Tuesday, March 7, 2017

Tyler Cowen Says If You Are Going to Tax Robots Do It Sooner Rather Than Later

Tyler Cowen
The Koch-funded economist Tyler Cowen has posted a brief analysis titled, Should we tax robots?.

I am completely flummoxed. Tyler, a supposed free market economist, can't even come out against a new tax on capital. Instead, he uses a bureaucrat's technocratic tools to look at a robot tax as though the tax may have legitimacy on its own:
So it depends on how labor and robot elasticities relate to each other.  I don’t know what relationship between the parameter values is likely, but typically in these scenarios just about any result is possible.  The robot tax would seem to do best when the elasticity of demand for robots is high, but the corresponding elasticity of demand for labor is low (and differentials in supply elasticities do not offset this).  As robots and labor become more substitutable, that difference in demand elasticities is likely to diminish.
His conclusion is, in typical Tyler fashion does not provide a clear answer to his own thinking:
So if you are going to do this, maybe it is necessary to do it soon, precisely when it does not seem needed.

Also see:  Robots and Jobs



  1. This and universal basic income both suffer from similar Malthusian myopia. Permanent unemployment has not been created by automobiles, factories, or computers, and will not be created by robots. Just because these people cannot personally envision the entire future economy does not mean we need more central planning, especially from people who are essentially advertising their lack of creativity.

  2. Taxing robots is taxing tools.
    Next tax hammers, drills, screw drivers, nail guns, wheel barrows?
    I'm sure that the buggy whip manufacturers wanted to tax Model T's too.
    Agree with Oz that the problem is with central planning - it always needs more and more money.