Effective Altruism

Coming out of the Silicon Valley libertarian sphere, Effective Altrusim is basically little more than 1980s era Reaganomics with a side order of philanthropy to paper over the rotting stench of unmitigated greed. 

For many people, their first exposure to it probably comes from the trial of Sam Bankman-Fried.  Broadly speaking, the basic principle of Effective Altruism is to use your financial resources (wealth) to benefit the most people possible.  If this sounds utilitarian, it’s because the phrase “benefit the most people possible” is straight out of utilitarian or consequentialist analysis.  Basically, the person tries to direct their wealth towards targets that they can determine will “benefit” a maximum number of people.  Doesn’t sound too bad, does it? 

Except it really is quite a stinker.  First, it supposes that the person with the money is the only person capable of deciding who the beneficiaries should be, and it encourages donating the money where it will benefit the most people.  This basically says “the person with the money knows better than anybody else how to utilize it for benefit” - sounds a little paternalistic, doesn’t it? 

Now, before you go jumping down my throat about whether the person with the money has the right to decide where it goes, of course they do.  But we should not be fooled that a blithe statement about “doing the most benefit for the most people” is going to work out for the greater benefit of society.   Sometimes, we have to ameliorate the situation of a minority in order to improve the overall of society, and simple utilitarian or consequentialist analysis isn’t going to pick up on that. 

Second, and it’s my bigger criticism of the concept.  At best it's built around the idea of "accumulate as much wealth as you can".  If you haven't heard this before, think back to the 1980s and the era of so-called "Junk Bonds", when Michael Milken declared "Greed is Good" (I wish I was joking).  This is the same kind of thinking, with a thin layer of philanthropy glued on to give moral justification to it.  

In other words, it's little more than "Trickle-Down Economics".  Become fantastically wealthy (apparently even through fraud is fine), and then assuage any guilt you might feel by donating money.  Yeah - that's going to work out - if you're a hollow husk of a human being utterly devoid of empathy, ethics, and morals. 

Every one of these fools needs to spend as much time understanding Rousseau's Social Contract as they wasted reading Ayn Rand and Margaret Thatcher. 

On Recession Economies

So, today the Bank of Canada lowered its prime lending rate to 0.5%.  Supposedly, this signals that Canada is sliding into a recession.

Those of us who have been watching have long ago figured out that the minute the bubble burst on oil prices, Canada was going to slide into a recession.  Arguably, if you aren't in the oil patch, Canada has been in a recession for the last four or five years.  What am I talking about here?

Jobs.  Sure, the government has posted "new jobs growth" regularly, but let's be honest with ourselves here.  Most of the jobs involved have been service jobs.  Jobs that pay poorly, have terrible hours and don't even provide a subsistence level of income.  If you're a skilled knowledge worker, you might luck out and get a contract job.  But guess what?  Contract work is unstable, and instead of paying a premium for your skills, you'll be lucky to get the same dollars you made as a full employee.

So, how do we end up with a long running "jobs recession" but still have economic growth for the last few years?  It's not really difficult to see.  If you have money invested in companies, they end up looking like they are posting profits, and the GDP numbers improve.  Basically, we're measuring two different things.  Growth in the size of the economy has become the rising tide that only floats the boats of the truly wealthy.  The rest of the "boats" are so far away from the water that the tide isn't even going to reach them.

Lower interest rates?  Well, it makes it easier to borrow money, right?  Sure ... except you need to have the income in the first place to support the loan.  So who benefits?  Once again, it makes it easier for business to borrow.  Oh, great, that means they can create jobs, right?  They could, but in today's world, they have been funnelling those funds into projects which eliminate jobs like automation projects; and as much as possible, new work that requires people gets shoved offshore wherever it is cheapest, or (until recently) assigned to temporary foreign workers instead of Canadians.  

The net effect of Harper's lovely little war on the middle class has been that those who aren't part of the privileged classes are screwed.  Lose your job?  Chances are the next one won't replace your previous income, and most certainly won't have any stability to it.  The problem is that business has decided that people are a risk, not an investment.  They are no longer willing to invest in people to solve problems.

Harper can deny that we're in a recession all he likes.  The cold, brutal reality is that we have never recovered from the consequences of the 2008 downturn, and the current crude oil price war being waged by Saudi Arabia and others is going to continue to keep things depressed.  Business may well post profits, the GDP will seem to grow, and workers will continue to be left behind.  

Abolishing Corporate Taxes

Writing for the Globe and Mail, Doug Saunders is arguing that we should abolish corporate taxes.

But corporate tax, by its nature, has a reverse Robin Hood effect: It is regressive. Big corporations have no trouble avoiding it. They can do any number of things, including acquiring other companies or shifting profits to overseas divisions, that make their balance sheets legally register zero profit. So small- and medium-sized businesses end up paying the full burden – a situation that chokes off entrepreneurship, reduces competitiveness and damages economic growth.

So ... in essence, Saunders is arguing that because of a swiss-cheese legislative approach to corporate tax law that we should abandon the idea entirely. I disagree with Mr. Saunders entirely on this.

There are a dozen things wrong with Saunders' reasoning here.

First of all, his comment about a "reverse Robin Hood effect" is a very narrow view of the situation. I will agree that there has been a growing concentration of wealth in the hands of the very wealthy. I do not agree that you can meaningfully place responsibility for that concentration at the feet of corporate taxation policy.

The real issue is that governments have allowed multinational corporations to become a law unto themselves over the last thirty years. Additionally, the multinationals have become very skilled at playing the governments off against each other by playing up fears of job losses and infringements upon national sovereignty. What really needs to happen is for the governments to get together and start creating agreements that tighten up the loopholes that the multinationals are using to sidestep the taxation laws in various countries that they operate in.

There is another strong argument against corporate tax: It gives businesses far too much power in politics, law and society. As “taxpayers,” corporations are given citizen-like rights in court and legislatures; as financiers of the state, they are given far too much lobbying power and influence over legislation

Again he's partially correct and grossly incorrect. The first point I have to make is that the notion of a corporation as citizens is a construct that has its roots in far more than taxation policy. I doubt that even if you were to offer to abolish corporate taxes that the corporations would accept having their voices relegated to the back seat any more.

The rise of corporate influence - especially in democratic countries - has severely weakened democracy. There is no doubt that it is necessary to take steps to curtail the abuses of power that are resulting from this. However, the solution to such ills as influence peddling, excessive lobbying and so on are not to be found in removing the taxation burden. These areas must be addressed with greater accountability on the part of both lobbyists and politicians. Essentially there must be double blind, audited records kept by all government officials who have decision making powers.

Lastly, if Mr. Saunders thinks that eliminating corporate taxes will somehow magically increase corporate investments in long term jobs and other related tasks, he is sorely mistaken. All it will do is make it still easier for the already wealthy to get even wealthier, and to do so entirely at the expense of middle and low income citizens. His fundamental point starts and ends with the dubious notion of trickle-down economics as practiced during the Reagan years - it wasn't terribly successful then, and I doubt that there is anything in place now that would change the outcome of such a structure today.