Imagine that we discovered a “hole in space”, through which we could see an alternate Earth, filled with people recognizably like us, though different in many ways. Those people could also see us. While no objects could move from their side of the hole to ours, small items (but not humans) could move from our side to theirs. Furthermore, the hole had the amazing property of multiplying everything we sent through by a factor F of a million! That is, if you tossed a gold coin through the hole, a million identical coins would come out the hole on the other side.
The belief that poverty will be eradicated in a century or two gives you reason not to postpone your donation 100-200 years. It doesn't give you reason to donate now.
Professor,The failure is in the rationality of the person that assumes the obligation to honor the interest rate. You hypotheses is based on the assumption that F*(your gift) so far in the future is a lot better than spending it now. If you didn't think so, there would be no point in renouncing comsumption for such a distant person. Let's assume that people live forever. So I lend you X dollars today, to collect in a thousand years. If it is obvious that the value I will get after interest rates is many times better than the value of spending it today, I have to be tricking you.
You may also be using the wrong deflators. If you use standard CPI or other price indices, it does seem to be a lot of money. But if you think about it in terms of relative wealth you get a different figure [and standard price adjustments aren't great for looking far back in the past]. I think a pound was about 5 dollars. So if we assume that 1000 pounds = 5000 nominal dollars and we use the Econ History's price deflators http://www.measuringworth.c... we find that this comes to over $2M if we use the unskilled wage and about $5M if we use nominal GDP. As a relative share of GDP, this figure would have been an enormous $380M or so. The latter is not an irrelevant calculation.
Given how wealthy someone had to be (relative to the poor in the 18th century) to fork over a thousand pounds in Franklin's time, he might have done more good with it then than you could do with 2 to 5 million bucks today.
If they don't invest it, then don't they give it to someone else by spending it? Not that much money sits around as cash in people's mattresses these days, but I'll admit that it may very well end up in a checking account that gets little or no interest. And money sitting around in a checking account gets turned into bank loans anyway. As far as I can tell, letting money sit in bank accounts for 200 years doesn't increase the growth of the overall economy. Compound interest only produces money, not wealth.
The most obvious real mechanism someone could have in mind is that production is mostly capital constrained as opposed to technology constrained. If we have not run into significant declining marginal productivity of capital then saving more real resources now gives the future a lot more productivity. However, it seems fairly clear to me that we are mostly technology constrained, so I don't think saving now gives the future a lot more productivity.
I think that Robin and some others are getting somewhat tripped up by monetary economics. I think it would be useful for Robin to try to reformulate his argument in a strictly barter economy.
The reason is this: if an estate saves money, it demands money if it spends money it demands less money. So if an estate had a large amount of cash (relative to the economy as a whole) and then decided to spend it one day, it would cause a large drop in total money demand. One of two things can happen: if the central bank does nothing you get a large rise in the price level which reduces the activities of everyone; if the central bank offsets the change in money demand, by reducing the money supply. This later action reduces the economic activities of everyone else (not the estate).
Simply saving cash does not move real resources into the future. In order to move resources into the future you need a non-financial phenomena that does it. Perhaps Robin has one in mind, but he hasn't made it clear.
It's useful to think of money as giving you control over a fraction of economic activity at a particular time, not giving you control over an *amount* of economic activity.
Yes, but that's the far far future, not "a few centuries". Not only is exponential economic growth unlikely for the same reasons that exponential population growth cannot continue, but the likelihood that I can help anyone I would want to help given the extreme environment seems vanishingly small. At this point, the argument really seems like Pascal's wager.
In the Malthusian em situation you propose donations don't necessarily increase per capita incomes unless they are conditional on the recipients abstaining from reproduction (which may be a harm to a total utilitarian anyway!).
I think we agree that donations are justified. The question is whether larger utility can be bought by donating to efficient charities today (e.g. the Schistosomiasis Control Initiative) or by saving money to be donated in the future. Given
(a) the highly speculative nature of your post-em-transition future (which is what I'm assuming you're talking about when you say "in a few centuries"),
(b) the amount of compounding that will happen in a few centuries, minus inflation, (as I've stated before, I don't find your prediction of future growth rates compelling)
(c) the likelihood that the our intentions will be respected by those entrusted with the funds, and
(d) the cost/feasibility of helping others in the future
it doesn't seem at all obvious to me that saving for the future yields higher expected utility than giving today. I'd welcome arguments that would convince me otherwise.
Two tangential points: (1) The em scenario which leads to many poor ems in the future won't motivate people who don't assign moral value to running computer programs. (2) The value of existential risk reduction seems to trump direct charitable giving, either now or to the future.
I haven’t shifted through all the posts let us consider that with such asymmetrical benefits as 1/F would lead many of us to donate to the point of cluttering the other world. Could it be said that the parallel earth would receive too many clothes, etc. So much that the relative benefits of receiving these goods would long surpass the relative costs of the sender. And if they started sending them back to use to free up space it may start an intergalactic reverse trade war…a charity war
Jess, Grobstein, Peter, etc. I've posted before on why there is a good chance there will be poor in a few centuries. You don't need a high chance to justify donations.
The belief that poverty will be eradicated in a century or two gives you reason not to postpone your donation 100-200 years. It doesn't give you reason to donate now.
Looks like things may be changing: http://www.laphamsquarterly...
Professor,The failure is in the rationality of the person that assumes the obligation to honor the interest rate. You hypotheses is based on the assumption that F*(your gift) so far in the future is a lot better than spending it now. If you didn't think so, there would be no point in renouncing comsumption for such a distant person. Let's assume that people live forever. So I lend you X dollars today, to collect in a thousand years. If it is obvious that the value I will get after interest rates is many times better than the value of spending it today, I have to be tricking you.
Some interesting trivia: At his richest, John D. Rockefeller had more money than the annual budget of the U.S. federal government.
You may also be using the wrong deflators. If you use standard CPI or other price indices, it does seem to be a lot of money. But if you think about it in terms of relative wealth you get a different figure [and standard price adjustments aren't great for looking far back in the past]. I think a pound was about 5 dollars. So if we assume that 1000 pounds = 5000 nominal dollars and we use the Econ History's price deflators http://www.measuringworth.c... we find that this comes to over $2M if we use the unskilled wage and about $5M if we use nominal GDP. As a relative share of GDP, this figure would have been an enormous $380M or so. The latter is not an irrelevant calculation.
Given how wealthy someone had to be (relative to the poor in the 18th century) to fork over a thousand pounds in Franklin's time, he might have done more good with it then than you could do with 2 to 5 million bucks today.
Indeed. Wouldn't throwing *cash* through our magic multiplier hole just cause inflation on the other side?
If they don't invest it, then don't they give it to someone else by spending it? Not that much money sits around as cash in people's mattresses these days, but I'll admit that it may very well end up in a checking account that gets little or no interest. And money sitting around in a checking account gets turned into bank loans anyway. As far as I can tell, letting money sit in bank accounts for 200 years doesn't increase the growth of the overall economy. Compound interest only produces money, not wealth.
Addendum:
The most obvious real mechanism someone could have in mind is that production is mostly capital constrained as opposed to technology constrained. If we have not run into significant declining marginal productivity of capital then saving more real resources now gives the future a lot more productivity. However, it seems fairly clear to me that we are mostly technology constrained, so I don't think saving now gives the future a lot more productivity.
I think that Robin and some others are getting somewhat tripped up by monetary economics. I think it would be useful for Robin to try to reformulate his argument in a strictly barter economy.
The reason is this: if an estate saves money, it demands money if it spends money it demands less money. So if an estate had a large amount of cash (relative to the economy as a whole) and then decided to spend it one day, it would cause a large drop in total money demand. One of two things can happen: if the central bank does nothing you get a large rise in the price level which reduces the activities of everyone; if the central bank offsets the change in money demand, by reducing the money supply. This later action reduces the economic activities of everyone else (not the estate).
Simply saving cash does not move real resources into the future. In order to move resources into the future you need a non-financial phenomena that does it. Perhaps Robin has one in mind, but he hasn't made it clear.
It's useful to think of money as giving you control over a fraction of economic activity at a particular time, not giving you control over an *amount* of economic activity.
Yes, but that's the far far future, not "a few centuries". Not only is exponential economic growth unlikely for the same reasons that exponential population growth cannot continue, but the likelihood that I can help anyone I would want to help given the extreme environment seems vanishingly small. At this point, the argument really seems like Pascal's wager.
I've argued for limits to growth independent of ems.
In the Malthusian em situation you propose donations don't necessarily increase per capita incomes unless they are conditional on the recipients abstaining from reproduction (which may be a harm to a total utilitarian anyway!).
I think we agree that donations are justified. The question is whether larger utility can be bought by donating to efficient charities today (e.g. the Schistosomiasis Control Initiative) or by saving money to be donated in the future. Given
(a) the highly speculative nature of your post-em-transition future (which is what I'm assuming you're talking about when you say "in a few centuries"),
(b) the amount of compounding that will happen in a few centuries, minus inflation, (as I've stated before, I don't find your prediction of future growth rates compelling)
(c) the likelihood that the our intentions will be respected by those entrusted with the funds, and
(d) the cost/feasibility of helping others in the future
it doesn't seem at all obvious to me that saving for the future yields higher expected utility than giving today. I'd welcome arguments that would convince me otherwise.
Two tangential points: (1) The em scenario which leads to many poor ems in the future won't motivate people who don't assign moral value to running computer programs. (2) The value of existential risk reduction seems to trump direct charitable giving, either now or to the future.
I haven’t shifted through all the posts let us consider that with such asymmetrical benefits as 1/F would lead many of us to donate to the point of cluttering the other world. Could it be said that the parallel earth would receive too many clothes, etc. So much that the relative benefits of receiving these goods would long surpass the relative costs of the sender. And if they started sending them back to use to free up space it may start an intergalactic reverse trade war…a charity war
Jess, Grobstein, Peter, etc. I've posted before on why there is a good chance there will be poor in a few centuries. You don't need a high chance to justify donations.
It seems mostly wishful thinking to think that research or education spending compounds at the market interest rates over long periods.