• Osa Iluobe

Effective Altruism & Philanthropy Economics

Updated: Sep 9


Source: Guerrilla Foundation


Peter Singer practises what he preaches. A utilitarian; effective altruist; vegetarian; animal-rights activist and big-brain philosopher, Mr Singer is a voice of reason in a world wherein much of it, not least within academia, appears increasingly lost. According to Mr Singer, ‘Ethics is not just about what I actually do, it’s also about what I omit to do and that’s why questions about what you spend your money on are also questions about what you don’t spend your money on, a lot of people forget that’. The implication of this idea is that financial altruism becomes a duty for those who are free from major suffering and poverty- Such as many in the west. It is also an essential aspect of living an ethical life, according to Mr Singer. A growing online movement called effective altruism holds that intentional acts of goodwill should be rationally guided and aimed towards maximising impact, not just achieving impact as an end in itself. Essentially, morality should be guided with the head, not the heart. Effective altruism, intellectually spearheaded by a vanguard of academics including Mr Singer himself, is gaining momentum and influence. Billionaires, yuppies, economists, philosophers, and several other individuals who live everyday lives endorse effective altruism and have bought into the idea that altruism should be targeted at achieving the most good. Yet, critics of effective altruism and philanthropy exist aplenty. So, what are the debates surrounding the ethics and economics of effective altruism, and philanthropy more generally?


According to orthodox economics, the conventional wisdom is that most people act rationally most of the time, that is to say, people are selfish - or rather, ‘self-interested’ to put it diplomatically. Cue billionaire philanthropists. Bill Gates; Warren Buffett; Mark Zuckerberg; Michael Bloomberg, and George Soros are some of the biggest donors of all time to charitable causes. The irony is that the wealth that these individuals have amassed is undeniably the result of the pursuit of profit and entrepreneurial vision, very much consistent with self-interest. What drives their desire to give is something that is not accounted for by orthodox economics. For Mr Soros, it’s a mix of ego and a more-than-mild desire to save the world. He openly confesses that he has a big ego, philanthropy is a way to boost it further. Indeed, having given more than $32 billion to promote a variety of ambitious liberal causes proves this.


Effective altruists are quick to heap praise on the billionaire class for their defiance of self-interested norms in pursuit of the greater good, which to them is seemingly consistent with the relentless pursuit of wealth. Despite their strong ethical inclinations, unlike social justice activists, Mr Singer and the intellectual vanguard of effective altruism do not innately despise billionaires or the means by which some of them make a handsome fortune. Will MacAskill, a leading effective altruist and philosophy professor at the University of Oxford believes that we shouldn’t boycott sweatshops or bother with fair-trade. Mr. Singer believes that it’s not immoral to be a billionaire (rather it’s only immoral to die as a billionaire) but according to many, inside and outside the halls of academia, the espousing of philanthropy and indifference to extreme wealth, rather than active opposition, is innately contradictory and arguably ignorant. From the viewpoint of sceptics, philanthropy is, therefore, an extension of self-interest, a sinister means employed to avoid one’s immediate moral obligations, namely to pay tax. Bernie Sanders, US Senator for Vermont, stated that he ‘doesn’t believe in charity’ and his demonisation of the billionaire class, alongside his view that the state and not individuals should provide welfare, allows us to see why.


Nevertheless, it would be misguided to view big philanthropy in a negative light. Effective altruists do get many things right and are alive to the fact that billionaires are not villains by default. Although it's true that some billionaires and wealthy individuals use philanthropy as a means to cut their tax bill - Thereby harming the state’s tax revenues and ability to fund public goods in the process, for most of the large-donor class philanthropy is a genuine endeavour. In most cases, philanthropy is not a substitute for one’s commitment to coughing up the money for the taxman. And those billionaires that do see it as such typically employ philanthropy alongside other means to ensure tax avoidance. However, the difference with philanthropy is that the use of funds is honourable and not self-interested.


The employment of effective altruism becomes important in light of this fact. If individuals have a duty to do the most good they can with their given resources, then philanthropy is a manifestation of this and should therefore be applauded. No individual, including multi-billionaires, gives away their money cheaply. This itself is a partial explanation of why some people of this category evade and avoid tax. Philanthropy is an expression of what people see as worthy of being invested in premised on their moral consideration and understanding of how they can maximise good. The philanthropy of economics is therefore important. Not only can we see how individuals are more than just self-interested, but it allows us to recognise the importance and difference that one can make by employing the resources they have. Crucially, this is not only true in the case of billionaires as those who aren’t make up a greater proportion of philanthropic donations.


The economic implications, and motivations of big philanthropy are increasingly under scrutiny from the armchairs of critics. This shouldn’t be the case, especially when considering the fact that beneficiaries would hardly moan at such actions of generosity.