I’m not going to get into the more contested parts of Effective Altruism, like whether AI safety is an urgent problem, or whether we should accept stronger-than-conventional views about animals’ moral weight.

There’s a hard core of Effective Altruism that has an obvious broad appeal. Nearly all of us agree that preventing malaria deaths and addressing severe poverty are good, important goals. But lots of people (like me!) find themselves really put off by Effective Altruism, even though we may know and respect people in the movement.

There’s a stereotyped conversation that goes something like this:

EA proponent: How can you not see that encouraging people to fund bed nets and so prevent unnecessary malaria deaths is a good thing? EA has saved thousands of lives, how can that not be good?

Person like me: Well, holding all else constant, that is good! I certainly don’t object to people buying bed nets to prevent malaria. But it also strikes me that buying bed nets doesn’t really get at the problems that render so many people vulnerable to malaria in the first place. We need a kind of systemic change that simple philanthropy can’t overcome.

EA proponent: Of course we do! We totally agree, and EA-aligned entities are interested in research towards effective development solutions. Obviously people have different views at a political level, but many EA-aligned individuals fund organizations that advocate for reform and better governance in both the developing and developed world, in order to pursue systemic change. We adopt a “both/and” approach! And surely it is better to help at the margin than not to help!

Yet I walk away still unconvinced. I’m trying to interrogate for myself why. It’s easy to argue that, under a better system, much of what the EA community does would make no sense. Essential goods like public health and basic succor should be ensured by states. In general, in a reasonably arranged society, philanthropy would finance civil society in spheres very local to donors, where they have better information and enjoy the kind of fine-grained feedback that states are ill-placed to perceive and react to. But if Give Well knows how to solve development problems, state actors are perfectly capable of allocating resources according to its recommendations. Philanthropists have no comparative advantage.

But we’ll all agree we don’t live in a better arranged society right now. So shouldn’t we divert resources to the places Give Well directs if our states are underdoing it?

In the dialog above, “person like me” used the mealy-mouthed phrase “holding all else constant”. If we were holding all else constant, the answer would be sure, of course. But I think the problem with Effective Altruism is that in social affairs you can hold nothing constant.

An obvious example is what was once one of Effective Altruism’s core recommendations (recently I think they’ve deemphasized it), “earn to give”. If it really is important to give, but a donor has her own requirements for a reasonable life, then she must increase her earnings some margin above that. If the need for charity is truly urgent, then of course a donor should earn as much as she possibly can, in order to give as much as she possibly can.

But earning large sums of money may not be neutral with respect to larger systemic questions that Effective Altruists generally concede are very important. There are ways of earning high incomes that are directly harmful, like hustling opiates or establishing monopolies. More broadly, industries that pay high incomes work to reinforce and sustain the status quo in which they thrive, rather than to evolve towards more egalitarian systems in which high incomes might be harder to come by, but philanthropic transfers would less necessary.

I think that the current emphasis in EA circles, perhaps as a response to this critique, is to focus on impactful careers rather than earning to give. But does that really address the issue? If, for example, you devote yourself sincerely to a great charity that does development work, and you allow yourself to be underpaid relative to what you might earn elsewhere, isn’t that laudable? At an individual level, it may be. But the crucial flaw in much EA-reasoning is that social outcomes are not arithmetic aggregations of individual-level scores. If you work for a development charity, the good work you do still depends on the high earners you forewent to become. Your work must be tailored to avoid approaches or choices that would upset the system that elevated them. Again, you are deeply tethered to the systemic status quo. If your organization is ambitious to increase its scale and thrive, it will likely be called upon to promote and reinforce questionable arrangements. Welcome to the World Economic Forum!

Indeed, from the perspective of “person like me”, philanthropy and the plutocracy that, in dollar-weighted terms, must dominate it is so interwoven with all that is systemically wrong, trying to do net good in the world via donor-financed institutions is likely to be counterproductive. The trade-offs are hard! I suspect GAVI, chartered by the Bill and Melinda Gates Foundation, has saved many lives relative to a counterfactual where everything is the same as it is now except Gates never intervened. But Gates is famously supportive of an extremely strong and universal intellectual property regime that, from the perspective of “person like me”, helps condemn the developing world to dependence and poverty (and continued disease), that contributes to class stratification in the developed world, that could be replaced by better means of encouraging innovation. (During the COVID crisis, GAVI was notionally supportive of waiving intellectual property restrictions, but in practice the organization was understandably circumspect.)

If I am to restrict myself to “evidence-based” behavior, then surely it is a good idea to donate to, or even work for, GAVI! The evidence that it has done good things is real. But we can only gather evidence about circumstances very near to the status quo. Since we can’t run persuasive social science experiments about a world in which many variables would be different from the one we actually inhabit, “evidence-based” policy is a prescription for local optimization, fine-tuning. If we agree that the key source of the problems we wish to address are systemic, but we can also make clear marginal improvements to those problems at cost of supporting institutions that help reinforce the bad status quo, how does a good rationalist weigh the trade-off? You may be suckered in the way that a certain narrow economism tells you it’s irrational to vote. At an individual level, your vote almost certainly won’t make a difference, but it will certainly cost something in time and convenience. Similarly, your withholding contributions won’t lead to a new intellectual property regime or alternative forms of state action, while your contribution to GAVI really will do a bit of good at the margin. But that sort of individual-level rationality doesn’t compose to social outcomes. You should in fact vote. It might be wise to circumvent donor-financed philanthropy as a key element of an ultimately harmful constellation of institutions, rather than contribute to it, despite the real good it also does.

At an individual level, that’s a genuinely hard judgment call. But Effective Altruism is a social movement, not a collection of independent idiosyncratic choices. At a social level, to “people like me”, it is not so hard. A social movement should not reinforce reliance upon plutocratic finance. It should not encourage or help whitewash extractive wealth generation. It should not prod people into careers where they must adopt the perspectives of those who most benefit from systems that we seem to agree must fundamentally change. At an individual level, the tradeoff between the costs and benefits of voting may not seem clear, but it would be obviously dumb for an interest group to advise its own members not to vote. Effective Altruism is a movement of idealistic, unusually educated, often affluent and socially influential individuals. Is integration of this group into the philanthropic status quo a good choice?

Note that fundamentally, the problem here isn’t philanthropy. It’s discretionary donor finance. The same critiques apply to think tanks, activist collectives, publications, research organizations, and Congressmen. In theory they ought not apply to venture capital, as allocation should be based on objective valuation of prospects rather than investor discretion. In practice, though, valuation of startups is so dependent on contestable assumptions that the industry is best conceived as donor finance plus a lottery ticket. If you think plutocracy is an important component of our systemic problems, then working through institutional forms where relative advantage will be decided by plutocratic discretion seems less than ideal. Plutocratic money is fine. It’s as green (much greener) than anyone else’s. But it must be decoupled from the discretion.

I love Effective Altruists. They are people devoted to thinking carefully and clearly and creatively, and serving the greater good. But as a social movement, I think they’ve erred. They’ve succumbed to fallacies of composition on both the input and the output side. On the input side, they imagine total contribution can be measured as a sum of individual contributions, so it’s sufficient to ask people to maximize their own impact, holding the rest of the world constant. That’s partial equilibrium thinking, and mistaken in their domain. On the output side, well, the usual critiques of “aggregate utility” as a welfare measure apply. I’d love to see a larger menagerie of social welfare functions, as formalizations that try to approximate competing groups’ actual values (which we might compare, contrast, perhaps even average), or that capture our status quo revealed preference as a society. Summing putatively identical concave individual welfare functions is great for expressing egalitarianism as a social value, and it usefully captures individual risk aversion. But it doesn’t actually express our collective aspirations.

There is no “true” or “scientific” social welfare function. We have to make it up. There is no objective way to quantify how much good we are doing in the world. And even if we settle upon some measure that we acknowledge merely expresses our own particular values, we will find that our means are not separable from our ends. I think many Effective Altruists have not fully grappled with contradictions between the means that they adopt and the ends they hope to further.

Postscript 1: For the most part this essay has been critique. I try here at interfluidity to be constructive. If EA is getting it wrong, how should people, including the well-meaning very rich, actually work to do good? I’ll write more on this in a future post, soon, I hope! Also, I have presumed more than argued that plutocratically dominated, donor-financed philanthropy is important contributor to what is undesirable about the status quo. For now I’ll send you to Anand Giridharadas and Rob Reich, but maybe I’ll try to offer my own summary of the case. If I’m going to be constructive, it might help to first clarify the pitfalls to avoid. Kelsey Piper offers a measured take on billionaire philanthropy, but I perceive harms that she doesn’t discuss.

Postscript 2: I’ve been percolating this for a while, but it’s probably not coincidence that I’m getting around to it now, in the wake of the astonishing collapse of FTX, the crypto exchange led by Effective Altruist Sam Bankman-Fried. My original take was that FTX died like highly leveraged financial institutions that also take on risk for profit often die, so it would be unfair blame the shiny new thing for an old, common story. It turns out the FTX’s case is extraordinary even within its sordid genre, and a case can be made that SBF’s really immoderate utilitarianism contributed to it. Even if that is so, I don’t think SBF is representative of Effective Altruism, and it strikes me as cheap to blame the broader movement for SBF’s sins.

Disclosures: In the above (and here again!) I have nepotistically linked my brother-in-law’s book. I am an uncompensated board member and officer of a small, donor-financed nonprofit.

Noah Smith has a good post on what, from a certain perspective, is kind of a puzzle. Why do real wages usually decline during inflations?

In theory, some economists imagine, inflation should be neutral. The nominal price level is just an arbitrary unit. If tomorrow we redenominated cents as dollars, and passed a law that updated previously defined contracts and prices to the new unit and let people exchange old currency for new, we’d expect nothing much to change. Sure, in “dollar terms”, prices would have risen by 100 times! But so also would have wages, and bank account balances, and everything else, so who cares. If we think of the real economy as fundamental and inflation as just a slipping of the nominal price unit, we’d expect wages and prices to rise simultaneously. Absent formal redenomination, there are some rigidities. Unexpected inflation redistributes from creditors to debtors, as debt contracts made in nominal dollars fail to adjust. But as Smith points out, wages are not thought to be rigid (“sticky”) upwards. So why, in most durable inflations, don’t wages rise at the same pace as prices?

This is a puzzle if you think about inflation as basically arbitrary, a symptom of mismanagement by central banks of purely nominal units. But that’s entirely the wrong way to think about stubborn inflations. Demand mismanagement can lead to some inflation, but it’s rarely durable. When there are not fundamental reasons for the inflation, moderate monetary and fiscal tightening quickly ends it. That happens a fair amount. Team transitory wins.

Stubborn inflations occur when there are in fact deep reasons why the inflation, or else some alternative form of unpleasantness, is necessary. Generally, inflation is the answer to a question: What do we do if we are not as rich as we thought we would be? More precisely, what do we do when the expectations of the labor force, in real terms, cannot be satisfied by the output we are capable of producing? Then we have to cut real wages relative to prior expectations somehow. If the shortfall is large, given the reality of downward nominal wage rigidity, we must resort to some mix of inflation and unemployment.

Inflation bounces around. We have lots of little spikes, the central bank and the fisc fine-tune, over time wages usually do keep up with prices through all of it. But when we have a serious inflation, it almost always accompanies a mismatch between what the labor force expects and what the economy, on the “supply side”, is capable of delivering. The functions of serious inflations are to (1) reprice real wages downward; and (2) allow for redistributions within the labor force, via repricings of relative wages that downward nominal wage rigidities would otherwise prevent.

Until February of this year, team transitory was right. In 2022, the fiscal impulse of the COVID era was going to collapse as quickly as it had arisen (and it has). That, and some monetary tightening, and unsnarling some temporary supply-side SNAFUs, would have ended the inflation. Last winter, we were seeing some redistribution of real wages within the labor force (towards the lower end), but not a steep decline in real wages. Then shit happened. February and early Spring brought three big shocks: the Ukraine War, the impact of Omicron on COVID-Zero China, and, in response to the Ukraine War, accelerating mistrust and hostility between China and the West. As Wolfgang Munchau points out (ht E.E. Reed), the old factory we have relied upon is shutting down. Over the next few years, we may have to radically reorganize the global supply side. The global demand side will have to adjust, at best, to a pause in the growth we might have expected from iterative improvements to that once humming machine. More likely we will have to adjust to some impoverishment in real terms, as businesses try to build a new machine from parts of the old one while the old one is struggles to sputter on. Patterns of sustainable specialization and trade that we have long depended upon are likely to be, well, no longer sustainable.

Globally, real wage expectations are out of kilter with what the global supply-side will be able to deliver. Locally, there will be winners and losers from the changes, which will entail redistribution of real wages from prior patterns within the global labor force. We are enduring a global inflation now because we require one. We don’t like it, so we are countering it with fiscal and monetary tools. But those can’t restore real wages the economy is unable to deliver. What fiscal and monetary tightening will do is trade some of the inflation for unemployment. Instead of everyone’s real wages falling, if we destroy demand for some superfluities, we can cut some of the labor force out from a share of the impaired flow of core goods and services that the global machine is now able to produce. That leaves more for the rest of us, higher real wages. As long as the supply side of the economy is impaired, our choice is whether to share the burden more broadly (tolerate inflation) or concentrate it on subgroups of workers (accept unemployment).

We are likely to do a bit of both, and oscillate between the two, until expectations of the labor force are realigned with expected (and much less uncertainly expected) global output. We won’t solve our macroeconomic problem until we find patterns of specialization and trade that are, in this new era, actually sustainable, and then accommodate our expectations and arrangements (wages, rents, etc.) to the actual production those new patterns can manage. Our problems are real. Neither Jay Powell nor Janet Yellen can fix them. Governments can, by finding a durable peace and building politically sustainable foundations for international trade and migration (which, I think, will be quite different from the arrangements of the past few decades), or by spurring domestic production of core goods and services.

Besides wage earners, there is another group of claimants who can share the burden of the real product shortfall. People who receive capital income might also adjust their real consumption. Under inflation they do, to a degree. Inflation will cause people “on fixed incomes” to consume less, and that will “help” in the sense that their discomfort will contribute to the burden sharing. Crashing portfolio values, declining home equity, higher mortgage payments (for those not on 30-year fixed rate mortgages) will reduce expenditures of the global “upper middle class”, helping limit the inflation and the decline of real wages. But in dollar terms, the vast majority of capital income goes to the very wealthiest, who did not spend much of it in good times, but who won’t adjust their spending downward in bad times, absent near total collapse of their wealth. Perhaps the main privilege of being fabulously rich is, under almost all circumstances, you get to opt out of “adjusting”.

At a macro level, the problem with capital isn’t that firms raise prices to pad margins. Those funds get paid mostly to people whose spending is decoupled from their earnings, so who don’t put pressure on global production. The expanded profits are like a tax, directly inflationary but disinflationary going forward as wage earners will afford less and less. The problem is when capital has the ability to increase profit by raising prices, that displaces the alternative strategy of increasing profit by expanding production. Expanding production is the happiest way of addressing a shortfall of core goods and services relative labor force expectations, and reduces the need for inflation and unemployment. In economic (as opposed to political) terms, the problem with capital is not that it takes too much money, but that it takes all that money while delivering too few goods. Which is why antitrust, or, excess margins taxes, or public options, should be at the very top of our inflation reduction agenda.