5 ms·

It is not rational once you have enough money for you and those you care about to be infinitely comfortable for the rest of your lives. Say you have $100,000 i

It is not rational once you have enough money for you and those you care about to be infinitely comfortable for the rest of your lives. Say you have $100,000 in the bank, and you want to spend $10,000. What's the best use of that money? For a normal self-interested person, a rational use would be to invest in whatever will give the largest return, in order to have enough money for living expenses, retirement, children, whatever. Now, say you have $100 million, and you want to spend $10 million. What's the best use of that money? Seeking a purely financial return is completely pointless. It will have absolutely no impact on your life or future, or those of the people you care about. So as a person with a normal amount of self-interest who also cares about other things in the world, the most rational behavior would be to donate it to a cause you care about, or start some purposeful organization, or anything that will have a positive impact on something or someone you value. At this level of wealth, just making more money has no positive impact on anybody, even yourself. I guess it's possible that Pelosi is saving up in order to start a SpaceX competitor or buy an NBA team or something once she leaves Congress, but she's 81 so that seems unlikely.

philsnow 6y ago
> At this level of wealth, just making more money has no positive impact on anybody, even yourself. except that having capital makes it easier to gain more capital, so you could very well end up with more impact by aggressively investing for a few years before donating.
- burkaman 6y ago
  Ok, say you invest that $10 million and a year later it's grown to $12 million. That's a decent return, but what was the opportunity cost of investing in Microsoft instead of, I don't know, funding 100 people on GoFundMe who are going to die if they can't afford surgery? The US government uses ~$10 million as the value of a human life when they analyze the cost/benefit of various policies. And it's a compounding investment - a dead person contributes nothing to society, but a living one might contribute quite a bit. That's just one example though, you could make an argument for any number of worthwhile uses for that money. Even something like venture capital or political organizing, which aren't exactly selfless philanthropic endeavors. And again, I'm talking about 10% of what's in the bank. You could donate $10 million, invest $60 million, and still have an absurd amount left to buy a few houses or whatever you want for yourself. All while risking nothing, if you hold onto $10 million or so to secure your future. My argument is that there's some threshold after which you have enough money to support yourself, and to invest to maintain your way of life, and to do something purposeful with the rest. And I think that threshold is below $100 million. I agree that it takes money to make money, but as you say, after "a few years" of investing, you do something with it. When does that happen? Do you need to hit a billion first?
  - philsnow 6y ago
    I totally agree with you -- I was trying to explain the thought process that I think is going on in some peoples' heads.
eloff 6y ago
You seem to have a fundamental misapprehension of capitalism. If you invest your capital, it's not being hoarded in a money bank like Scrooge McDuck. It's being put to use by the companies and institutions you invest in to provide products and services. Now I'm all for donating to charity, and it's a much better option than leaving massive wealth to your offspring, in my opinion. But investing your money is totally rational at any wealth level and it's good for society, and necessary for capitalism to function.
- solipsism 6y ago
  It's being put to use by the companies and institutions you invest in to provide products and services. Why is that better than these companies living off their profits, and their loans? You talk about it and if it's a given. It's not.
  - eloff 6y ago
    You've got a fringe position there. If you want to defend it, be my guest. I believe it's pretty obviously a given. You're basically picking a fight with capitalism which, while far from perfect, it's the best system we've tried to date.
    - solipsism 6y ago
      You're basically picking a fight with capitalism That's a straw-man. I've said nothing questioning capitalism. The stock market isn't a necessary component of capitalism any more than subprime lending is. The cost of the stock market is clear. The stock market causes and amplifies inequality. This isn't controversial. But I find proponents of the stock market have trouble defending it, when asked to really be clear about the benefit to society -- to people.
      - eloff 6y ago
        > That's a straw-man. I've said nothing questioning capitalism. The stock market isn't a necessary component of capitalism any more than subprime lending is. The stock market, no, but the ability to invest/allocate capital is quite fundamental to capitalism. The stock market is merely one incantation of that. Let's take your criticism as only pertaining to the stock market. > The cost of the stock market is clear. The stock market causes and amplifies inequality. This isn't controversial. I'm not going to give you that one. The stock market enables the public to invest in these companies. That's why they're called public companies. If you ditch it, suddenly only wealthy venture capitalists can do that. This has been happening more and more with companies starting private longer and longer thanks to abundant private capital that doesn't bring the onerous regulations of being a public company. Unfortunately that seems to be increasing inequality, as the public has been cut out of these kinds of riskier but high growth investments. I'm sure there is a better way of doing it, but it isn't as cut and dried as you suggest.

philsnow 6y ago

> At this level of wealth, just making more money has no positive impact on anybody, even yourself. except that having capital makes it easier to gain more capital, so you could very well end up with more impact by aggressively investing for a few years before donating.

burkaman 6y ago
Ok, say you invest that $10 million and a year later it's grown to $12 million. That's a decent return, but what was the opportunity cost of investing in Microsoft instead of, I don't know, funding 100 people on GoFundMe who are going to die if they can't afford surgery? The US government uses ~$10 million as the value of a human life when they analyze the cost/benefit of various policies. And it's a compounding investment - a dead person contributes nothing to society, but a living one might contribute quite a bit. That's just one example though, you could make an argument for any number of worthwhile uses for that money. Even something like venture capital or political organizing, which aren't exactly selfless philanthropic endeavors. And again, I'm talking about 10% of what's in the bank. You could donate $10 million, invest $60 million, and still have an absurd amount left to buy a few houses or whatever you want for yourself. All while risking nothing, if you hold onto $10 million or so to secure your future. My argument is that there's some threshold after which you have enough money to support yourself, and to invest to maintain your way of life, and to do something purposeful with the rest. And I think that threshold is below $100 million. I agree that it takes money to make money, but as you say, after "a few years" of investing, you do something with it. When does that happen? Do you need to hit a billion first?
- philsnow 6y ago
  I totally agree with you -- I was trying to explain the thought process that I think is going on in some peoples' heads.

eloff 6y ago

You seem to have a fundamental misapprehension of capitalism. If you invest your capital, it's not being hoarded in a money bank like Scrooge McDuck. It's being put to use by the companies and institutions you invest in to provide products and services. Now I'm all for donating to charity, and it's a much better option than leaving massive wealth to your offspring, in my opinion. But investing your money is totally rational at any wealth level and it's good for society, and necessary for capitalism to function.

solipsism 6y ago
It's being put to use by the companies and institutions you invest in to provide products and services. Why is that better than these companies living off their profits, and their loans? You talk about it and if it's a given. It's not.
- eloff 6y ago
  You've got a fringe position there. If you want to defend it, be my guest. I believe it's pretty obviously a given. You're basically picking a fight with capitalism which, while far from perfect, it's the best system we've tried to date.
  - solipsism 6y ago
    You're basically picking a fight with capitalism That's a straw-man. I've said nothing questioning capitalism. The stock market isn't a necessary component of capitalism any more than subprime lending is. The cost of the stock market is clear. The stock market causes and amplifies inequality. This isn't controversial. But I find proponents of the stock market have trouble defending it, when asked to really be clear about the benefit to society -- to people.
    - eloff 6y ago
      > That's a straw-man. I've said nothing questioning capitalism. The stock market isn't a necessary component of capitalism any more than subprime lending is. The stock market, no, but the ability to invest/allocate capital is quite fundamental to capitalism. The stock market is merely one incantation of that. Let's take your criticism as only pertaining to the stock market. > The cost of the stock market is clear. The stock market causes and amplifies inequality. This isn't controversial. I'm not going to give you that one. The stock market enables the public to invest in these companies. That's why they're called public companies. If you ditch it, suddenly only wealthy venture capitalists can do that. This has been happening more and more with companies starting private longer and longer thanks to abundant private capital that doesn't bring the onerous regulations of being a public company. Unfortunately that seems to be increasing inequality, as the public has been cut out of these kinds of riskier but high growth investments. I'm sure there is a better way of doing it, but it isn't as cut and dried as you suggest.