Comments
Put another way, in the long run under market economies, does philanthropy reduce the power of altruistic actors and increase the power of non-altruistic actors? If not, why?
I think it's true that donating €10,000 may reduce my personal power/influence compared to keeping it in the bank. But I think it's essential to keep in mind that my €10,000 wouldn't be burned, it would "increase the power" of the beneficiaries/recipients. Given the diminishing returns on wealth, I expect the extra power the beneficiaries receive is more than the power I lose, so overall power transfer is positive-sum, and from someone relatively rich (like me) to someone relatively poor.
Another IMHO extremely important consideration is that money will be spent on something eventually. So if I buy something on Amazon instead of giving it to charity, I'm transferring wealth/power/influence from people in extreme poverty (partly) to Jeff Bezos, and conversely, if I donate to charity instead of buying something from Amazon I would do the opposite, which seems to me a better form of wealth redistribution.
(Also of course this ignores the many other positive effects of giving to effective charities, besides "power" transfer)
I think the transfer from the philanthropic actor to the charity preserves the “altruism” of the resource-utilizer so there shouldn’t be a net loss there unless you think gains due to charity don’t accrue as quickly as capital gains in the private market. So I think then the question kind of reduces to give now or give later. Unless there’s some belief in concentrating resources being inherently better than diffusing them.
Ah I see, I guess this is a difference in thinking or perhaps a misunderstanding on my part! My mental model for charitable contributions is kind of:
Giving money to philanthropy is a non-compounding effect. Kind of a one and done contribution.
But, what I'm hearing you say is that charitable contributions continue to compound value (perhaps through flow-through effects?). Do you have any data/research to back up the compounding effect of charity? I'm curious to learn more.
Also, charitable organizations need continuous influx of capital to keep operating. If I give, how is this not a 'one and done' contribution given that the organization would need more capital to continue operating. I guess I'm still having difficulty understanding, where is the compounding nature of charity?
Different charities will have different effects but broadly speaking if you save someone's life, that person continues to live and generate economic value (they do work, other people benefit by associating with them, etc.) Some things (like animal welfare) may be more like consumption (though accomplishing animal welfare advocacy goals may change policy that continues on further in time).
But also there may be a category error because even if the nonprofit just pays people to do nothing. The money you gave doesn't cease to exist -- it just becomes income for the employees and is spent on some combination of consumption and savings by them and the government that taxes them. So i think it may lead to a question of: in the broader economy, is savings or consumption preferred? And I guess that would probably vary over time based on the macroeconomic sittuation.
Thanks for elaborating! That's very helpful to understand and certainly strengthens the case for giving now (in the sense of power/capital transfer to other altruists).