epistemic status: extremely uncertain philosophy ramblings
Scott Alexander recently examined whether capitalism or charity is more deserving of your support. He comes out in favor of charity:
Instacart makes yearly profit of $500 million, yearly revenue of $2.5 billion, and has 10 million yearly customers (who I guess pay $250 each per year?) and a market cap of $10 billion. For complicated reasons I’ll relegate to a footnote1, I’m going to summarize the deal that Capitalism offers by allowing Instacart to exist to “For $1 million, you can give 2,000 people a great deal on grocery delivery”.Compare this to a good charity, like GiveWell’s pick Dispensers For Safe Water. If I understand their claim right, per $1 million they can give 50,000 people clean water for ten years, which would probably save about 1,500 lives.
So which is a better use of $1 million? Give it to Capitalism, and give 2,000 people a great deal on grocery delivery? Or give it to Charity, and give 50,000 people clean water and save 1,500 lives? Even without being able to exactly quantify the value of grocery delivery deals vs. clean water, common-sensically Charity wins on first-order effects.
This seems straightforward: 1500 lives saved in Africa should obviously be better than helping out 2000 rich Americans get their groceries slightly faster! But I think this comparison is less obvious than it might seem, as it rests on a common but not ironclad assumption: that all lives are equal.
“Wait”, you say, “Isn’t this philosophy 101? At least under a particular set of moral values (consequentialist utilitarianism), lives and the utility granted to them have the same moral weight. Anyone would get more utility out of clean water than from faster deliveries. Of course you can debate what values to use for your framework, but that’s a different problem”.
I think even under utilitarianism grounds, you may choose to help American lives; even though an American and African life has equivalent intrinsic value, I argue that the American life has much more instrumental value, which can be reasonably measured by its capitalistic impact.
Intrinsic vs instrumental
An intuition pump about the difference between intrinsic and instrumental value goes like this: let’s say you could choose either Barack Obama or 5 random US citizens to save out of a freak car accident. (I made up this example while he was still president). What would you choose? My intuition strongly leans towards Obama. Breaking this down: even though Obama is only one person and has 1/5 the intrinsic worth of the party of 5, his instrumental value in being a good leader of the country far exceeds that. If he were replaced by the next-best president, this would, in expectation, cause a decrease in total utility much more than a mere 5 lives. So the correct utilitarian thing would be to save Obama.
Another intuition pump (this one from the book Open Borders): A barber who works in the US gets paid much more than a barber who works in the Africa, even though they cut the same amount of hair. American clients pay more because they earn more than African ones, which is to say that they are more productive, which is to say that in the same hour of work, typical Americans produces more total wealth (aka stuff people in the world want) than Africans. So teleporting an African barber into America would make global GDP go up, aka increase the total amount of productive capacity of our world. This would also be the correct thing to do on utilitarian grounds.
In saving Obama or teleporting the barber, we observe that even while trying to maximize utility in a worldview where lives are equal, something about certain people or contexts can lead us to choose them over other people and contexts. That “something” is their instrumental ability to produce more utility for others, which is roughly but usefully approximated as their earning power. And when trying to maximize utility in our world, paying attention to instrumental utility is important as it is how the majority of utility is produced.
Steelmanning capitalism (or: worshipping money. or: how to spend a million dollars)
Scott does briefly account for instrumental utility (aka earning power) in this way:
Second Order Effects: Instacart pays its employees, who then go on to stimulate the economy somewhere else. And it saves its customers time, which they can spend on productive economic activity. On the other hand, saving people’s lives allows them to engage in productive activity too. Fewer diseases mean families can spend more money on things other than medical care, and fewer childhood infections potentially means higher IQ and potential as an adult. I don’t think Instacart trivially wins this one either.
I think this glosses over the order-of-magnitude differences between Americans and Africans. Elsewhere, Scott notes that Instacart took about $500 of investment per customer; by implication, the VCs who bought into this framework think that the total consumer surplus of Instacart existing will be >$500 over the lifetime of each customer. Meanwhile, clean water seems to cost ~$20 per user per 10 years ($1m/50k). Of course, any American or African would prefer the first “10y clean water” over “Instacart access”. But the fact that the American had the ability to spend $500+ on Instacart in the first place, while the African was unable to pay $20 out of pocket reveals that from a global capitalistic production perspective, the American’s preferences are much more important to respect.