This is a compelling argument for the value of billionaire philanthropy, but it’s not quite as bulletproof as it would have been a few years ago, back when Warren Buffett was channeling most of his wealth into the Gates Foundation. Buffett’s recent shift toward funding his children’s foundations complicates the picture. While those foundations may do meaningful work, they don’t seem to share the Gates Foundation’s singular focus on scalable, life-saving initiatives like global health and poverty alleviation. That’s the kind of work that gives utilitarian arguments their punch.
This shift highlights a structural tension: billionaire philanthropy fills a vacuum precisely because no other system reliably tackles the world’s biggest problems with the same agility and ambition. Governments are often paralyzed by domestic priorities, bureaucratic inertia, and voter demands that skew resources away from the global poor. International institutions, while valuable, face chronic funding gaps and political constraints. In this landscape, billionaires like Gates and Buffett step in with massive resources and the freedom to deploy them where they’ll make the biggest impact—at least, when they choose to.
But that freedom is also the Achilles’ heel of the system. It’s subject to the whims of individuals, whose priorities might shift from eradicating malaria to, say, preserving midwestern prairie grasses. Those are valid causes, but they lack the same transformative potential. Buffett’s pivot underscores the fragility of a system that depends on personal discretion rather than institutional commitment to global utility. For all its virtues, billionaire philanthropy is an unreliable mechanism for addressing long-term global needs. The challenge is that no better mechanism exists—and until one does, this tension will remain baked into the system.
Let us start with what I (with respect) can only regard as close to a factual error in your post. I suspect you have the facts correct on this in your own mind, but due to how you have expressed it this doesn't quite come across. What the reader should be aware of is there is almost no welfare relevance of the fact that there is no (as yet discovered) cap on welfare returns to income. Our best estimate of the elasticity of the marginal utility of income in income is 1.3- a 1.3% rise in income is equal to a 1 percent reduction in the marginal utility of incomes. Using the statistic we find, for example, that an additional dollar to someone earning 30,000 is worth 15x as much to them as it is worth to a similar individual earning 240,000. One does not need a ceiling on a logarithmic process to make the diminishing returns so great as to be hardly considerable. When we add in consideration for the positional effects of income, the welfare difference between giving a dollar to someone on 30,000 and giving a dollar to someone on 240,000 will grow even larger.
The effects of any redistribution of income- whether at home and abroad- are not only significant for their immediate effects, but for the kinds of (global) societies they enable, and the ethical orders they encourage among people. One simply cannot treat justice at home as irrelevant to the question of global justice. As long as, for example, there is an entrenched oligarchy of wealth, ill advised international adventures are more likely. The economy itself is damaged as economic rent seeking is encouraged by oligarchy. Conceptions of the good are distorted and social solidarity between the people who actually encounter each other- compatriots- falls. Politics becomes bitter and divisive, with inevitable effects on the economy, national stability and foreign policy. All this contributes to further instability of action on the world stage. Important goals like the proper management of AI development become harder because of political dysfunction. Wealth inequality is a big part of what is leading to America's bizarre political behaviour at the moment. The very social values that pressure billionaires to give their money are eroded. The neoliberal argument that inequality abroad is what really matters fails because you just can't run a polity like this in the long run without repercussions for other nations, and without long run implications for the very values - and their social embedding- that make you want to help others to begin with.
The first criticism is well-taken. I assumed the misreading of the Deaton paper was widely believed, but without evidence for that the whole section is a non sequitur.
I have a hard time taking the second criticism seriously, although I think that's just because we have fundamentally opposed beliefs about political economy that are too entrenched and complicated to be argued in a comment section. Suffice it to say I don't think there's much value in assembling a list of bad things and saying neoliberalism is responsible for all of them.
I would suggest that even were everything I said in the above were false, it is extremely hard to have political influence if people feel like you have goals that do not priortise the welfare of the electorate, and it's not really something you can lie about- people can tell. You have to be able to signal, sincerely, that your political side will act as an honest fiduciary for the people of the nation's self interest. Goals over and above that are fine, but there has to be a primacy of citizens in the context of domestic policy.
This applies if you have any public affiliation with a political team at all- even if you are not an official representative- *and maybe even if you don't have any public affiliation to a specific team*. Why even if you don't have affiliation to a political team? If the public come to see a set of goals (e.g. international charity) as opposed to national welfare, that will be extremely bad for the goals. Thus *for the sake of your own goals* you should not treat these goals as overriding concerns in the context of national politics.
It's certainly is larger than neoliberalism, but many neoliberals in particular have explored- sometimes in hushed tones- the argument that there is a affinity between the global poor and the national rich.
Hmm, this is interesting. I've had the thought before, but I guessed it would probably be outweighed in significance by the stuff governments fund. Do we have any idea of how much of their income the top ~1% spends internationally?
There’s not much good data as far as I can tell, and it’s probably only a little more than the average person. But it’s so much more effective that I have to think even a small amount of funding is more worthwhile than the most popular transfer programs that would be funded by higher taxes. And that’s not to mention Dustin’s farmed animal funding, which does oodles more good than even global health.
The one part of this article I thought was kind of weird was the part about how diminishing marginal utility isn't as strong as people think. I had always thought the utility of money was modeled as logarithmic, which is exactly the model you say is correct. I didn't know anyone believed that there was a point within human reach where the marginal utility is zero, and certainly not a point as low as $75,000/y.
The, "It's undemocratic," argument is actually even stupider than it seems. The whole argument is based on the assumption that the only people voting in the hypothetical who-to-give-philanthropy-dollars-to election are the people in the wealthy nations those philanthropy dollars are coming from, and not the people in the poor nations that the money would go to.
I don't think lack of diminishing returns to life satisfaction as income goes up proves that inequality is okay in a utilitarian sense.
I suspect a lot of the increase in life satisfaction that comes from increased income is a result of the increases status that comes with working a fancy job or owning luxuries. So even if you redistributed a lot of that utility is preserved since the jobs and relative purchasing power are still there.
I could imagine that capital is managed more effectively in the hands of a Warren buffet and allocated better. But I suspect it’s still not as useful as if one would spread the money across a few billion people.
What if Gates spent less money on Africa and more money on Kamala? Could he have tipped the 2024 election? What would have been the implications for foreign aid? Not just for countries suffering from centuries of relative poverty, but for countries which are currently suffering from invasion and occupation?
Reframing the dialectic between foreign and domestic welfare:
Option 1: USA goes full Huey Long. Steal all money from billionaires and redistribute. This is bad, because it destroys future growth. The global economy collapses. Worst outcome in the shortest amount of time
Option 2: Bill Gates maximalism. We cut social security and redirect that money to the 3rd world. Encourage Bill Gates to focus his efforts on donating to Africa. But, domestic culture war issues are neglected (January 6th), and foreign allies are abandoned (Ukraine). Pax Americana collapses, and the 3rd world is left in the lurch.
Option 3: Maintain global trade, even if that requires violence at the margins. This isn't good for Africa in the short term, but in the long term, Africa will benefit more from the indirect effects of a stable America than from direct aid.
Option 2 and Option 3 aren't necessary mutually exclusive. Bill Gates Maxing is tolerable as long as Global Trade flows.
Argument from stability and sustainability:
Short-term direct aid is less helpful than long-term trade, because direct aid is dependent on the whims of politicians and is fragile, whereas trade relies on rational self interest and is less fragile. It's easier for politicians to campaign against aid to African than to campaign against trade with Africa.
If a man is being assaulted, the state must prioritize his defense over soup kitchens for the perennial dysfunctional vagrant, even if neglect in both cases results in death (murder or starvation). State legitimacy comes before all other considerations.
One argument for why northern Europe pulled ahead of the Mediterranean is because Northern Europe ended piracy around the 11th century, while Mediterranean piracy got worse and worse until the 18th century. I would argue the reason why America is so rich (along with the rest of the world) is because we have solved the piracy problem. From here on out, it's a question of how long we can contain the forces of entropy before the problem explodes again.
Another way to put it is that there's a very real sense in which people with a marginal propensity to consume of zero simply can't be taxed. Yes, the government can take money from them, but that money is going to come at the expense of their investments or charitable donations, not at the expense of their personal consumption.
Ideally, a tax system should be designed such that it reduces the consumption of taxpayers to a greater extent than it reduces investment or charitable contributions, as investment and charitable contributions have positive externalities. There's no tax system that can reduce the consumption of taxpayers without reducing investment and charitable contributions, but we should at least try to skew things in that direction. This rules out taxes where the total tax wedge is increased when choosing to defer consumption in order to save or invest, such as wealth taxes or taxes on investment income, and instead suggests that the tax system should be based around consumption taxes, land taxes, and perhaps even head taxes.
Basically all of the left's intuitions about a "fair" tax system are completely wrong, and detrimental to economic growth.
This is a compelling argument for the value of billionaire philanthropy, but it’s not quite as bulletproof as it would have been a few years ago, back when Warren Buffett was channeling most of his wealth into the Gates Foundation. Buffett’s recent shift toward funding his children’s foundations complicates the picture. While those foundations may do meaningful work, they don’t seem to share the Gates Foundation’s singular focus on scalable, life-saving initiatives like global health and poverty alleviation. That’s the kind of work that gives utilitarian arguments their punch.
This shift highlights a structural tension: billionaire philanthropy fills a vacuum precisely because no other system reliably tackles the world’s biggest problems with the same agility and ambition. Governments are often paralyzed by domestic priorities, bureaucratic inertia, and voter demands that skew resources away from the global poor. International institutions, while valuable, face chronic funding gaps and political constraints. In this landscape, billionaires like Gates and Buffett step in with massive resources and the freedom to deploy them where they’ll make the biggest impact—at least, when they choose to.
But that freedom is also the Achilles’ heel of the system. It’s subject to the whims of individuals, whose priorities might shift from eradicating malaria to, say, preserving midwestern prairie grasses. Those are valid causes, but they lack the same transformative potential. Buffett’s pivot underscores the fragility of a system that depends on personal discretion rather than institutional commitment to global utility. For all its virtues, billionaire philanthropy is an unreliable mechanism for addressing long-term global needs. The challenge is that no better mechanism exists—and until one does, this tension will remain baked into the system.
Let us start with what I (with respect) can only regard as close to a factual error in your post. I suspect you have the facts correct on this in your own mind, but due to how you have expressed it this doesn't quite come across. What the reader should be aware of is there is almost no welfare relevance of the fact that there is no (as yet discovered) cap on welfare returns to income. Our best estimate of the elasticity of the marginal utility of income in income is 1.3- a 1.3% rise in income is equal to a 1 percent reduction in the marginal utility of incomes. Using the statistic we find, for example, that an additional dollar to someone earning 30,000 is worth 15x as much to them as it is worth to a similar individual earning 240,000. One does not need a ceiling on a logarithmic process to make the diminishing returns so great as to be hardly considerable. When we add in consideration for the positional effects of income, the welfare difference between giving a dollar to someone on 30,000 and giving a dollar to someone on 240,000 will grow even larger.
The effects of any redistribution of income- whether at home and abroad- are not only significant for their immediate effects, but for the kinds of (global) societies they enable, and the ethical orders they encourage among people. One simply cannot treat justice at home as irrelevant to the question of global justice. As long as, for example, there is an entrenched oligarchy of wealth, ill advised international adventures are more likely. The economy itself is damaged as economic rent seeking is encouraged by oligarchy. Conceptions of the good are distorted and social solidarity between the people who actually encounter each other- compatriots- falls. Politics becomes bitter and divisive, with inevitable effects on the economy, national stability and foreign policy. All this contributes to further instability of action on the world stage. Important goals like the proper management of AI development become harder because of political dysfunction. Wealth inequality is a big part of what is leading to America's bizarre political behaviour at the moment. The very social values that pressure billionaires to give their money are eroded. The neoliberal argument that inequality abroad is what really matters fails because you just can't run a polity like this in the long run without repercussions for other nations, and without long run implications for the very values - and their social embedding- that make you want to help others to begin with.
The first criticism is well-taken. I assumed the misreading of the Deaton paper was widely believed, but without evidence for that the whole section is a non sequitur.
I have a hard time taking the second criticism seriously, although I think that's just because we have fundamentally opposed beliefs about political economy that are too entrenched and complicated to be argued in a comment section. Suffice it to say I don't think there's much value in assembling a list of bad things and saying neoliberalism is responsible for all of them.
I would suggest that even were everything I said in the above were false, it is extremely hard to have political influence if people feel like you have goals that do not priortise the welfare of the electorate, and it's not really something you can lie about- people can tell. You have to be able to signal, sincerely, that your political side will act as an honest fiduciary for the people of the nation's self interest. Goals over and above that are fine, but there has to be a primacy of citizens in the context of domestic policy.
This applies if you have any public affiliation with a political team at all- even if you are not an official representative- *and maybe even if you don't have any public affiliation to a specific team*. Why even if you don't have affiliation to a political team? If the public come to see a set of goals (e.g. international charity) as opposed to national welfare, that will be extremely bad for the goals. Thus *for the sake of your own goals* you should not treat these goals as overriding concerns in the context of national politics.
It's certainly is larger than neoliberalism, but many neoliberals in particular have explored- sometimes in hushed tones- the argument that there is a affinity between the global poor and the national rich.
Hmm, this is interesting. I've had the thought before, but I guessed it would probably be outweighed in significance by the stuff governments fund. Do we have any idea of how much of their income the top ~1% spends internationally?
There’s not much good data as far as I can tell, and it’s probably only a little more than the average person. But it’s so much more effective that I have to think even a small amount of funding is more worthwhile than the most popular transfer programs that would be funded by higher taxes. And that’s not to mention Dustin’s farmed animal funding, which does oodles more good than even global health.
The one part of this article I thought was kind of weird was the part about how diminishing marginal utility isn't as strong as people think. I had always thought the utility of money was modeled as logarithmic, which is exactly the model you say is correct. I didn't know anyone believed that there was a point within human reach where the marginal utility is zero, and certainly not a point as low as $75,000/y.
The, "It's undemocratic," argument is actually even stupider than it seems. The whole argument is based on the assumption that the only people voting in the hypothetical who-to-give-philanthropy-dollars-to election are the people in the wealthy nations those philanthropy dollars are coming from, and not the people in the poor nations that the money would go to.
101 iq small busyness owner watching fox news: Free market capitalism!
120 iq harvard student: Utilitarian socialism!
140 iq bryancaplanomics phd: Free market capitalism!
150 iq jamie galbraith enjoyer: social democracy for the win!
150 iq jamie galbraith enjoyer: social democracy for the win!
I don't think lack of diminishing returns to life satisfaction as income goes up proves that inequality is okay in a utilitarian sense.
I suspect a lot of the increase in life satisfaction that comes from increased income is a result of the increases status that comes with working a fancy job or owning luxuries. So even if you redistributed a lot of that utility is preserved since the jobs and relative purchasing power are still there.
I could imagine that capital is managed more effectively in the hands of a Warren buffet and allocated better. But I suspect it’s still not as useful as if one would spread the money across a few billion people.
Thought experiment:
What if Gates spent less money on Africa and more money on Kamala? Could he have tipped the 2024 election? What would have been the implications for foreign aid? Not just for countries suffering from centuries of relative poverty, but for countries which are currently suffering from invasion and occupation?
Reframing the dialectic between foreign and domestic welfare:
Option 1: USA goes full Huey Long. Steal all money from billionaires and redistribute. This is bad, because it destroys future growth. The global economy collapses. Worst outcome in the shortest amount of time
Option 2: Bill Gates maximalism. We cut social security and redirect that money to the 3rd world. Encourage Bill Gates to focus his efforts on donating to Africa. But, domestic culture war issues are neglected (January 6th), and foreign allies are abandoned (Ukraine). Pax Americana collapses, and the 3rd world is left in the lurch.
Option 3: Maintain global trade, even if that requires violence at the margins. This isn't good for Africa in the short term, but in the long term, Africa will benefit more from the indirect effects of a stable America than from direct aid.
Option 2 and Option 3 aren't necessary mutually exclusive. Bill Gates Maxing is tolerable as long as Global Trade flows.
Argument from stability and sustainability:
Short-term direct aid is less helpful than long-term trade, because direct aid is dependent on the whims of politicians and is fragile, whereas trade relies on rational self interest and is less fragile. It's easier for politicians to campaign against aid to African than to campaign against trade with Africa.
If a man is being assaulted, the state must prioritize his defense over soup kitchens for the perennial dysfunctional vagrant, even if neglect in both cases results in death (murder or starvation). State legitimacy comes before all other considerations.
One argument for why northern Europe pulled ahead of the Mediterranean is because Northern Europe ended piracy around the 11th century, while Mediterranean piracy got worse and worse until the 18th century. I would argue the reason why America is so rich (along with the rest of the world) is because we have solved the piracy problem. From here on out, it's a question of how long we can contain the forces of entropy before the problem explodes again.
Another way to put it is that there's a very real sense in which people with a marginal propensity to consume of zero simply can't be taxed. Yes, the government can take money from them, but that money is going to come at the expense of their investments or charitable donations, not at the expense of their personal consumption.
Ideally, a tax system should be designed such that it reduces the consumption of taxpayers to a greater extent than it reduces investment or charitable contributions, as investment and charitable contributions have positive externalities. There's no tax system that can reduce the consumption of taxpayers without reducing investment and charitable contributions, but we should at least try to skew things in that direction. This rules out taxes where the total tax wedge is increased when choosing to defer consumption in order to save or invest, such as wealth taxes or taxes on investment income, and instead suggests that the tax system should be based around consumption taxes, land taxes, and perhaps even head taxes.
Basically all of the left's intuitions about a "fair" tax system are completely wrong, and detrimental to economic growth.