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Don't Blame the Robots

How Housing Prices and Market Power Explain Wage Stagnation

Canadian PM Justin Trudeau high-fives a robot in Boisbriand, Quebec, March 2017. Christinne Muschi / Reuters

Six months ago, Microsoft’s Bill Gates proposed a robot tax, on the grounds that if workers pay taxes, so too should the machines that take their jobs. Such a policy would, in Gates’s words, “slow down the speed” of automation, thereby allowing societies to “manage [the] displacement” of workers. The idea speaks to a widespread sense that the labor market isn’t working like it used to.

But since Gates made his statement, it has become clear that taxing technology entails a comically large number of problems. One is that robots can both reduce and increase the demand for human labor. Search algorithms reduced the need for travel agents, but Uber increased demand for drivers. It is impossible to determine ex ante which robots to tax.

Others have noted that a robot tax would be impossible to structure and police. If a robot is, as the dictionary puts

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