4 ms·

But then it's actually best to invest and lose all your money in the stock market, because then capital gets reallocated to the people who are best at allocatin

But then it's actually best to invest and lose all your money in the stock market, because then capital gets reallocated to the people who are best at allocating capital. More seriously, you also need to take into account the compounding interest from e.g. malaria nets for people in Africa. Save some number of lives today, and you prevent human capital from being completely destroyed today, which also compounds in parallel with the capital allocated into AMZN etc.

spearo77 6y ago
Good point. Early stage support for an effective intervention could prevent the need for massive resources after the problem is more widespread.
ve55 6y ago
Haha, yes. I was trying to think of a way to phrase "Jeff Bezos is probably better at compounding his personal wealth than most people". I think what you've noted is perhaps the best counter-argument, but it's difficult to balance out and do the math. There is obviously some trade-off at which compounding is better than instantly donating, but it's quite possible that the compounding effects of certain classes of donations can be much stronger than what would reasonably be attained, so maybe that is where I'm wrong if I am. I think this is the usual EA argument, but it's just that I don't know of any way for it to really be backed with the type of quantitative analysis I'd prefer to see to change my mind on it.
- scarmig 6y ago
  At least in Bezos' case: let's imagine his position after the Amazon IPO. It's absolutely true that his skills as a capital allocator are extremely socially valuable. But at the same time, him taking advantage of his newfound liquidity wouldn't prevent him from continuing in that role: he wasn't going to be dumped and replaced. He could have given away his money to high value charitable causes and still continued to run Amazon. Other people would be getting rich in his stead, sure, but some amount of that wealth accruing to other people would also end up reaching charity. The only big risk would be if his lack of ownership in the company caused him to not be able to execute on his vision. Going at the question from another direction: imagine you have two companies, each with the potential to provide equal economic and social value. However, the government promises to tax the profits of one at 0% and the other at 90%. Which one will be undercapitalized? I would argue this is analogous to at least some charitable situations: oftentimes it's impossible to capture the economic benefit of socially valuable investments, because of institutional, legal, or informational challenges. But the value from making that "investment" doesn't disappear: it simply dissipates into the amorphous category of positive externalities.

spearo77 6y ago

Good point. Early stage support for an effective intervention could prevent the need for massive resources after the problem is more widespread.

ve55 6y ago

Haha, yes. I was trying to think of a way to phrase "Jeff Bezos is probably better at compounding his personal wealth than most people". I think what you've noted is perhaps the best counter-argument, but it's difficult to balance out and do the math. There is obviously some trade-off at which compounding is better than instantly donating, but it's quite possible that the compounding effects of certain classes of donations can be much stronger than what would reasonably be attained, so maybe that is where I'm wrong if I am. I think this is the usual EA argument, but it's just that I don't know of any way for it to really be backed with the type of quantitative analysis I'd prefer to see to change my mind on it.

scarmig 6y ago
At least in Bezos' case: let's imagine his position after the Amazon IPO. It's absolutely true that his skills as a capital allocator are extremely socially valuable. But at the same time, him taking advantage of his newfound liquidity wouldn't prevent him from continuing in that role: he wasn't going to be dumped and replaced. He could have given away his money to high value charitable causes and still continued to run Amazon. Other people would be getting rich in his stead, sure, but some amount of that wealth accruing to other people would also end up reaching charity. The only big risk would be if his lack of ownership in the company caused him to not be able to execute on his vision. Going at the question from another direction: imagine you have two companies, each with the potential to provide equal economic and social value. However, the government promises to tax the profits of one at 0% and the other at 90%. Which one will be undercapitalized? I would argue this is analogous to at least some charitable situations: oftentimes it's impossible to capture the economic benefit of socially valuable investments, because of institutional, legal, or informational challenges. But the value from making that "investment" doesn't disappear: it simply dissipates into the amorphous category of positive externalities.