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Conflicts of Interest, Poverty and Rationality

I quit the Effective Altruism forum due to a new rule requiring posts and comments be basically put in the public domain without copyright. I had a bunch of draft posts, so I’m posting some of them here with light editing.

Almost everyone believes in conflicts of interest without serious consideration or analysis. It’s not a reasoned opinion based on studying the literature on both sides. They’re almost all ignorant of classical liberal reasoning and could not summarize the other side’s perspective. They also mostly haven’t read e.g. Marx or Keynes. I literally can’t find anyone who has ever attempted to give a rebuttal to Hazlitt’s criticism of Keynes. And I’ve never found an article like “Why Mises, Rand and classical liberalism are wrong and there actually are inherent conflicts of interest”.

(Searching again just now the closest-to-relevant thing I found was an article attacking Rand re conflicts of interest. Its argument is basically that she’s a naive idiot who is contradicting classical liberalism by saying whenever there is a conflict someone is evil/irrational. It shows no awareness that the “no conflicts of interest” is a classical liberal theory which Rand didn’t invent. It’s an anti-Rand article that claims, without details, that classical liberalism is on its side. It’s a pretty straightforward implication of the liberal harmony view that if there appears to be a conflict of interest or disharmony, someone is making a mistake that could and should be fixed, and fixing the mistake enough to avoid conflict is possible (in practice now, not just in theory) if no one is being evil, irrational, self-destructive, etc.)

There are some standard concerns about liberalism (which are already addressed in the literature) like: John would get more value from my ball than I would. So there’s a conflict of interest: I want to keep my ball, and John wants to have it.

Even if John would get less value from my ball, there may be a conflict of interest: John would like to have my ball, and I’d like to keep it.

John’s interest in taking my ball, even though it provides more value to me than him, is widely seen as illegitimate. The only principle it seems to follow is “I want the most benefit for me”, which isn’t advocated much, though it’s often said to be human nature and said that people will inevitably follow it.

Wanting to allocates resources where they’ll do the most good – provide the most benefit to the most people – is a reasonable, plausible principle. It has been advocated as a good, rational principle. There are intellectual arguments for it.

EA seems to believe in that principle – allocate resources where they’ll do the most good. But EA also tries not to be too aggressive about it and just wants people to voluntarily reallocate some resources to do more good compared to the status quo. EA doesn’t demand a total reallocate of all resources in the optimal way because that’s unpopular and perhaps unwise (e.g. there are downsides to attempting revolutionary changes to society (especially ones that many people will not voluntarily consent to) rather than incremental, voluntary changes, such as the risk of making costly mistakes while making massive changes).

But EA does ask for people to voluntarily make some sacrifices. That’s what altruism is. EA wants people to give up some benefit for themselves to provide larger benefits for others. E.g. give up some money that has diminishing returns for you, and donate it to help poor people who get more utility per dollar than you do. Or donate to a longtermist cause to help save the world, thus benefitting everyone, even though most people aren’t paying their fair share. In some sense, John is buying some extra beer while you’re donating to pay not only your own share but also John’s share of AGI alignment research. You’re making a sacrifice for the greater good while John isn’t.

This narrative, in terms of sacrifices, is problematic. It isn’t seeking win/win outcomes, mutual benefit or social harmony. It implicitly accepts a political philosophy involving conflicts of interest, and it further asks people to sacrifice their interests. By saying that morality and your interests contradict each other, it creates intellectual confusion and guilt.

Liberal Harmony

Little consideration has been given to the classical liberal harmony of interests view, which says no sacrifices are needed. You can do good without sacrificing your own interests, so it’s all upside with no downside.


A fairly straightforward answer is: if John wants my ball and values it more than I do, he can pay me for it. He can offer a price that is mutually beneficial. If it’s worth $10 to me, and $20 to John, then he can offer me $15 for it and we both get $5 of benefit. On the other hand, if I give it to John for free, then John gets $20 of benefit and I get -$10 of benefit (that’s negative benefit).

If the goal is to maximize total utility, John needs to have that ball. Transferring the ball to John raises total utility. However, the goal of maximizing total utility is indifferent to whether John pays for it. As a first approximation, transferring dollars has no effect on total utility because everyone values dollars equally. That isn’t really true but just assume it for now. I could give John the ball and $100, or the ball and $500, and the effect on total utility would be the same. I lose an extra $100 or $500 worth of utility, and John gains it, which has no effect on total utility. Similarly, John could pay me $500 for the ball and that would increase total utility just as much (by $10) as if I gave him the ball for free.

Since dollar transfers are utility-neutral, they can be used to get mutual benefit and avoid sacrifices. Whenever some physical object is given to a new owner in order to increase utility, some dollars can be transferred in the other direction so that both the old and new owners come out ahead.

There is no need, from the standpoint of total utility, to have any sacrifices.

And these utility-increasing transfers can be accomplish, to the extent people know they exist, by free trade. Free trade already maximizes total utility, conditional on people finding opportunities and the transaction costs being lower than the available gains. People have limited knowledge, they’re fallible, and trade takes effort, so lots of small opportunities are missed out on that an omniscient, omnipotent God could do. If we think of this from a perspective of a central planner or philosopher king with unlimited knowledge who can do anything effortlessly, there’d be a lot of extra opportunities compared to the real situation where people have limited knowledge of who has what, how much utility they’d get from what, etc. This is an important matter that isn’t very relevant to the conflicts of interest issue. It basically just explains that some missed opportunities are OK and we shouldn’t expect perfection.

There is a second issue, besides John would value my physical object more than me. What if John would value my services more than the disutility of me performing those services? I could clean his bathroom for him, and he’d be really happy. It has more utility for him than I’d lose. So if I clean his bathroom, total utility goes up. Again, the solution is payment. John can give me dollars so that we both benefit, rather than me cleaning his bathroom for free. The goal of raising total utility has no objection to John paying me, and the goal of “no one sacrifices” or “mutual benefit” says it’s better if John pays me.

Valuing Dollars Differently

And there’s a third issue. What if the value of a dollar is different for two people? For a simple approximation, we’ll divide everyone up into three classes: rich, middle class and poor. As long as John and I are in the same class, we value a dollar equally, and my analysis above works. And if John is in a higher class than me, than him paying me for my goods or services will work fine. Possibly he should pay me extra. The potential problems for the earlier analysis come if John is in a lower class than me.

If I’m middle class and John is poor, then dollars are more important to him than to me. So if he gives me $10, that lowers total utility. We’ll treat middle class as the default, so that $10 has $10 of value for me, but for John it has $15 of value. Total utility goes down by $5. Money transfers between economic classes aren’t utility-neutral.

Also, if I simply give John $10, for nothing in return, that’s utility-positive. It increases total utility by $5. I could keep giving John money until we are in the same economic class, or until we have the same amount of money, or until we have similar amounts of money – and total utility would keep going up the whole time. (That’s according to this simple model.)

So should money be divided equally or approximately equally? Would that raise total utility and make a better society?

There are some concerns, e.g. that some people spend money more wastefully than others. Some people spend money on tools that increase the productivity of labor – they forego immediate consumption to invest in the future. Others buy alcohol and other luxury consumption. If more money is in the hands of investors rather than consumers, society will be better off after a few years. Similarly, it lowers utility to allocate seed corn to people who’d eat it instead of planting it.

Another concern is that if you equal out the wealth everyone has, it will soon become unequal again as some people consume more than others.

Another concern is incentives. The more you use up, the more you’ll be given by people trying to increase total utility? And the more you save, the more you’ll give away to others? If saving/investing benefits others not yourself, people will do it less. If people do it less, total utility will go down.

One potential solution is loans. If someone temporarily has less money, they can be loaned money. They can then use extra, loaned dollars when they’re low on money, thus getting good utility-per-dollar. Later when they’re middle class again, they can pay the loan back. Moving spending to the time period when they’re poor, and moving saving (loan payback instead of consumption) to the time period when they’re middle class, raises overall utility.


But what if being poor isn’t temporary? Then I’d want to consider what is the cause of persistent poverty.

If the cause is buying lots of luxuries, then I don’t think cash transfers to that person are a good idea. Among other things, it’s not going to raise total utility of society to increase consumption of luxuries instead of capital accumulation. Enabling them to buy even more luxuries isn’t actually good for total utility.

If the cause is being wasteful with money, again giving the person more money won’t raise total utility.

If the cause is bad government policies, then perhaps fixing the government policies would be more efficient than transferring money. Giving money could be seen as subsidizing the bad government policies. It’d be a cost-ineffective way to reduce the harm of the policies, thus reducing the incentive to change the policies, thus making the harmful policies last longer.

If the person is poor because of violence and lack of secure property, then they need rule of law, not cash. If you give them cash, it’ll just get taken.

Can things like rule of law and good governance be provided with mutual benefit? Yes. They increase total wealth so much that everyone could come out ahead. Or put another way, it’s pretty easy to imagine good police and courts, which do a good job, which I’d be happy to voluntarily pay for, just like I currently voluntarily subscribe to various services like Netflix and renting web servers.

Wealth Equality

Would it still be important to even out wealth in that kind of better world where there are no external forces keeping people persistently poor? In general, I don’t think so. If there are no more poor people, that seems good enough. I don’t think the marginal utility of another dollar changes that much once you’re comfortable. People with plenty don’t need to be jealous of people with a bit more. I understand poor people complaining, but people who are upper middle class by today’s standards are fine and don’t need to be mad if some other people have more.

Look at it like this. If I have 10 million dollars and you have 20 million dollars, would it offer any kind of significant increase in total utility to even that out to 15 million each? Nah. We both can afford plenty of stuff – basically anything we want which is mass produced. The marginal differences come in two main forms:

1: Customized goods and services. E.g. you could hire more cooks, cleaners, personal drivers, private jet flights, etc.
2: Control over the economy, e.g. with your extra $10 million you could gain ownership of more businesses than I own.

I don’t care much about the allocation of customized goods and services besides to suggest that total utility may go up with somewhat less of them. Mass production and scalable services are way more efficient.

And I see no particular reason that total utility will go up if we even out the amount of control over businesses that everyone has. Why should wealth be transferred to me so that I can own a business and make a bunch of decisions? Maybe I’ll be a terrible owner. Who knows. How businesses are owned and controlled is an important issue but I basically don’t think that evening out ownership is the answer that will maximize total utility. Put another way, the diminishing returns on extra dollars is so small in this dollar range that personal preferences probably matter more. In other words, how much I like running businesses is a bigger factor than my net worth only being $10 million rather than $15 million. How good I am at running a business is also really important since it’ll affect how much utility the business creates or destroys. If you want to optimize utility more, you’ll have to start allocating specific things to the right people, which is hard, rather than simply trying to give more wealth to whoever has less. Giving more to whoever has less works pretty well at lower amounts but not once everyone is well off.

What about the ultra rich who can waste $44 billion dollars on a weed joke? Should anyone be a trillionaire? I’m not sure it’d matter in a better world where all that wealth was earned by providing real value to others. People that rich usually don’t spend it all anyway. Usually, they barely spend any of it, unless you count giving it to charity as spending. To the extent they keep it, they mostly invest it (in other words, basically, loan it out and let others use it). Having a ton of wealth safeguarded by people who will invest rather than consume it is beneficial for everyone. But mostly I don’t care much and certainly don’t want to defend current billionaires, many of who are awful and don’t deserve their money, and some of whom do a ton of harm by e.g. buying and then destroying a large business.

My basic claim here is that if everyone were well off, wealth disparities wouldn’t matter so much – we’d all be able to buy plenty of mass produced and scalable stuff, and so the benefit of a marginal dollar would be reasonably similar between people. It’s the existence of poverty that makes a dollar having different utility for different people a big issue.

The Causes of Poverty

If you give cash to poor people, you aren’t solving the causes of poverty. You’re just reducing some of the harm done (hopefully – you could potentially be fueling a drug addiction or getting a thug to come by and steal it or reducing popular resentment of a bad law and thus keeping it in place longer). It’s a superficial (band aid) solution not a root cause solution. If people want to do some of that voluntarily, I don’t mind. But I don’t place primary importance on that stuff. I’m more interested in how to fix the system and whether that can be done with mutual benefit.

From a conflicts of interest perspective, it’s certainly in my interest that human wealth goes up enough for everyone to have a lot. That world sounds way better for me to live in. I think the vast majority will agree. So there’s no large conflict of interest here. Many a few current elites would prefer to be a big fish in a smaller pond rather than live in that better world. But I think they’re wrong and that isn’t in their interest. Ideas like that will literally get them killed. Anti-aging research would be going so much better if humanity was so much richer that there were no poor people.

What about people who are really stupid, or disabled, or chronically fatigued or something so they can’t get a good job even in a much better world? Their families can help them. Or their neighbors, church group, online rationality forum, whatever. Failing that, some charity seems fine to fill in a few gaps here and there – and it won’t be a sacrifice because people will be happy to help and will still have plenty for themselves and nothing in particular they want to buy but have to give up. And with much better automation, people will be able to work much shorter hours and one worker will be able to easily support many people. BTW, we may run into trouble with some dirty/unpleasant jobs still being needed, that aren’t automated, and how do we incentivize anyone to do them when just paying higher wages for those jobs won’t attract much interest since everyone has plenty.

So why don’t we fix the underlying causes of poverty? People disagree about what those are. People try things that don’t work. There are many conflicting plans with many mistakes. But there’s no conflict of interest here, even between people who disagree on the right plan. It’s in both people’s interests to figure out a plan that will actually work and do that.

Trying to help poor people right now is a local optima that doesn’t invest in the future. As long as the amount of wealth being used on it is relatively small, it doesn’t matter much. It has upsides so I’m pretty indifferent. But we shouldn’t get distracted from the global optima of actually fixing the root problems.


I have ideas about how to fix the root causes of poverty, but I find people broadly are unwilling to learn about or debate my ideas (some of which are unoriginal and can be read in fairly well known books by other people). So if I’m right, there’s still no way to make progress. So the deeper root cause of poverty is irrationality, poor debate methods, disinterest in debate, etc. Those things are why no one is working out a good plan or, if anyone does have a good plan, it isn’t getting attention and acceptance.

Basically, the world is full of social hierarchies instead of truth-seeking, so great ideas and solutions often get ignored without rebuttal, and popular ideas (e.g. variants of Keynesian economics) often go ahead despite known refutations and don’t get refined with tweaks to fix all the known ways they’ll fail.

Fix the rationality problem, and get a few thousand people who are actually trying to be rational instead of following social status, and you could change the world and start fixing other problems like poverty. But EA isn’t that. When you post on EA, you’re often ignored. Attention is allocated by virality, popularity, whatever biased people feel like (which is usually related to status), etc. There’s no organized effort to e.g. point out one error in every proposal and not let any ideas get ignored with no counter-argument (and also not proceed with and spend money implementing any ideas with known refutations). There’s no one who takes responsibility for addressing criticism of EA ideas and there’s no particular mechanism for changing EA ideas when they’re wrong – the suggestion just has to gain popularity and be shared in the right social circles. To change EA, you have to market your ideas, impress people, befriend people, establish rapport with people, and otherwise do standard social climbing. Merely being right and sharing ideas, while doing nothing aimed at influence, wouldn’t work (or at least is unlikely to work and shouldn’t be expected to work). And many other places have these same irrationalities that EA has, which overall makes it really hard to improve the world much.

Elliot Temple on December 7, 2022


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