In August, 2011, Warren Buffett wrote an op-ed article for the New York Times, calling for higher tax rates on the rich that was a veritable symphony of statistical sleight-of-hand. I wrote about it here.

But in today’s Wall Street Journal, he redeems himself with an excellent article on the minimum wage. Buffett points out that in our ever-increasingly technical economy, those without high-order skills are being left further and further behind. Just look at any checkout section of a supermarket. Ten years ago, all the lines were manned by clerks. Today about half are manned by computers. In ten years, nearly all will be computerized.

The answer to this problem for economically illiterate liberals (pardon the redundancy) is to jack up the minimum wage. But that will only accelerate the rate at which computers and robots replace human beings. The minimum wage is price fixing plain and simple and price fixing is always economically pernicious because it prevents market forces from working, producing shortages or surpluses of the commodity whose price is fixed. Teenage unemployment right now is over 17 percent. As Buffett explains,

In my mind, the country’s economic policies should have two main objectives. First, we should wish, in our rich society, for every person who is willing to work to receive income that will provide him or her a decent lifestyle. Second, any plan to do that should not distort our market system, the key element required for growth and prosperity.

That second goal crumbles in the face of any plan to sizably increase the minimum wage. I may wish to have all jobs pay at least $15 an hour. But that minimum would almost certainly reduce employment in a major way, crushing many workers possessing only basic skills. Smaller increases, though obviously welcome, will still leave many hardworking Americans mired in poverty.

Buffett would prefer, and I concur wholeheartedly, the use of the earned income tax credit:

The better answer is a major and carefully crafted expansion of the Earned Income Tax Credit (EITC), which currently goes to millions of low-income workers. Payments to eligible workers diminish as their earnings increase. But there is no disincentive effect: A gain in wages always produces a gain in overall income. The process is simple: You file a tax return, and the government sends you a check.

Buffett says, correctly, that the EITC needs reform (it’s rife with fraud now, and it should be paid out monthly rather than annually, reducing the need for short-term, high-interest loans), but it is a much fairer and better targeted system than the minimum wage. For one thing, it goes to heads of households. Most minimum wage workers are teenagers still living at home and college students. As Buffett writes, “In essence, the EITC rewards work and provides an incentive for workers to improve their skills. Equally important, it does not distort market forces, thereby maximizing employment.”