And Jeff Bezos spends his money on Blue origin which furthers the cause of the human race as a whole
This seems good to me from the little that I know.
No need to reply to this red herring about spending habits of super-rich; they are largely irrelevant to your argument (that capitalism is still the better system).
But once we go down that road...
“The IRS facts for 2007 show that the 400 biggest taxpayers had a total adjusted income of $138 billion, and just over $11 billion was taken as a charitable deduction, a proportion of about 8%...Is it possible that annual giving misses the bigger picture? One could imagine that the very rich build their net worth during their lifetimes and then put large charitable bequests into their wills. Estate tax data, unfortunately, make hash of that scenario, as 2008 statistics show.”
It’s a good counter-point to Roko’s fantasy about the kindness of billionaires. I suspect he fell for availability bias with his space program idea and Bezos. BTW, the Blue Origin investment is not even close to closing his income gap with the average Joe. Buffett is giving away all of his money, to be managed by tech-smart Gates, would have made a better example (which again supports the availability bias ;).
Still, the real economics of it is that the super-rich by and large do not take away much from society, with some exceptions. This is because they either buy goods and services for themselves or invest. This per se adds a single cycle to the money circulation rate, which is not huge. The exceptions come when they spend obscene amount on essentially single-used goods that need to be produced anew, such as building palaces for them and their whole f*g royal extended family (sorry for the emotion, but this is what I feel for the oil sheiks). Somewhat counter-intuitively, if they compete on existing luxuries, such Michelangelo paintings, and spend billion dollars on them, the harm is pretty minimal, since little societal resources needed to be wasted on these goods.
All in all I heard of very few, billion-dollar self indulgent spenders. The rest of the money gets invested, and often in new startups/technologies that you mutual fund will not invest in, and which in fact is a very valuable service.
it’s a good counter-point to Roko’s fantasy about the kindness of billionaires
$11 billion was taken as a charitable deduction, a proportion of about 8%
Note that SpaceX, Blue Origin, Virgin Galactic wouldn’t be counted in that as it is not technically charity.
In 2002, the average British person gave 147 pounds to charity, and the average net income is roughly 15,000 pounds per person, making an average donation level of about 1%.
So the super rich are 8 times as charitable as the average person.
In the USA, the average person is waaaay more charitable. Unfortunately, that’s all money going to churches, so not high-impact money.
Perhaps I should have qualified myself: ordinary Americans do spend money on what they think is important: they overwhelmingly give to churches.
But again, intention is not what matters to a consequentialist. Results matter.
I venture that if you put this data next to the marginal utility of money the 1% donation of the ordinary people will look way more charitable than the 8% or the super-rich.
Buffett said, rather honestly (after declaring his intention of giving away 99%) something along the lines of “don’t look at me for charity advice, I never gave away a dollar I actually needed”. You have to discount super-rich giving quite steeply on altruism scale.
Additional accounting note: the 8% comes from American data, so 8x is not the true ratio your 1% figure is from UK, and according to you Americans’ giving is waaay more charitable. Also not known how much of the super-rich giving goes to churches as you point out.
Just to point out, we are not arguing about altruism of the super-rich, not their usefulness in a capitalist society; they are not only a necessary evil but are actually useful because of their investment profile.
It is the results that matter, though. I should have worded my original comment to make this clear. Ordinary people in the USA give bucketloads of money to Churches, but that one set of donations by Theil to SIAI matters almost infinitely more.
Agreed, but this still does not indicate any general altruism of the super-rich. Pragmatically, you’re better off hitting them up for 10M than me for $100, even if I am giving up more utils in process. Individually Theil deserves credit for far-sightedness, of course.
Thanks for your interesting response. If you have any relevant references concerning what billionaires do with their money, I would appreciate them.
If super-rich people really do reinvest most of their money in startups/technologies, then their disinclination toward charitable spending may not be problematic at all. It’s occurred to me that investment in startups/technologies may more cost effective than donations to virtually all presently existing charities (even the ones that GiveWell recommends, which I presently donate to).
At the same time, if the situation is as you describe, then why don’t billionaires make this point more often to increase their public adulation?
Most of my data is just plain logic and some reading of biographies/news.
I imagine it’s actually pretty hard to spend a billion dollars on yourself, because each thing that you acquire, if it is of any value above rubbish, carries management overhead. These people have teams managing their staff; owning too much stuff can get pretty annoying.
I do not know what they invest in in general, I suspect hedge funds and VC firms, if not their own business expansion, since these can provide greater returns with small risk if you are rich enough to diversify. What I can say is that I and other ordinary folk do not invest in startups, as I cannot diversify that risk enough and cannot afford time for due diligence etc. It’s up to the rich to provide Angel/VC funding.
•I have the same impression that rich people can’t spend too much money on themselves. But I remain concerned that they may split their fortune many ways among their children, grandchildren, great-grandchildren etc. who all use a lot of money on luxury goods. It would be good to have some data on this point.
•Hedge funds may skew wealth on account of picking up “quarters on the side walk” that otherwise would have been distributed randomly among members of the population. Wealth skewing seems to be bad for (economic growth)/(political stability)/(average quality of life). On the other hand hedge funds may stabilize the economy on account of suppressing bubbles. On the other hand they may destabilize the economy on account of leveraging a lot of funds and occasionally messing up. These things are complicated.
•Angel/VC funding is probably good.
•I would like to see super-rich people systematically using their money to achieve maximum positive social impact. Angel/VC funding should have some positive social impact, but since the market system does not take into account externalities & because there are tragedy of the commons issues in the market system, I think that super-rich people could be benefiting the world much more than they are now if they were actively trying to benefit the world rather than just trying to make more money.
No need to reply to this red herring about spending habits of super-rich; they are largely irrelevant to your argument (that capitalism is still the better system).
But once we go down that road...
It’s a good counter-point to Roko’s fantasy about the kindness of billionaires. I suspect he fell for availability bias with his space program idea and Bezos. BTW, the Blue Origin investment is not even close to closing his income gap with the average Joe. Buffett is giving away all of his money, to be managed by tech-smart Gates, would have made a better example (which again supports the availability bias ;).
Still, the real economics of it is that the super-rich by and large do not take away much from society, with some exceptions. This is because they either buy goods and services for themselves or invest. This per se adds a single cycle to the money circulation rate, which is not huge. The exceptions come when they spend obscene amount on essentially single-used goods that need to be produced anew, such as building palaces for them and their whole f*g royal extended family (sorry for the emotion, but this is what I feel for the oil sheiks). Somewhat counter-intuitively, if they compete on existing luxuries, such Michelangelo paintings, and spend billion dollars on them, the harm is pretty minimal, since little societal resources needed to be wasted on these goods.
All in all I heard of very few, billion-dollar self indulgent spenders. The rest of the money gets invested, and often in new startups/technologies that you mutual fund will not invest in, and which in fact is a very valuable service.
Note that SpaceX, Blue Origin, Virgin Galactic wouldn’t be counted in that as it is not technically charity.
In 2002, the average British person gave 147 pounds to charity, and the average net income is roughly 15,000 pounds per person, making an average donation level of about 1%.
So the super rich are 8 times as charitable as the average person.
In the USA, the average person is waaaay more charitable. Unfortunately, that’s all money going to churches, so not high-impact money.
Perhaps I should have qualified myself: ordinary Americans do spend money on what they think is important: they overwhelmingly give to churches.
But again, intention is not what matters to a consequentialist. Results matter.
I venture that if you put this data next to the marginal utility of money the 1% donation of the ordinary people will look way more charitable than the 8% or the super-rich.
Buffett said, rather honestly (after declaring his intention of giving away 99%) something along the lines of “don’t look at me for charity advice, I never gave away a dollar I actually needed”. You have to discount super-rich giving quite steeply on altruism scale.
Additional accounting note: the 8% comes from American data, so 8x is not the true ratio your 1% figure is from UK, and according to you Americans’ giving is waaay more charitable. Also not known how much of the super-rich giving goes to churches as you point out.
Just to point out, we are not arguing about altruism of the super-rich, not their usefulness in a capitalist society; they are not only a necessary evil but are actually useful because of their investment profile.
It is the results that matter, though. I should have worded my original comment to make this clear. Ordinary people in the USA give bucketloads of money to Churches, but that one set of donations by Theil to SIAI matters almost infinitely more.
Agreed, but this still does not indicate any general altruism of the super-rich. Pragmatically, you’re better off hitting them up for 10M than me for $100, even if I am giving up more utils in process. Individually Theil deserves credit for far-sightedness, of course.
Thanks for your interesting response. If you have any relevant references concerning what billionaires do with their money, I would appreciate them.
If super-rich people really do reinvest most of their money in startups/technologies, then their disinclination toward charitable spending may not be problematic at all. It’s occurred to me that investment in startups/technologies may more cost effective than donations to virtually all presently existing charities (even the ones that GiveWell recommends, which I presently donate to).
At the same time, if the situation is as you describe, then why don’t billionaires make this point more often to increase their public adulation?
Most of my data is just plain logic and some reading of biographies/news.
I imagine it’s actually pretty hard to spend a billion dollars on yourself, because each thing that you acquire, if it is of any value above rubbish, carries management overhead. These people have teams managing their staff; owning too much stuff can get pretty annoying.
I do not know what they invest in in general, I suspect hedge funds and VC firms, if not their own business expansion, since these can provide greater returns with small risk if you are rich enough to diversify. What I can say is that I and other ordinary folk do not invest in startups, as I cannot diversify that risk enough and cannot afford time for due diligence etc. It’s up to the rich to provide Angel/VC funding.
Thanks for your response.
•I have the same impression that rich people can’t spend too much money on themselves. But I remain concerned that they may split their fortune many ways among their children, grandchildren, great-grandchildren etc. who all use a lot of money on luxury goods. It would be good to have some data on this point.
•Hedge funds may skew wealth on account of picking up “quarters on the side walk” that otherwise would have been distributed randomly among members of the population. Wealth skewing seems to be bad for (economic growth)/(political stability)/(average quality of life). On the other hand hedge funds may stabilize the economy on account of suppressing bubbles. On the other hand they may destabilize the economy on account of leveraging a lot of funds and occasionally messing up. These things are complicated.
•Angel/VC funding is probably good.
•I would like to see super-rich people systematically using their money to achieve maximum positive social impact. Angel/VC funding should have some positive social impact, but since the market system does not take into account externalities & because there are tragedy of the commons issues in the market system, I think that super-rich people could be benefiting the world much more than they are now if they were actively trying to benefit the world rather than just trying to make more money.
Good point.