When classifying institutions, a natural way is to use the sign of their free cash flow: firms are supposed to make it positive and as big as possible, while charities look for donors to maintain their vocationally loss-making operations. Between these two extremes, however, there is an spectrum of intermediate options. Some institutions, such as mutuals, cooperatives or partnerships, do not seek to maximize their free cash flow, nor do they seek donations, but instead they try to maintain a neutral cash flow, while meeting their foundational aims (including providing income to their stakeholders). 

Very often, what characterizes this class of institutions is a less adversarial relationship with their clients. The capitalist firm is statutorily committed to maximize profit. It is the simplicity of capitalist firm aims what makes the issuance of tradable capital shares possible. However, the price of this clarity is that it is very difficult for a firm to overcome the natural adversarial relationship with its clients. The capitalist firm and its managers are bound to maximize profits within the law, and this implies that, in all their relations with its clients, the capitalist firm wears a sign with the legend "caveat emptor" in its hat.

However, many services cannot be provided if the client has not a genuine trust that the provider has the interests of the client as its prime objective (the role of the trustee). For example, there are people who are not in a position to manage their own interests, and the courts have to appoint guardians for them. In a world where family ties are weakening and individualism is at the heart of the social operating system this problem can only become more acute. After World War II, one of the architects of social democratic Europe (William Beveridge) described the ideal of the welfare state as life cycle management “from cradle to grave”. The ideal of the financial adviser is exactly that: to offer his client advice not only on investment opportunities, but also on savings levels, and even certify the quality of services such as nursing homes (that can a large part of future expenditure or welfare). The same kind of trust is needed in the delivery of educational services, and that is why education “for profit” is more or less a universal failure, and also explains a good part of the dysfunctions of private healthcare.

For effective altruists, there is another area of interest in the trust business: animal welfare certifications. Much of the animal movement is grounded on the Ethics of "non-exploitation" and "anti-speciesism". A qualitative moral position is superior from the perspective of social activism, but to reap the political rewards a parallel movement focused on incremental improvements is necessary.

In my opinion veganism is not only utopian, but also undesirable. The vegan diet is poor, debilitating and above all, depressing. However, animal farming in Concentrated Animal Farming Operations (CAFO) is a mass abomination, but fortunately it likely can be overcome (in developed countries) by a general shift of diets towards: i) a higher consumption of vegetable over animal proteins, ii) a shift in animal protein consumption from pig, chicken and eggs towards milk and ruminants (see here for estimates). 

Even at the present moment, in terms of animal suffering, there is a huge gap between a gram of dry animal protein obtained from different sources. If we could label each food with its “neg-utility”, starting with green for those that do not involve animal suffering, and putting in warmer colors those that induce more suffering, a chicken breast or a pork loin steak would be in deep red, and a piece of cheese would barely be pale yellow (an Argentine beef steak would probably be orange). Meat production in CAFOs cannot be done with “net zero utility” animals without prohibitive prices, but probably eggs can be produced by “net zero utility” hens at a price comparable (in terms of animal protein per euro) to meat (while currently eggs are among the worst offenders). For dairy cows, although some cruelty is unavoidable (to maintain a stable herd, both nature and man have to inflict compensatory mortality on the offspring of milky cows), given the immense productivity in terms of protein of those animals, that cruelty is diluted on a very large volume of final product. And this is the correct measure of cruelty: neg-utility per gram of protein (or even better, neg-utility per euro of final product).

Therefore, if we had a credible certification of the level of animal suffering in each product, omnivorous diets could be reshuffled to have a lower impact in terms of animal welfare. But there is a large institutional vacuum: the meat industry has no interest nor credibility, and the animalist organizations are vegan, and in the best of cases only willing to fight for animal welfare measures imposed by governments.

Only Effective Altruists have the ethical framework and the relationship with capitalism that allows for the development of a system of animal welfare certifications that can be the basis for a global dietary transformation. For this, it is necessary to start with applied agronomic research, through the creation of model farms that allow for cost quantification and “best practices” design. Then it is necessary to develop inspection systems that allow for the translation of these practices to the part of the industry interested in capturing the demand of the ethical consumer.

For its current activities, Effective Altruism has a reasonable institutional structure, but to be competitive in the trust business the most important factor is an institutional design adapted to the activity considered. For institutional design, utilitarianism deserves trust: Bentham was the first to point out that the basis for building trust is transparency, and he proposed the “Panopticon” as a model. To the general principles of auditability, personnel rotation and transparency, the EAs can add the extra ideological conviction that makes possible the development of effective institutions.

Effective Altruism only will be consolidated by creating an economic ecosystem, and that ecosystem in my view shall be focused on the Trust business: schools, hospitals, fund managers/investment advisers, nursing homes and animal welfare certification and consulting.





More posts like this

No comments on this post yet.
Be the first to respond.
Curated and popular this week
Relevant opportunities