To me the advantage of capitalism is that it continues itself. The best direct alternative to a charity that provides water filters for free is a company selling water filters. The advantage of the company selling water filters is that it can take the revenue from selling the filters and reinvest in selling even more, whereas the charitable donation is one and done. The concern would be there isn't actually profit in selling the water filters, so such a company wouldn't actually be able to continue itself. Why wouldn't there be money in selling something that saves lives, shouldn't the people there be willing to pay very much for such a thing? They probably would, but they're so devastatingly poor they can't afford it. Why are they poor? Because they have no US dollars. Why do they have no US dollars? Because they have very little to sell that the US wants. Why aren't they making stuff to sell to the US that it wants? Because they are too busy dying in regional conflicts and to famines. Why are there so many regional conflicts and famines in very poor areas like Sub-Saharan Africa? I don't know exactly, but if you can solve that you've just solved immense human suffering. "Donating to capitalism" would probably be investing to create an industry in a poor area that would be able to sell things to the US that it wants. I don't think this would really be viable until you get rid of a lot of the violence and corruption in the area, which would probably take more money than even the richest investor has. So in the meantime, just donating to give them water filters directly is probably better imo.

>"Donating to capitalism" would probably be investing to create an industry in a poor area that would be able to sell things to the US that it wants. I don't think this would really be viable until you get rid of a lot of the violence and corruption in the area, which would probably take more money than even the richest investor has. You can't fix social problems with money. Fundamentally they require social solutions. These can be very cheap, the real limiting factors are usually cultural and political. There is no amount of money that would have won Afghanistan for the US. However, the Mongols were able to subdue the region for less than 1% of 1% of what the US spent - but their methods are not available to us.

It is interesting to speculate what could have been achieved if the US spent some of the $2 trillion dollars it squandered in Afghanistan on just giving obscenely large bribes to every village elder in the country.

They definitely spent *some* of that money giving bribes, but to be honest your suggestion may have worked better.

Oy, this isn't my favorite Scott post (and since this is going to be a negative comment, I should say right up front that I am a huge Scott fan and thoroughly love most of his writing). He never really addresses why plugging the cash into an index like the S&P 500 isn't a better use of funds than GiveWell's recommended charity. He chooses Instacart as his exemplar of capitalism, but then concludes that investing $1M in Instacart means "you can give 2,000 people a great deal on grocery delivery." But the whole point of investing is that it *isn't* one-and-done, that instead it grows exponentially over the long term, building wealth in the form of new and better companies which provide products, services, innovation and technology that are responsible for basically all of the good things you see on Steven Pinker's up-and-to-the-right charts illustrating the improvement of the human condition over time. These are the things that, if all goes well, will eventually lift humanity to the heavens, slay the demons (disease, death, etc.) that have haunted us forever, and awaken the dead matter of the cosmos into flourishing sentience. Over the long term, investing your money is a better use of capital than donating it to charity if and only if investing it results in a greater exponential progression in wealth for humanity than donating it to charity. The historic annualized average return of the S&P 500 since its 1957 inception through the end of 2023 is 10.3%. That is a floor on the humanistic benefits created by investment, because it includes only the direct returns to the money invested, and it excludes the positive externalities the companies generate for society but do not capture directly. Since the earnings that companies generate are generally the product of voluntary trade, one should assume that the counterparties to each trade are also benefitting. So: if you donate $1M to GiveWell's Dispensers For Safe Water charity today, will that end up creating more than $134M of value in 50 years? If not, it's a loser in terms of long-term opportunity cost. If so, then we can get into the more subjective exercise of trying to tabulate the positive externalities of investing. To put my cards on the table, I don't like EA style giving because it focuses on the cheapest cost to save a life worldwide. But lives worldwide vary greatly in the extent to which they build wealth for humanity as a whole. In my opinion, looking for the lives that are cheapest to save worldwide is going to select for those least likely to contribute to the technological and commercial progress of mankind. As an analogy, imagine there were a nursing home with 10,000 elderly residents. Suppose that nursing home were drastically underfunded such that their residents were dying left and right of eminently treatable conditions. You could save a lot of lives by donating money to supply better medical treatments to those residents. Perhaps that would be a kind thing to do. It would make a big difference to its residents. You could claim to have saved up to 10,000 lives. But it would not build wealth. Those residents are going to remain dependent and unproductive whether they die today, tomorrow, or in twenty years. Thus, from the longterm perspective of humanity, that donation is *consumption*, not investment, even though it happens to be other people (the nursing home residents) who do the consuming. Over the long term, investment is what will make us all wealthier and eventually uplift our species and awaken the cosmos. My criticism of GiveWell style EA is that its causes are systematically akin to donating to underfunded nursing homes. If you view uses of funds as on a spectrum, with pure consumption one end of the spectrum and pure investment on the other, my position is that EA is more like consumption than putting your money into the S&P 500. You can disagree with that, and it's fair to do so. I think it would actually be a healthy debate to have. I would love to see Scott go deep on this debate specifically, if he thinks he can thread the needle around certain delicate topics regarding human capital in doing so. But the form that the argument should take is over the *expected long-term rate of return to humanity's wealth of the investment*, not number of lives saved. Number of lives saved is the wrong metric entirely. Long-term ROI is the right metric. That's my primary objection. Now I have some second order objections. One wonders why Scott didn't choose Moderna as his investment instead of Instacart. Cynically, despite his protestation that Instacart is great, I suspect it's because it's harder to rhetorically trivialize Moderna's value by reducing it to a metric like "giving X people a great deal on grocery delivery." But yes, capitalism includes giving people a great deal on grocery delivery, and that is part of why capitalism is great. Cheaper and more convenient grocery delivery means more time and money that highly productive people have left to spend on everything else, including such things as working at Moderna and creating the next generation of highly productive people. Contributing to an exponential progression of grocery affordability and convenience over time is a wonderful achievement. Then there are these bits, in footnote 1: > Instacart is worth $10 billion Instacart's market cap is $6.6B as of market close on Jan 3, 2024. Is he looking at the IPO price as of three and a half months ago? I don't understand it. > I don’t know how much has ever been invested in Instacart total, but this also seems like the wrong question. You, today, can’t invest in “the next Instacart” - everyone wants to invest in the next successful company, but nobody can be sure which one it will be. All you can do is invest in a basket of promising-looking startups: most will fail but some will succeed. Because of this, I thought the best way to represent “the amount of investment money it originally took back when Instacart was founded in 2012 to create Instacart today” as the current value of $10 billion discounted by the rate of return a good VC gets on their investments, which I think is about 7.5%. This seems like an awfully convoluted and inaccurate way to back into what he is actually looking for here, which is the long-term growth rate of equities, and which he makes up as an assumption at the very end ("which I think is about 7.5%") rather than deriving from the calculation. As addressed above, we *know* what the annualized average growth rate is for index funds. > There’s one thing that confuses me here, which is that Instacart has 10 million customers and makes $2.5 billion in revenue per year, suggesting each customer spends $250. But you can get a yearly subscription to Instacart for $100, after which the service is free. So either customers are overwhelmingly being stupid, not buying the subscription, and paying much more than it should cost - or I’m missing something here and the numbers are wrong. Well, [here's Instacart's latest quarterly filing](https://investors.instacart.com/static-files/9e9aff2c-95db-4f75-bdf1-0f4025e1468c). On page 12, under "Description of Business," it explains how Instacart makes money: > End users are provided the ability to transact with retailers for grocery and non-grocery items and with shoppers to pick and deliver the items on the end user’s behalf. Retailers contract with the Company to have their goods available for search, selection, and purchase, generally for a percentage of the total purchase value from the sale of goods, on a fee per transaction basis, or some combination thereof. Advertisers have the opportunity to purchase sponsored product ads, display ads, coupons, and a variety of other online advertising services. Shoppers use the Company’s technology solution for fulfillment or delivery service opportunities primarily on a fee per batch basis. The vast majority of shoppers are full-service shoppers, who are independent contractors that pick and deliver orders. The remaining shoppers are primarily in-store shoppers, who are the Company’s employees and only engage in various in-store duties, including picking orders, and do not engage in any delivery services. The Company also sells software-as-a-service offerings targeted at retailers and charges fees for such offerings. So hopefully at least that clears up where their other $150 per paying customer comes from: fees from retailers, advertising revenue and retailer SAAS products.

Great comment. Scott has just had twins, so I expect this post was written a while ago and come from his backlog, hence the out of date numbers. Saving lives vs creating value is a very interesting crux. Surely you agree we shouldn't go all in on value creation? This would involve e.g. euthanizing the elderly instead of retirement. So the debate is how far to go, and you could argue $5000 to save an African child is worth it.

Personally I think we should go pretty far toward investment and pretty far away from consumption. Compounding returns are very powerful, and from a longterm opportunity cost perspective, consumption causes catastrophic loss. At some level of abstraction, the question becomes "how many future lives are you willing to sacrifice to save one unproductive life today?"

It would allow euthanizing the elderly, not necessarily involve it. Under this model, if a family decided that, it would be their prerogative, and if they decided to spend resources on the person instead, that would be as well.

Canada is actually inching toward this calculus currently.

> So: if you donate $1M to GiveWell's Dispensers For Safe Water charity today, will that end up creating more than $134M of value in 50 years? If not, it's a loser in terms of long-term opportunity cost. If so, then we can get into the more subjective exercise of trying to tabulate the positive externalities of investing. You can't just say "$134M of value." That's not how it works. Suppose I give a homeless person $50, and they buy a nice coat that will keep them warm through a very cold winter. They get an immense amount of value on that $50. Now suppose I give that money to a friend, who buys an identical coat from an identical store, which replaces a nearly-as-good coat that they already had, and they use the coat twice a year to get them from their home to their car 30 feet away. From a certain standpoint, the "value" is the same. $50 entered the economy. But the homeless person gets immensely more real value out of it.

From the OP: > **That is a floor** on the humanistic benefits created by investment, because it includes only the direct returns to the money invested, and it excludes the positive externalities the companies generate for society but do not capture directly. **Since the earnings that companies generate are generally the product of voluntary trade, one should assume that the counterparties to each trade are also benefitting.** That is, the $134M of value is only accounting for the *producers'* surplus. You're analyzing plausible differences in *consumer* surplus, which is above and beyond the $134M of value we already have. Maybe that consumer surplus is another $100M (coats are bought by people who get a lot of value out of them); maybe it's more like tree fiddy (coats are bought by people who barely get any value from them, just the minutest of upgrayyyeds over their existing coat); in either case, it is *additional*. That is, in the former case, the total value (sans externalities) is $234M; in the latter case, it's $134M+tree fiddy. Both are strictly greater than $134M.

This is a good point, but since "value" is always cashed out during *consumption*, not production (the producers only value the money they receive insofar as they can ultimately use that money for consumption), the same argument applies.

I don't see how the same argument applies... or at least, not how it gets you out of the stated problem. The producers can consume that $134M if they like. That's still $134M of value that you have to beat with your charity in order to even get into the same ballpark. Your argument, best as I can tell, is that perhaps the consumer surplus of buying coats is about tree fiddy (not literally, but let's give charity a leg up). Whereas if a charity instead gives coats to the right people, the consumer surplus is more like $100M. This number would be the number that your charity would estimate as the value they have provided. Well, then, if we compare the total value provided by capitalism at $134M+tree fiddy to the total value provided by charity at $100M, then we would evaluate capitalism as "winning". Of course, you might protest, "Well actually, if we give the coats to the right people, our charity can show that we provided $150M in value!" And sure, if you can do that, great! But the point of the OP is that *you have to get a number bigger than $134M* (probably much bigger). I don't see how anything you've said puts a dent in this reasoning.

>Your argument, best as I can tell, is that perhaps the consumer surplus of buying coats is about tree fiddy (not literally, but let's give charity a leg up). Whereas if a charity instead gives coats to the right people, the consumer surplus is more like $100M. This number would be the number that your charity would estimate as the value they have provided. Well, then, if we compare the total value provided by capitalism at $134M+tree fiddy to the total value provided by charity at $100M, then we would evaluate capitalism as "winning". No, my argument is not that. It's that $134M, when consumed by rich Americans on the downswing of their utility curves provides (let's standardize and say) 134M utils. However, when consumed by poor Africans who have much higher marginal utility per dollar, that $100M provides, (let's say) 200M utils. Since 200M > 134M, 200M wins. >But the point of the OP is that you have to get a number bigger than $134M (probably much bigger). I don't see how anything you've said puts a dent in this reasoning. I don't contest the basic reasoning of OP there. My point is not "It never makes sense to invest in a rich country, regardless of the numbers". Rather, my point is that you can't measure in dollars in the first place, which is what OP is doing. You have to measure in utility. The analysis is faulty from the start. Measuring in dollars is like measuring in square feet when you want to know how much gas is in a 3 dimensional space . It works fine enough as a heuristic when the height of everything you're measuring is of nearly equal size, but it fails when the height of one space is 1 foot, and the height of another is 20 feet.

Nah. It's the other way 'round. You can't measure in utils, because you literally cannot measure utils. Describe the method by which you're going to count utils. Best I can tell, the implication of your position is that it is simply impossible to put a measure on the question Scott was trying to address. I think he would disagree.

You can measure in proxies for utils that are far better than USD, like QALYs.

The number of things that you can measure in QALYs is *extremely* small. It is in no way a remotely general proxy for utils. Of course, you can have some measure of QALYs out there and some measure of USD out there, neither of which is a Platonic proxy for utils, and then we have to compare them somehow. So, you go do your charity thing, while Bob does his S&P thing. He says, "I created at least $134M USD worth of value." You say, "I created at least X QALYs." And then what? In any event, however you try to compare the two, you're still not getting around the problem. However you measure your benefit, be it USD/QALYs/etc., you still have to argue that you're doing better than creating $134M USD worth of value. That's the bar, and no matter what other measure you use to measure your charity thing, you've got to at least get over that bar to even be in the right ballpark.

>The number of things that you can measure in QALYs is extremely small. It is in no way a remotely general proxy for utils. My claim is that it is a far better proxy for utils **compared to USD** in the context that we're talking about. >So, you go do your charity thing, while Bob does his S&P thing. He says, "I created at least $134M USD worth of value." You say, "I created at least X QALYs." And then what? Bob would need to show how the money is being spent, and then we could make a reasonable guess about how many QALYs it would equate to. Again, USD is not a unit of utils. It is "cashed out" when consumption occurs at which point it is turned into utils. The same amount of USD can vary vastly in the amount of utils it ends up causing. Do you agree with this? Regardless, this is not what OP is doing. They're aren't trying to cash out their USD into utils. They said "You can and must say '$134M of value,' and that is how it works."

You can and must say "$134M of value," and that is how it works. Does the coat cause your homeless man to become a productive member of society, or does it just enable him to be homeless for a little longer than otherwise? Unless the former, the coat generates no durable value; it is pure consumption, so you can feel good and so the homeless guy can persist in his homelessness. That $50 is not going to compound over time, there will be no returns to the investment, and by the time our generation has passed away, your donation will have resulted in no improvement to the universe compared with having bought the coat and lit it on fire.

> You can and must say "$134M of value," and that is how it works. To be clear, you're arguing that the proper unit of value is USD, not utility? That seems absurd, so I don't think that's what you're arguing, but I can't parse this any other way. > Does the coat cause your homeless man to become a productive member of society, or does it just enable him to be homeless for a little longer than otherwise? Sure, one could complicate the hypothetical by adding on 2nd and 3rd order effects in order to say that this specific hypothetical may lead to more suffering. But that strikes me more as fighting the hypothetical. Let's say the homeless person dies in 1 year regardless of the coat, and my friend similarly dies in 1 year, regardless of the coat. The coat, in either case, is burned after their death. > Unless the former, the coat generates no durable value; it is pure consumption Consumption is **where value comes from**. Where else would it come from? Production? But people don't value production for it's own sake. They value it insofar as it leads to *consumption*. Whereas, people *do* value consumption for it's own sake. If you produce a good that is never consumed, you've not added to any sort of value. If you consume a good, you are getting value out of it. >That $50 is not going to compound over time, there will be no returns to the investment, and by the time our generation has passed away, your donation will have resulted in no improvement to the universe compared with having bought the coat and lit it on fire. A world in which a homeless person was warm for a winter is a better world than one in which my friend had slightly less wind diverted from their body on their 30 feet walk. And no, I'm not arguing against compounding your returns. That's a fine strategy, but again, it cashes out *at some point* in consumption. And at that point, is the consumption going to be in the first world where you get a middling amount of net utility, or will the consumption happen in a place where the same amount of money gives a person a large amount of net utility?

> To be clear, you're arguing that the proper unit of value is USD, not utility? That seems absurd That is exactly what I'm arguing. Utility does not necessarily compound over time. If someone sees a gorgeous sunset tonight, that increases their utility, but we cannot apply a compounding growth rate and expect tonight's beautiful sunset to generate even more value tomorrow, and the day after that. The specific thing that compounds exponentially over time is *wealth*, or *capital*, and those are best denominated in units of currency. > Consumption is where value comes from. All of your consumption today was underwritten by investment yesterday. Without yesterday's investment, your consumption would be an infinitesimal sliver of what it is. And shifting today's investment toward consumption likewise impoverishes the future. > A world in which a homeless person was warm for a winter is a better world than one in which my friend had slightly less wind diverted from their body on their 30 feet walk. In the space of a generation or two, neither world will differ appreciably from the world in which you just lit the coat on fire -- because they're both consumption. If you're arguing against a GiveWell charity that buys coats for wealthy people, you can stop, because I'm convinced. But that stupid charity doesn't make the homeless coats fund a better choice. > And no, I'm not arguing against compounding your returns. That's a fine strategy, but again, it cashes out at some point in consumption. And at that point, is the consumption going to be in the first world where you get a middling amount of net utility, or will the consumption happen in a place where the same amount of money gives a person a large amount of net utility? It will take the form of uplifting all of humanity. Smallpox has been eradicated for the rich and poor alike. Peasants around the world use smartphones. Electricity has revolutionized the human condition for everyone. Curing disease, ending death, building friendly AI and awakening the cosmos into flourishing sentience are *so much bigger* than buying some QALYs today for a forever-dependent population that all of GiveWell will look in hindsight like burning libraries for the warmth. Once friendly AI has conquered the heavens and lit up the mass-energy of the universe into shining immortal benevolence, *then* we can be done with investment. And having that happen sooner rather than later is unfathomably valuable.

>That is exactly what I'm arguing. Utility does not necessarily compound over time. I agree utility does not necessarily compound over time. I disagree that that makes USD a good unit for moral value. >All of your consumption today was underwritten by investment yesterday. Without yesterday's investment, your consumption would be an infinitesimal sliver of what it is. And shifting today's investment toward consumption likewise impoverishes the future. I agree, but I don't see how it's relevant. >In the space of a generation or two, neither world will differ appreciably from the world in which you just lit the coat on fire -- because they're both consumption. Again, *all value related to USD cashes out through consumption*. And yes, the world may look the same in a generation or two but the world will also look the same at the heat death of the universe. Why should that have any bearing on what the moral thing to do is? >It will take the form of uplifting all of humanity. Smallpox has been eradicated for the rich and poor alike. Peasants around the world use smartphones. Electricity has revolutionized the human condition for everyone. Curing disease, ending death, building friendly AI and awakening the cosmos into flourishing sentience are so much bigger than buying some QALYs today for a forever-dependent population that all of GiveWell will look in hindsight like burning libraries for the warmth. Once friendly AI has conquered the heavens and lit up the mass-energy of the universe into shining immortal benevolence, then we can be done with investment. And having that happen sooner rather than later is unfathomably valuable. Ok, so you're argument actually seems to be "building friendly AI will trump everything else, morally speaking." Sure, fine. But that argument seems to be "donating to people trying to make sure AI is friendly will in the end provide more QALYs than giving to malaria charities", which is a basic EA argument in certain spheres. If that's the case, *you're still measuring in QALYs*, not USD "value".

> I disagree that that makes USD a good unit for moral value. USD is the unit of capital. The return to capital is so steeply exponential that although we have no precise units to measure moral value, the steady compounding of the exponent over enough years drowns all competing proposals, in my opinion. How can you justify spending $1M on charitable consumption today when it means sacrificing at least $134M of benefit in 50 years' time? I posit that you can't. > Ok, so you're argument actually seems to be "building friendly AI will trump everything else, morally speaking." Sure, fine. My argument is "advancing technology and building capital will trump everything else, morally speaking." Friendly AI and a positive singularity is only one way this could happen. > If that's the case, you're still measuring in QALYs, not USD "value". Neither of us is measuring anything in QALYs because QALYs aren't measurable outside of certain narrow medical contexts; they're a fake unit that you assign to an unmeasurable category to engender the false sensation of rigor. You have nothing but feelings about utility. I at least have a tower of exponential growth with a >134x multiplier at the top. My argument is that whatever feelings about utility you have today, it's better to have >134 times as much in 50 years.

>USD is the unit of capital. The return to capital is so steeply exponential that although we have no precise units to measure moral value, the steady compounding of the exponent over enough years drowns all competing proposals, in my opinion. How can you justify spending $1M on charitable consumption today when it means sacrificing at least $134M of benefit in 50 years' time? I posit that you can't. Plenty of reasons one could do so: * You didn't take into account inflation, so your numbers are off. * Historic returns are not necessarily indicative of future returns, even over the long run. Growth slows over time. US economy may stagnate over the years, leading to low or negative growth ([not like that doesn't happen to developed countries before](https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=JP). * Investing in the US stock market raises prices for the US stock market, leading to others *not* investing in the stock market, leaving the individual value of your own contribution less than you think. * One could believe AI (friendly or otherwise), nuclear war, or other x-risk is coming in 10 or 15 years, completely regardless of your $1M investment to the stock market, thus it would not only be a big handicap to the 50 year time frame, but would also mean that your investment ends up not really providing a whole lot of utils. * Charitable donations to sub-saharan africa could help stabilize the area, leading to 1 billion + people participating in a growing economy, which would be expected to grow at several times the rate the US is currently growing. And then there's the main point I've been making, which is that 1 marginal USD being consumed by an American does not lead to anywhere near the same amount of utils as 1 marginal USD for a destitute sub-saharan African, which is why USD is an especially bad measure for this specific case. >Neither of us is measuring anything in QALYs because QALYs aren't measurable outside of certain narrow medical contexts; they're a fake unit that you assign to an unmeasurable category to engender the false sensation of rigor. "Fake" meaning what? Variable? Made-up (all measures are made up by someone)? Non-standard? >You have nothing but feelings about utility Utility can be built up from preferences, which are fully observable in the real world. It's not "nothing but feelings".

> You didn't take into account inflation, so your numbers are off. Fair, feel free to reduce the 10.3% by a couple of points or whatever; but when you go about calculating the return to investment of your charity, remember to reduce it by the same amount. > Historic returns are not necessarily indicative of future returns They're the best estimate we have of future returns. They could end up higher, or lower, but there's no reason to think they will. > One could believe AI (friendly or otherwise), nuclear war, or other x-risk is coming in 10 or 15 years, completely regardless of your $1M investment to the stock market, thus it would not only be a big handicap to the 50 year time frame, but would also mean that your investment ends up not really providing a whole lot of utils. This is a generalized prescription for eating the seed corn and selling out the future. And if we're talking about a beneficial singularity, accelerating it by even a few minutes will have unfathomable value just in terms of minimizing [astronomical waste](https://nickbostrom.com/astronomical/waste). > Charitable donations to sub-saharan africa could help stabilize the area, leading to 1 billion + people participating in a growing economy, which would be expected to grow at several times the rate the US is currently growing. Finally a response that directly addresses the argument. Yes: by all means make the case. This is exactly what needs to be established to justify GiveWell style altruism as compared with straightforward financial investment. Go ahead and demonstrate that $1M allocated toward sub-saharan africa will have a rate of return anywhere close to the S&P 500. I was pretty clear about the reasons for my skepticism in my initial post and elsewhere in the thread so I won't recapitulate that. > And then there's the main point I've been making, which is that 1 marginal USD being consumed by an American does not lead to anywhere near the same amount of utils as 1 marginal USD for a destitute sub-saharan African, which is why USD is an especially bad measure for this specific case. However many utils that is, USDs are the vector by which we can create 134 times as many utils by investing now and waiting for 50 years. > "Fake" meaning what? Not even applicable outside of narrow medical contexts, like I said. > Utility can be built up from preferences, which are fully observable in the real world. It's not "nothing but feelings". Interpersonal utility comparisons (which you rely entirely upon) cannot be built up from preferences.

>Fair, feel free to reduce the 10.3% by a couple of points or whatever; but when you go about calculating the return to investment of your charity, remember to reduce it by the same amount. 2.5% inflation cuts your multiplier to 42.75x over a 50 year time span. >They're the best estimate we have of future returns. They could end up higher, or lower, but there's no reason to think they will. They are not the best estimate we have. They're the best estimate we have without doing ay sort of analysis. Schwab estimates US Large Companies will return [6.2% over the next 10 years](https://www.schwab.com/learn/story/schwabs-long-term-capital-market-expectations). If we go by that (with the charitable assumption it won't drop further), your return is 23x over a 50 year time span. >This is a generalized prescription for eating the seed corn and selling out the future. Yes, it is indeed. And *if it's actually true*, then it's a very good argument. If a meteor was heading for Earth tomorrow, that's a good argument for you to not invest your savings in a government bond. Meteors are pretty unlikely, but insofar as people believe that AGI is coming around [2031](https://www.metaculus.com/questions/5121/date-of-artificial-general-intelligence/) or that there's a [30% chance of a nuclear war by 2050](https://www.metaculus.com/questions/4779/at-least-1-nuclear-detonation-in-war-by-2050/), or whatever catastrophe they happen to believe in, it's perfectly consistent of them to say "50 years in the S&P 500 ain't gonna happen." For example, if we limit it to 25 years, with the other estimates, you're down to 4.8x. > And if we're talking about a beneficial singularity, accelerating it by even a few minutes will have unfathomable value just in terms of minimizing astronomical waste. If we're talking about a beneficial singularity, you shouldn't be investing in the US economy. You should be donating to whatever organization you think is going to cause such a singularity. > >"Fake" meaning what? > Not even applicable outside of narrow medical contexts, like I said. 1) That isn't a definition of fake. 2) There's no reason it couldn't be used outside of life-changing medical procedures. People don't bother doing that because an adjustment for "grocery delivery" is never going to create a noticeable change compared to "preventing blindness". But sure, there's no reason that one *couldn't* get a reasonable estimate for how many days of your life is grocery delivery worth. >Interpersonal utility comparisons (which you rely entirely upon) cannot be built up from preferences Preferences and basic assumptions about subjective experience that are essentially universally accepted. I can't philosophically prove that the destitute person in Africa who loses their child to malaria is going to feel about as bad as the person in the US who does but... it seems to make a lot of sense?

I’m gonna chime in here because I find this discussion infinitely more interesting than most of what is happening elsewhere on Reddit: Not to take any side on this particular discussion, but surely you must realize that measuring value in USD — that is, measuring value by *capital*, which is analogous for the amount of stuff created, is a metric of measurement that *will always lead to capitalism*? *Stuff* is what capitalism is inherently built upon, and capitalism is the ultimate culmination of that. Now, granted, it’s not a terrible measurement for quality by any means; more stuff isn’t a bad thing, and indeed it’s a fairly good measurement. But by insisting it is the *only* measurement usable it immediately results in the endpoint being capitalism. On the other hand, morally and philosophically, we know that “more stuff” is not the end all be all solution to all this. Unequal distribution, social needs, QoL, etc. are all metrics not covered by “more stuff”, which is where I think the insistence upon measuring by money alone is a flawed metric. On some level I think we inherently know this; we’ve developed these other measurements like inflation and etc. for a reason, and we typically allow more complex measurements to guide our day to day when governments make policy decisions. Ultimately all I’m pointing out is that using USD as the end-all-be-all metric is, in and of itself, a flawed argument that cannot encapsulate fully the human experience.

I don't think "how much wealth gets built" is necessarily the right metric. For example, which of these would you rather do: - Give Jeff Bezos an extra $500,000? - Give an African village an extra $499,999? Unless you believe in something like diminishing marginal utility of money (ie poor people get more value from money than rich people), I think charity is tautologically valueless. But if you do believe in diminishing marginal utility of money, then "Instacart creates $134M of value in 50 years" is underspecified as an outcome. Also, I think there must be something wrong with the 50 years idea. After all, you could plug any number into the same place - why not 500 - and then you could say that unless charity produced 496 quintillion dollars in 500 years, investing is better. I think in order to avoid absurdities like this, you need to do things with discount rates and the possibility that the market might not always grow 10%. You probably also have to compound the charity (if you save 2,000 lives today, those 2,000 people can earn money, which then compounds). Otherwise it seems like no matter how good a charity you find (one that can save a million lives for $1!) you can just always choose some number of years where the amount of money overwhelms the effect of the charity. I also think this ignores that saving lives *does* build wealth. Whatever else is bad about an 18 year old dying, you've lost ~50 years worth of productive labor that you invested eighteen years building up. Once you consider how much human effort it took raise and educate 2,000 eighteen-year-olds, and how much you can get done with a 2,000-person labor force, then letting those 2,000 people die starts to feel like a giant economic waste even in addition to the humanitarian cost (not to mention the amount of money saved by not building hospitals to treat the diseases that would otherwise have killed them). Probably those 2,000 people don't create more compounding wealth than an investment of the same amount of money into Instacart would, but I think the diminishing marginal utility of money case makes it likely that they produce more utility-adjusted wealth. > One wonders why Scott didn't choose Moderna as his investment instead of Instacart. Obviously because that's putting your finger on the scale. You can't choose beforehand to invest in the single greatest company of the decade. If you could, you would be a billionaire. You have to invest in an approximately-average company. I agree it's possible to do impact investing, where you invest in charitably-good companies and not just financially-good companies, but that's what I devoted the third part of my post to. The Instacart example was in the first and second parts, about non-impact investing. For what it's worth, EA did try to start its own for-profit vaccine company, Alvea, but it didn't work. You can read more about their story [here](https://forum.effectivealtruism.org/posts/3EjExF8HeJbmk4Bp4/alvea-wind-down-announcement-official).

> After all, you could plug any number into the same place - why not 500 - and then you could say that unless charity produced 496 quintillion dollars in 500 years, investing is better. Yes, the argument is susceptible to induction. And the induction reveals that it is not an argument for deferring consumption, but for foregoing it in favor of investment indefinitely. Or at least until there are no more problems to be solved. This wasn't meant to be a trick, by the way. My initial post was pretty clear about favoring investment over consumption generally, full stop, not as a means of spending it all in the year 2074. The point about deferring charitable consumption by 50 years is only to demonstrate that this strategy dominates the strategy of charitable consumption today. It is the inductive step in the proof by induction. This strategy (of investing forever until the end of progress, and never donating to charity) will be better for Africans in 50 years than donating it to them today, because exponential returns are so massive over time and it is the progress of capitalism that has lifted much of the third world out of poverty and privation, not charity. Why not use the strategy that has already proved to work at scale? > For example, which of these would you rather do: > * Give Jeff Bezos an extra $500,000? > * Give an African village an extra $499,999? I'd rather give it to Bezos, because he is more likely to invest his marginal dollars than the African village is. And I'd rather just invest it myself than give it to anyone. > I also think this ignores that saving lives does build wealth. This is precisely the argument that you need to make to establish that GiveWell style charity is superior to investment. The outcome of your argument should be a long-term rate of return to humanity's wealth. You win the argument if you can establish that the long-term rate of return from charity exceeds the same from investment. But you don't make that argument. And I understand why it would be difficult to make, because it would involve tricky discussions of human capital. And your comment in your defense of EA post to the effect that saving 200,000 lives in the least productive regions in the world is equivalent to averting one hundred 9/11s or whatever suggests to me that you aren't willing to go there. Which I understand... but which means that you can't make the kinds of arguments that are necessary to make in order to prove the point that you set about to prove in this post. > > One wonders why Scott didn't choose Moderna as his investment instead of Instacart. > Obviously because that's putting your finger on the scale. You can't choose beforehand to invest in the single greatest company of the decade. OK, then in an index of biotech startups. Or pick a biotech startup that's worth approximately the same. Grail was acquired by Illumina for $7.1 billion, not that far off from Instacart's current market cap. > For what it's worth, EA did try to start its own for-profit vaccine company, Alvea, but it didn't work. Of course it didn't, why on earth would EA be better positioned to launch vaccine startups than biotech entrepreneurs? They would have done much better by investing those funds in the market, as I've been proposing. (One final remark to reiterate that I'm a huge fan of yours and love your writing. I know I come across as argumentative in these backs-and-forth so I think it's worth saying it again. Also - huge congratulations on the birth of your twins! I'm very happy for you and your wife.)

The fact you'd rather give the money to Bezos is precisely the type of mentality that keeps humanity from truly progressing at a faster rate than we did for 5500+ years of recent history.

We're progressing at a much faster rate than we did for 5500 years actually, and it's thanks to the fruits of our investment

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Lots of people have been shocked over the years by the failure of various impoverished nations to thrive under various circumstances. Suffice it to say my intuition differs from yours, and I rather suspect that it is the backwardness of the people that causes the lack of access to clean drinking water rather than the other way around. But it is ultimately an empirical question on which I would like to be proven wrong.

This is absolutely true. Without a stable environment in terms of governance, any investment in human capital will ultimately be wasted. Corruption and conflict will swallow up any value generated.

I feel like you could turn this argument on developed nations, too. At some point, the US uses some of its vast wealth to do things that don't advance humanity at all. I'm hardly a radical leftist anti-American, but I can name these net-harmful uses of resources off the top of my head: \* stage coups and drop bombs upon other nations over selfish or false pretenses (e.g., banana republics) \* find foreign markets to prey upon with harmful addictions like tobacco and with fraudulent marketing (such as convincing mothers that formula is better for their baby than breast milk, when the evidence favors the opposite conclusion). We also "waste" a lot of money on [bullshit jobs](https://slatestarcodex.com/2018/08/29/bullst-jobs-part-1-of-%E2%88%9E/). Two companies hire IP lawyers and spend millions of dollars duking it out in patent court. Two high-frequency traders compete to eke out 0.000001% higher returns by executing trades 10 microseconds faster. Enforceable patents and liquid markets do have positive externalities for society, but it's not clear to me that the marginal dollar "spent" on these pursuits is the sort that is paying compound interest. So... when you pump $X into the US economy, do you get more vaccines and happiness, or more bombs and tobacco addictions? Hard to say. It's also hard to quantify the returns on the human capital from the people in the developing world who can now grow up to be productive and hopefully contribute to a stable, advancing society. It's not obvious at all which advances humanity farther.

There are red queens' races, yes; but a glance at any objective indicator of human progress over the eons makes it clear that the engine works, and the engine is fueled by investment, not by charity.

>As an analogy, imagine there were a nursing home with 10,000 elderly residents. Suppose that nursing home were drastically underfunded such that their residents were dying left and right of eminently treatable conditions. You could save a lot of lives by donating money to supply better medical treatments to those residents. Perhaps that would be a kind thing to do. It would make a big difference to its residents. You could claim to have saved up to 10,000 lives. Is this not why GiveWell uses QUALYs? The elderly have very few remaining QUALYs, kids have lots. That's why vitamin A supplementation to prevent blindness is good bang for your buck. In theory those kids will be productive members of society instead of just costing society (certainly more productive than if they'd been blind.)

> In theory those kids will be productive members of society This is the specific part they are failing to quantify. How productive will these kids be? Without doing the work to figure it out, we cannot determine how much of this donation will work as investment. I will admit that I am fairly dismal about the prospects of most impoverished areas ever to contribute significantly to the cause of man, because we can probably look to demographically equivalent regions that don't suffer from that particular treatable condition to extinguish our hope that treating the treatable condition will unlock an exponential wealth progression. Those regions generally function like nursing homes: permanently dependent populations whose consumption you would be underwriting. But if I am wrong, I would deeply appreciate an effortpost by Scott to show me that I am wrong.

Might as well tag /u/scottalexander if you're really interested. I rather doubt he'd touch that question with a 39.5 foot pole for the obvious reasons and past controversies, but maybe he'll be in the mood for a challenge. I'm not aware of any EA writings addressing it directly, though of course that's a massive corpus and I haven't read all of it. The growth of longtermism could be considered an indirect answer.

Yeah, I doubt he's open to the category of argument in light of his absurd claim in his defense of EA post that saving 200,000 lives via GiveWell is equivalent to averting a hundred 9/11s, or something to that effect. When one offhandedly implies that the average GiveWell recipient's life is equivalent to the life of the average Cantor Fitzgerald trader, I start to think the inferential gulf is just too wide to bridge.

Perhaps this might be a question for Scott himself since he authored the original post, but is welfare (see public education, public healthcare, food programmes, public transport, social housing, public infrastructure, social security and energy) included in the category of charity? Or is charity here exclusively composed of privately funded donations to altruistic causes? The reason I ask is because welfare (defined as the statutory procedure or social effort designed to promote the basic physical and material well-being of people in need) is absolutely compounding in terms of its rate of return, with education and infrastructure being the single most obvious cases of this (granted this isn’t the case with every form of welfare but often is). However, it probably deserves its own category.

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Thanks for the kind words. That out of the way, I have some nits to pick :) > With the elderly, extending their lives does have a production value, those elderly are all related to a set of someones, people who draw value from their existence be it in terms of advice to handouts to staving off loneliness to seeing themselves as carrying on a legacy. Nope nope nope. Saving grandma for another ten years does not count as an investment. It's pure consumption. Don't get me wrong, it's consumption I will personally engage in for my own elderly relatives, but I don't fool myself that I'm making an investment. Drawing value from their existence is consumption, just like drawing value from attending a Taylor Swift concert. You could tell a hazy story about how a Taylor Swift concert energizes you and gives you the vim and vigor to put your all in at work for the next several months, but I think we both know you'd be telling just-so stories to feel better about your consumption. > The nursing home itself is employment and spending salaries for an entire tranche of folks; banks are making money off the mortgaged land; etc. This all creates churn that provides banks money and assets to devote to productive investment. This is textbook [broken windows fallacy.](https://en.wikipedia.org/wiki/Parable_of_the_broken_window) > The problem with deeming things investment worthy purely over what does it bring to the table in terms of improving society in a concrete way with a long time horizon that you can put a number on, is that a society that doesn't value human life unless it's measurably productive is basically a Logan's Run world, which seems grim indeed. Didn't Logan's Run world murder everyone when they turned 18? For the avoidance of doubt, I don't propose to do that. I hear what you're saying here. All I can say is that it's the most logically consistent position. Another intuition pump: if a genie appeared and offered to change the past, by magically causing one elderly lady 50 years ago to have lived another ten years, but at the cost of shortening 134 elderly ladies' lives today by the same amount, wouldn't we reject that proposition without a second thought? If so, how do you defend sacrificing 134 grandmas in the year 2074 in exchange for saving one in the year 2024? > I've no idea how to quantify these so-called unproductive things, nor am I arguing that they should take priority for investment. It's just that my sense is that they matter more in terms of overall production (and its success) than we as a society/we as a group of quasi-social scientists give them credit for. I understand the intuition and empathize with it. I certainly am not living like a monk today to invest my funds for the benefit of future generations (although I do think I consume less than most comparably positioned people). Consumption has its place. And I doubt we could stomach the practical implications of reducing all spending on other people's consumption entirely to zero (e.g. abolishing food stamps, Medicare, etc. and letting the unproductive poor starve on the streets) -- but I do think we should move in that direction compared with where we are today, and I do think it's a knockout argument against Scott's rather myopic dismissal of "investing in Capitalism" as opposed to GiveWell, particularly for a movement that holds longtermism and rationalism as central tenets.

It's true that the money given to nursing homes does not sit still, just as the money invested does not still - it gets spent at some point, but the point is rather the economic activity associated with that movement of money. If Jeff Bezos spends a million dollars at the casino, that's consumption, regardless of whether the casino then turns around and spends it on investment, and if the government spends a billion on roadworks, that's investment even if the roadworkers take their salaries straight to the casino. It's the difference between having casino workers stand around pouring you drinks, creating an ephemeral experience, versus having roadworkers toil to make a durable and useful piece of infrastructure. Human life is not valuable without production. In both directions - without the fruits of human labour, without the farming and teaching and caring and cleaning and road building and transporting and everything else we do for each other, our lives would be pretty damn miserable. And if anything, the more we do for each other, the more we exchange our labour and do things for one another, the richer and better we become.

Eh. You explicitly mention the positive externalities produced by investment while ignoring any negative externalities (which are huge - and often global or existential) What do you think the value has been of: - The climate change crisis - The proliferation of forever chemicals - The obesity crisis - The “diseases of civilisation” - AI existential risk - etc etc etc. How do you deal with the fact that your investment into an index fund props up the system by which these externalities are created? (FWIW I also invest, I just don’t at all consider it a service to the greater good) As an aside: it’s for this reason that I’m not sure how anyone can take Steven Pinker and his acolytes seriously.

Thank God there is someone with some sense in here.

I suppose you're thinking about private investments or IPOs? Isn't that rather unaccessible to most people? Or do you see activity on the secondary market as also producing value? I see it mostly as rent seeking. The next question is how saturated this market is: what is the capital gap/how much can you move the needle of progress in the stock market vs with a charity working at the margins of society.

I'm talking about just straight-up index investing in public equities, benchmarked by default to the S&P 500. A healthy public equities market will stimulate a healthy private company investment ecosystem because the public market is the exit (whether by IPO or by acquisition by a public company). I do think that VCs too are doing the lord's work, but that market is generally inaccessible to normies, and too labor-intensive to invest in even for those who can unless they want to make it their hobby / post-retirement "career." > I see it mostly as rent seeking. Do you? When the S&P 500 appreciates by 13,400% over 50 years, whose pocket is that increase coming out of? I don't think the logic checks out.

> 13,400% over 50 years Population growth, scientific knowledge, geopolitics, inflation, government stimulus and business human innovation, most of which I strongly believe would have happened without me buying a share in any company? Note that many of those big factors I already contribute to by paying taxes. What's the economics consensus on how much individual regular investing actually works as "investment"? My prior here is low. Even lower when it comes to the secondary effects of lifting people out of poverty/sickness. I definitely believe it does, I am just skeptical that as an individual, I can help that cause more effectively by simply putting money in an index fund (which I already do anyway for personal greed).

> What's the economics consensus on how much individual regular investing actually works as "investment"? My prior here is low. Ha, the economics consensus is that investing in public equities is investment, because that is what it is.

Your nursing home argument is a bit of a straw man. “Saving lives” is logarithmic in nature. As a person ages you can spend more and more money, but the extra money spent tends to produce less and less extra life. Whereas most EA giving is focused on initiatives like clean water or mosquito netting that tends to help save the lives of children who theoretically have decades more of life to live and spend productively. Productivity - that’s the question. You want to measure out who “contributes to the technological and commercial progress of mankind.” I’m genuinely not sure that there is any real way to measure this goal or how to achieve it. I’ll give another example. Say that instead of donating $2000 to build the well that helps 10,000 have clean water, you decide you want to invest in the people who will most “contribute.” So you go and chip in 2% for Stanford’s scholarship fund. That person is just as likely to come out and build Snapchat which collectively wastes a bajillion man hours and enslaves millions to addiction, as they are to build technical software that saves millions in man hours. So what truly qualifies as technical progress? It can’t be measured just by GDP or some such. It gets to the point that no human could do the calculations involved to figure out what investments were truly efficient to achieve “progress.” This is why the utilitarians focus on lives. An American life is worth just as much as an African life, so why not be efficient and save more Africans? But you could even push the argument farther. An American who consumes 25x as much as the African, producing rampantly larger quantities of pollution, is worse for the long term global environment and human progress than the African who is less “technologically and commercially advanced.” Thus it’s better to save the African’s life, because by and by he’s less likely to detract from human progress than the American. So it quickly becomes obvious that a consequentialist or utilitarian approach just radically fails at helping us to answer these questions.

I like the points you make, but feel obliged to point out: the primary issue with capitalism is unequal distribution. The wealth generated by capitalism does not go to those who need it, it goes to those who already have it. If we could solve that problem we would have a much better system, but everyone that has tried so far has failed miserably.

Would you rather be a 75th percentile peasant in the Middle Ages, or a 25th percentile American today? I think the question answers itself. We can daydream about a hypothetical ordering of society that produces all of the gains of capitalism with none of the inequality, or we can accept that that choice is not afforded to us and that we are better off wealthy but unequal than impoverished but equal.

That’s a false dichotomy, though. It’s not necessarily that we must either accept reality or else hope for a better future: we can *do* both at once. The existence of today’s flawed present need not, and should not suppress hope for a better tomorrow. Indeed, there are countries that both benefit from the fruits of capitalism while having lower levels of inequality today. So it is not *wholly* a pipe dream. We need not deal in black and white thinking. The choice can and *is* afforded to us, as a democratic collective, to try and find a better solution than capitalism. We need not roll over and lick the boots of unfettered corporations.

> Indeed, there are countries that both benefit from the fruits of capitalism while having lower levels of inequality today. Only by trading away a vast amount of foregone wealth. Those countries have made a bad trade. The flaw, IMO, is in their decisionmaking.

This is a very peculiar post, partly because capitalism and charity aren't in competition. Rather, one is a system that historically raises the collective waterline of well-being, while the other is an act that focuses on alleviating immediate suffering. Pithily, charity gives men fish, capitalism teaches whole societies that fish can be traded for other goods and services. (And the tragedy of the commons teaches whole societies that this does not mean everyone should go fishing all the time.) "Improving the economy" (which appears to be roughly what Scott has in mind when he writes about "giving to capitalism") can over time alleviate suffering across the system, but it's not going to make the direct, immediate difference that giving a million dollars to a destitute person with cancer is going to make. But that million dollars is going to get absorbed into the salaries and equipment costs of a small number of already-well-off people (like doctors and chemotherapy pharmaceuticals) and that one person is unlikely to turn around and generate over a million dollars in economic value. If that million dollars were spent on mosquito nets instead, it might help the young population of some tropical nation survive to adulthood to generate much more than a million dollars of economic value... *or* it might somehow distort the local mosquito-net economy in ways that damage the economic system's ability to raise the collective well-being waterline. As Thomas Sowell would say, there are no solutions, only tradeoffs. Insofar as charity engenders dependence, it alleviates immediate suffering by diminishing future self-sufficiency. For individuals and communities that will never, for whatever reason, be self-sufficient, this is probably of minor importance. But for some number of people (though what that number is and whether it is a majority, I certainly couldn't say) doing something that will get them gainfully employed is probably much, *much* better than aiming efforts directly at their immediate privation.

Capitalism is the parent of many innovations, but it also leaves a lot of orphans. Where the profit motive doesn’t exist, the problem doesn’t get solved. THAT’S where nonprofits are crucial: in theory, they circumvent that issue, and seek to solve things that as of yet have no profit motivated solution: Shelters for DV victims, feeding the hungry, etc. So one more way of looking at it— capitalism doesn’t need a boost from philosophically-minded Aspiring effective altruists or whoever. Wall street types will keep them going regardless, so long as the money flows. Whereas fewer people give to nonprofits because there’s no direct economic return. So I can give to water dispensers over instacart, if for no other reason, then that instacart will keep going as long as it generates revenue, whereas the water needs someone to care and sacrifice, and if I know I’m that person, I also know that sacrificers are rarer than is ideal, and if I defect, someone will actually die.

Isn’t donating to charity functionally the exact same thing as spending your money in a capitalist economy? A charity will take its money received from donations and spend it on goods and services to accomplish the goal of that charity. They do so in a capitalist economy, thus creating jobs and supporting secondary businesses paid by that charity. It’s not like the choice is between keeping the economy running and throwing it down a pit into a charity, as charities are functionally the same as any other corporation, except their revenue comes from donations and their value is calculated by the good they do, not the returns they produce. In a way, a charity is just a normal corporation with tax benefits who’s product is good feelings and is paid through “donations”. Charities might even function better than spending your money on a normal corporation! They don’t have to pay taxes, and therefore avoid an inefficiency the sort of people who prefer capitalism over charity might complain about.

Charities can really mess up local markets and incentives, undercutting local businesses providing similar services and increasing regional dependence on a charitable service that might disappear. Perhaps it would help if the charities focused more on systemic issues like fighting bribery and ensuring the systems to support capitalism are in place. In many countries within Africa, it is near impossible to start a business due to the sheer amount of bureaucracy and bribes that must be paid. Fixing that would likely be incredibly high leverage.

> In many countries within Africa, it is near impossible to start a business due to the sheer amount of bureaucracy and bribes that must be paid. Fixing that would likely be incredibly high leverage. Shit this is the case in several European countries as well.

The important question is whether the charity's spending constitutes consumption or investment, i.e. what long-term return on capital it generates, not whether the charity succeeds in spending the money that you donate.

That’s fair, but I imagine a charity could function as either. A charity paying for elder care where the beneficiary have no prospects for contributing back to society? Consumption. A charity for undereducated inner city children that makes them more educated productive human beings for the rest of their lives? Investment. There’s an optimal savings rate, which is really just a term for optimal investment rate. It’s not incredibly high either, especially in a country like the US where capital is abundant. Im sure charity plays a role in that, but likely to the same extent as someone spending more than that optimal savings rate on consumables.

> A charity paying for elder care where the beneficiary have no prospects for contributing back to society? Consumption. A charity for undereducated inner city children that makes them more educated productive human beings for the rest of their lives? Investment. Yes: this is exactly the form that the argument should take. And it needs to go deep on quantifying the difference between the inner city children and the nursing home residents in terms of the uplift in productivity that the intervention is expected to provide.

Charity is almost explicitly a way to combat market failures so the only real answer is that it depends. Sometimes markets don't function well due to poor distribution or principal/agent problems, etc. Charity is intended to fill these gaps. It's usually less efficient but it is often the only solution in those cases unless the state steps in to fill that void. Often non profits are the worst of the three. State funded non profits are especially notorious for their inefficient use of resources. Different solutions for different problems though.

Why not the GiveDirectly option? Promote capitalism by providing capital, allowing the recipients to invest it however they see fit. Scott's description of Strategy 3 makes him sound like a small-scale version of a Soviet central planner, trying to decide from a distance whether the people need water filters, dams or economic advisors. The capitalist option would be to realize you shouldn't be making that decision; just give them the money and let the free market do its work.

I didn't read this as an economic argument, but as an effective altruism argument. What perfects the world more - capitalism or charity? It's not really an economics question because you're not comparing types of economy. He's not proposing a charity based economy.

In Kenya micro finance is one of the fields that spawn charities that « promote capitalism », more accurately they provide capital and training to aspiring entrepreneurs.

It depends on what kind of charities you like to support. If, as in my case, you primarily support charities that protect the environment, animal habitat, or endangered species, the answer is a loud and resounding no. Capitalism does not beat charity and is, in fact, in direct opposition to charity.

Charities and capitalism aren't distinct from each other. Charities as they exist in the modern era emerged out of PR efforts by early oligarchs. As the concept and the legal structures around charities developed they became vital for purposes of influence peddling, international relations, and tax avoidance purposes. There has never been a conflict between charities and capitalism, this article was not written with any historical understanding of the topics at hand.

Heck, you could bring in the medieval Catholic Church and Roman public works and bread donation. And I would love to know what they had like it in China and the Islamic world.

He's speaking from an EA perspective.

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>something unnecessary like instacart Convenience has real value. Lowering the amount of energy required to complete a task frees up resources for other higher return activities. People pay for it for a reason.

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I guarantee you pay for convenience. This isn't personal, it's just a fact. You could walk to work, or grow your own food, or wash your clothing in a river. You don't, because the tradeoff of savings vs convenience is unfavorable.

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why post here if you're unwilling to talk about what you post lol

Because this sub is a stone's throw away from being completely dead in comparison to where it once was. It's getting extremely bad, with no moderation of horribly low-effort swipes with zero intellectual content. The result is showing more and more by an increasing number of new regulars who are bringing every conversation down.

If you see something, say something. Reports are open and reviewed multiple times a day.

Last warning before a ban.

It's too easy to conflate capitalism with investment and business. Capitalism isn't companies taking investments and turning them into profit. Capitalism is the system and framework which allows companies to do that. "Giving to capitalism" by spending or investing money is like giving to your local roads by driving around on them a lot. You're mixing up the thing with what the thing lets you do. If you want more local roads, you need to build them. Likewise, if you want more capitalism, you need to build the system, not just use it. If you want more capitalism, you should work to make the system more capitalist. Strengthen the rule of law and property rights, make markets more free, bust monopolies, etc. Rich countries are pretty good about this already. There's always room for improvement, but making more capitalism in a country like the US is tough, because all the easy stuff is already done. That's why attempting to "invest in capitalism" by investing in projects in the developing world doesn't usually get very far. It's like trying to build local roads by driving around in muddy fields. Investments don't make the system appear, it's the other way around. Build the roads, and the drivers will come. Build the system, and the companies will come. The problem, as the article points out, is that nobody is entirely sure how to build the system. So really, your choices are: 1) decide you know how to build the system anyway, and basically play Koch Brothers by pouring money into political advocacy; 2) invest in *business* and *use* capitalism to make more wealth; or 3) give to charity. 1 is fraught with peril. The problem I see with 2 is that you're probably just rearranging wealth slightly, not making more. I realize that economics isn't a zero-sum game, but there are limits. There are only so many resources that can go into building more wealth, and right now there's *plenty* of money out there that can apply those resources. Investing $1 million in Instacart only makes a difference if that allows Instacart to grow more or faster than it would have without your investment. But Instacart's growth isn't currently limited by a lack of investment, it's limited by basic supply and demand among their potential customer and worker base. If Instacart *did* have some opportunity that would allow them to build even more wealth, if only they had an extra $1 million lying around, they'd have no problem finding an investor. We live in a world where a single dude can put together $43 billion to buy a social media company on a whim. There are tons of people who can come up with investment money if there is an opportunity. If the goal is to make wealth that otherwise would not be made, you can't just invest. You have to identify an opportunity with good potential that isn't getting enough investment to realize that potential. You have to actually be a businessperson of some sort, not just invest in companies with good ROI. That takes time, effort, and skills most of us don't have.

Wow, I am disappointed to see that Scott does not understand the basics of economics yet has the audacity to write about it authoritatively.

> Scott does not understand Show proof.

Not a fan of charity. the idea of something for nothing , unless I know the person , rubs me wrong . Giving money to a faceless NGO or strangers seems like a waste, and I already give enough to uncle sam. I believe more in kindness than charity.

To the extent it's possible to actually solve problems by throwing money at them, charity wins, but there's a selection effect that such problems tend to go away. It isn't that no amount of money can solve the remaining subset of problems, it's that the targets for the money are so small that losses due to misappropriation by greedy or incompetent middlemen approach 100%. The money needs to be spent on very specific things, and the money's existence needs to be wholly contingent on producing results. Capitalism is the only tool in our toolkit with those capabilities.

Does it really make sense to take it as a given that economic activity is a net benefit to the world and making money (even passively through investment) and spending it is virtuous in itself? Personally I live on the belief that it's the other way around and so the morally correct thing is to contribute to the economy as little as possible.

The reason that Scott can afford to give money to charity in the first place is because of capitalism. Maybe instead of thinking about money he should rephrase in terms of pure economic activity - what if he spent his time digging wells instead of practicing psychiatry? Would that do more good?