2015 May 23 Saturday
Warren Buffett On Brutal Truth About Poor
Warren does not think education can help a significant portion of the population become capable of earning more than a bare subsistence. This is coming from the most accomplished investor in the history of the world.
The remedy usually proposed for this mismatch is education. Indeed, a top-notch school system available to all is hugely important. But even with the finest educational system in the world, a significant portion of the population will continue, in a nation of great abundance, to earn no more than a bare subsistence.
The brutal truth is that an advanced economic system, whether it be geared to physical or mental skills, will leave a great many people behind.
Buffett prefers an expansion of the Earned Income Tax Credit. But I think that's a mistake because of the moral hazard. People need to work to earn money. What should be done instead: subsidize their wages. What should also be done: stop the influx of illegal immigrants with few skills who compete against the minimum wage workers.
This problem is going to become far larger because the robots are coming and a move to enact $15 per hour minimum wage is going to accelerate that shift.
By Randall Parker at 2015 May 23 08:16 PM
I think Buffett gets this one right. First he correctly states that education isn't the answer to poverty, contrary to the beliefs of starry-eyed liberals and the education bureaucracy, who believe that just spending more money on schools will make everything great. Then he favors a "carefully crafted" expansion of the EITC as an alternative to increasing the minimum wage. True, the EITC pays people more than they earn, but if the alternative is having them live on the dole and get paid for doing nothing at all, well, I'll take the EITC, flawed though it may be. Of course, Buffett, being a good liberal, never mentions the hardships that immigration causes for poor Americans, or, in some cases, not-so-poor Americans, as when Disney Parks and Resorts recently laid off most of their IT staff and replaced them with H-1B foreigners. Think about that one when you visit the Magic Kingdom.
Of course, Buffett himself is a complete hypocrite. He does everything he can to avoid taxes himself while calling for higher taxes for everyone else. In "Human Events," John Hayward wrote;
Warren Buffet is no different from the other liars and frauds orbiting Barack Obama. His hypocrisy just runs billions of dollars deeper. When it comes to “shared sacrifice,” you do the sacrificing, and they do the sharing.
Buffet may be wrong on a lot of things, but on this I'd say he's right. Education isn't a cure-all for improving the lives of most workers. We don't like to admit it, but there are lots of people who are working at the edge of their talents and capabilities in low level manual labor or service level jobs. Just check the success rates of job retraining programs. Sorry, but you can't take a 50 year old sheet metal worker and teach him to write code.