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

Don't Blame the Robots

How Housing Prices and Market Power Explain Wage Stagnation

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 it, something that “is capable of carrying out a complex series of actions automatically,” then what is a dishwasher? Taxing some machines and not others would be a regulatory muddle.

Finally, whereas Gates saw a robot tax as a way of addressing the negative side-effects of rapid technological change, it is also a tax on capital investment—investment that every country is trying to encourage. No wonder that, when asked if he would support a robot tax, the European official in charge of digital affairs said, “No way, no way.”

Proposals like the robot tax are appealing because countries across the Atlantic are facing wage stagnation and rapid technological change, producing populist backlash. And it seems like robots are at least partially to blame. At Davos earlier this year, a parade of Silicon Valley chiefs drew the connection between the impact of artificial intelligence and populist movements. Microsoft’s Satya Nadella said his “biggest lesson of last year” was to ensure that “the surplus [from] breakthroughs in artificial intelligence” were not concentrated among the few. Salesforce’s Marc Benioff warned of

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