” without trying to offer a different perspective, you know?

My most liked and watched video is honestly one I did as a lark; isn’t that always the case? But watching it back, I do think it shows my general, deep knowledge on the topic at hand, which I think some audiences desperately want. (Please ignore the thumbnail…I didn’t know how to change that yet.)

@aliciatalksmoneyMore workers are taking emergency hardship withdrawals from their 401(s), according to Vanguard—never a good sign for the economy. Increasing usage of auto-enrollment and recent expansions of the reasons to legally make hardship withdrawals are two factors. #economy #retirement #401k #vanguard

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I hope to see more journos join me there. I actually find it kind of an inspiring place, though many of the comments are quite dumb. After one or two videos, I was bursting with ideas. I like it as a space for a first or second draft—talk about a topic, see what’s sticky.

Also, to be frank, the types of videos I’m making require much less work than writing a fully fleshed out article, so if you want to cover something but don’t quite have the time for the whole editorial process, you could post a few thoughts there.

On a basic level, I’ve literally learned how to film a video (this is something I never had to do on my own though I arguably should have), edit it, add captions, etc. And I still have a lot to learn! Shoutout to my friend Kristen who gave me a handy template I use to ensure my captions/graphs/article excerpts are all showing on the screen and not hidden by the comments/phone UI. These are things a non-visual person like me doesn’t know to think about. There are many more, I’m sure.

Next, I’d like to experiment with longer-form videos about the topics I’m passionate about (e.g. retirement, housing), that require more reporting, script writing, and editing.

The money

Financially, I weirdly feel more in control of my money now than I ever did working full time. Yes I am paying out of pocket for health insurance, I am not getting employer retirement contributions, and I have to set aside money for taxes on my own. But I feel much more in tune with my finances now.

I credit that to there always being the possibility of making more/taking on more work if I really needed to, doing work I want to do, which wasn’t really an option at previous FT employers. (And maybe also because I’m older and wiser.) That said, I really stretched myself the past few months juggling The Purse, Semafor, TRIP:US, and other one-off gigs for companies like Wealthfront. While it paid off financially, I feel pretty burnt out and will try to avoid that in the future.

There is still a lot of stress about the future and a lot of feast or famine, which I am still getting used to. And I’m always thinking about what I might be able to add on, what happens if one client doesn’t re-sign me, and so on.

But I feel pretty good about where I’m at financially. I have no idea what the next 30 years have in store for me but, well, do any of us?

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On my radar

• You better believe I loved the 30-minute interview Taylor Swift gave The New York Times about songwriting. This is shady tho.

• Also in popular white millennial woman culture, I am enjoying Lena Dunham’s memoir Famesick. I was never a Girls-head but I was also never a Lena hater. I think she’s just a remarkably interesting and creative person who makes mistakes as we all do but has much more to offer the world. Her newsletter on here is also very good (but did recently lead me to spending an ungodly amount of money on eBay).

• If I can plug one more of my TikToks, people really seemed to like my private credit break down, which makes me feel…hopeful?

• I am speaking on a panel at SABEW next Friday about creator journalists. If you’re there, say hi!

That’s it for now. See ya soon,
A

P.S. Thanks Christopher Skinner for the illustrations!