Imagine there were only two people in the world

Imagine there were only two people in the world - Alice and Bob. Over the course of a year:

• Alice buys $1,000 worth of goods from Bob (vegetables, furniture, etc.)

• Bob only buys $500 worth of goods from Alice (homemade cookies, crafts, etc.)

How was Alice able to buy $1,000 of goods from Bob when she only sold $500 of goods? There are only two possibilities

1. Alice had saved up money - since there are only two people in this world, money just means Alice gave Bob something of value in previous years that Bob is accepting as payment now

2. Alice has promised to produce $500 of value for Bob in the future

Is someone getting screwed over? I’m not sure but assuming there is nothing defective in the goods Bob gave Alice, we should be more worried about Bob getting screwed over, not Alice. What if Alice is making empty promises and fails to produce the value she said she’d create?

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Applying this to countries

If country X runs a trade deficit, it means it buys more in the category “goods and services” than it sells to the world in the same category “goods and services”. Therefore, it must be selling something else - something not included in the category “goods and services” to pay for this deficit.

Here are the possibilities:

(i) Country X receives more income from non-goods and services (presumably from investments abroad investments) than it has to pay out

(ii) Country X can liquidate more in foreign investments than foreigners liquidate investments in American companies.

(iii) Country X borrows from country B than Country B borrows from Country A

(iv) Country X invests in country A more than Country A invests in Country B.

Applying this to the United States

In 2024, the United States ran a trade deficit of ~$900B in 2024. The United States consumed $900B worth more goods and services produced by other countries than goods and services it sold to other countries. How did the United States pay for this?

Hypothesis 1 - Americans received more income from investments abroad than they had to pay out.

This is false. While Americans did receive investment income from foreign investments, they paid more to foreigners who invested in American assets, making the current account deficit ($1.27 trillion) even larger than the trade deficit.

Hypothesis 2 — Americans liquidated more foreign investments than foreigners liquidated American investments.

This is also false. Americans were net buyers of foreign assets, not sellers.

Hypothesis 3 - Americans borrowed more from foreigners than foreigners borrowed from Americans.

This is most of the answer and accounts for $934B.

Hypothesis 4: Foreigners invested more in American companies than Americans invested in foreign companies.

This is a smaller part of the answer and accounts for ~$266B

The Quality of Financing Matters

The nature of the financing matters. Currently, a significant portion of America's trade deficit is financed by an increase in government debt through Treasury securities sold to foreigners. America is borrowing from global markets to fund current consumption rather than to invest in future productive capacity.

Now imagine an alternative scenario: What if our trade deficit was primarily financed by foreign equity investments in American R&D labs and innovative companies? In that world, foreigners would be buying shares in America's productive future rather than fixed claims on dollars. They would be partners in our success rather than creditors expecting repayment regardless of outcomes.

In this scenario, there would be nothing concerning about the trade deficit. We would be importing the inputs needed to innovate and create value, with foreigners willingly participating in this process because they believe in America's capacity to generate returns. The trade deficit would represent global investment in American innovation and productive capacity, not unsustainable consumption.

The core issue, therefore, isn't the foreign share of public indebtedness but the overall level of public indebtedness and what it finances. If anything, Americans today are benefiting from this, at the expense of foreigners and future Americans.

The Reserve Currency Advantage

When foreigners buy Treasury securities, they are purchasing a claim to a fixed number of U.S. dollars in the future. But the U.S. has the unique ability to create dollars, which introduces a significant risk for these investors. If the U.S. were to significantly increase its money supply—effectively devaluing the dollar—foreign investors holding dollar-denominated debt would suffer losses in real terms.

This scenario represents a subtle form of default through inflation, where the U.S. technically repays its debts but with currency that has lost purchasing power.

What has protected the dollar from such devaluation so far is its status as the world's reserve currency. Countries hold dollars in reserve to weather economic shocks, pay for imports, service debts, and moderate the value of their own currencies. With most international obligations and transactions denominated in dollars, there's a persistent global demand that helps maintain the dollar's purchasing power.

However, this arrangement only works as long as the demand for dollars—driven by global trade and international finance—remains greater than or equal to the increase in the supply of dollars. If confidence in America's fiscal discipline erodes, or if alternative reserve currencies gain traction, the dollar's privileged position could weaken.

In a counterfactual world where most of America's public debt was held domestically rather than by foreigners, any inflation-driven devaluation would primarily hurt American citizens who hold government bonds. The inflation would effectively transfer wealth from American savers (bond holders) to American debtors (including the government itself). By having a significant portion of U.S. debt held by foreigners, some of this potential cost of inflation gets externalized—borne by foreign investors rather than domestic ones.

Solvency Over Self-Sufficiency

Think of the United States as a business: what matters is its ability to meet obligations and generate returns, not whether it manufactures every input in-house. Just as a company may outsource production if it can invest the savings into higher-return activities, the U.S. can import goods while using borrowed funds to finance projects that drive growth.

The critical measure is solvency—ensuring that the economy's growth and income streams exceed the cost of servicing its debt. A healthy business balances borrowed capital with profitable investments.

If you want to improve solvency, you have to find a way to grow revenue faster than expenses or cut expenses that don’t slash revenue as much. So if you insist on producing inputs yourself for a non-economic reason, your profitability shrinks and so does your ability to service future debt.

But Aren’t Countries Like China Cheating?

A common objection to this analysis is that other countries impose their own tariffs and trade barriers, effectively "cheating" in international trade. If countries like China are using protectionist policies, shouldn't the U.S. respond in kind?

This objection misunderstands who bears the cost of protectionist policies. When a government imposes tariffs, it's essentially holding access to its citizens hostage and making them pay more for goods while enriching cronies (domestic producers) who don't have to compete with foreign companies in their home market.

Chinese consumers pay higher prices for American goods due to Chinese tariffs. American consumers would pay higher prices for Chinese goods due to American tariffs. In both cases, the primary victims are the citizens of the country imposing the restrictions, who face reduced choice and higher prices.

If there are ways to encourage other nations to reduce their trade barriers, the U.S. should pursue them because it’s the right thing to do for the world, not because the current system is "ripping America off”.

I have two gripes with Caplan. One is that his example fails to prove that relative income is unimportant. But more importantly, I believe Caplan’s jihad against socialism—which I fully support—is better served by fully acknowledging that people care deeply about relative status (of which relative income can be one part). Why? Because it happens to be both true and deeply damaging to the moral imperative of socialism.

First, are immigrants from poorer countries genuinely forced to choose between relative income/status and absolute welfare improvements? We routinely observe individuals with relatively high incomes and status moving from the developing to the developed world, willingly accepting lower occupational status in exchange for higher real wages. In the late 1990s, we personally knew upper-middle-class Indians who left their white-collar jobs in India to arrive in Canada and drive trucks or work in grocery stores (since most degrees and qualifications obtained in India weren’t recognized by Canadian employers).

But this isn't truly a choice between absolute welfare and relative status. As this family packs its bags and sets off for Canada, do you think their status has been elevated or diminished among friends and family? It’s obvious to anyone who has spent significant time in the developing world that an opportunity to move to the first world almost always elevates one’s status. These migrants don’t immediately re-adjust their reference class to white Canadians and decide against moving. In fact, even after moving overseas, their reference class often remains other immigrants who've made similar trades.

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My intuition is that people care deeply about relative status, and income is just one way to achieve it. Let’s flip Bryan’s example around. How many people complaining about the rat race in San Francisco or New York City have already earned enough money to move to a smaller city tomorrow, double their purchasing power, and perhaps gain several more hours of leisure each week? Such a move is likely to boost living standards while simultaneously reducing their relative status. Indeed, you might lose status with your Manhattan book club just by moving twenty minutes away to Jersey City for an extra bedroom. The critical point is that status is context-dependent. If your immediate reference group is the cultural elite of Manhattan, losing status with them hurts, and the possibility of eventually gaining status among people you currently consider lower-status offers no consolation.

As the previous example suggests, status correlates with income, wealth, and just about all good things in life—but it’s multidimensional and complex. Within some wealthy circles, the top of the status hierarchy isn't necessarily occupied by the individual with a few extra million dollars, but rather by someone who's "well-connected," "well-read," or simply "more interesting." Other communities prioritize artistic achievement, cultural capital, intellectual prestige, or moral purity.

This complexity of status makes a strong argument against redistributing wealth solely to alleviate status anxiety. Status is exceptionally malleable, so compressing the income distribution merely shifts the competition into other dimensions. Certain human competitions—such as for attention or mate selection—are fundamentally zero-sum, meaning people will always compete over them and create new forms of anxiety. Given this, why not choose a system that is both more likely to deliver absolute welfare improvements and create a multitude of hierarchies for people to climb? In the freest, most cosmopolitan Western cities, you can achieve high status by being a tattoo artist, investment banker, musician, writer, or entrepreneur. Each of these groups is largely indifferent to the other's hierarchy. That’s about as close to "equity" as we’re likely to get.

While tit-for-tat proves remarkably robust in games and game-like scenarios, internalizing it as an ethical heuristic can be surprisingly destructive. In life, choices and payoffs are infinitely fuzzier, and our situational awareness is systematically biased.

In our relationships, we aren't confined to binary choices of "cooperate" or "defect." What appears as a partner's "defection" might be unintentional: perhaps they spoke dismissively or failed to provide support when needed. Even if an objective observer might label it as defection, your partner likely has justified it to themselves differently.

More importantly, your psychology is always on your side. We make decisions and perceive reality through our perceptive and emotional filters. Sometimes we find ourselves retaliating not from strategic choice, but from anger or hurt. Our emotional apparatus, evolved for self-preservation, colors our perception toward self-interest. A good relationship heuristic should account for and counterbalance this bias.

Responding with your own "defection"—by withholding affection or support—risks triggering a cascade of mutual retaliation, with both parties feeling equally justified. Relationships offer a crucial alternative to action-reaction cycles: communication and to some extent, norms.

During a charged exchange with your partner the seductive game theoretic thought appeals to you: 'If I let this slide, what precedent am I setting?' This reveals we're already rationalizing retaliation rather than following a robust heuristic. Instead of emotionally charged tit-for-tat, relationships need clear boundaries established in advance and protocols for communication when those boundaries are crossed. What feels intuitively like tit-for-tat in the moment won't accomplish what the bot version accomplishes in a game.

The tit-for-tat mindset often appeals to driven, ambitious individuals. It's adaptive in low-trust contexts where exploitation is common—business deals with unfamiliar parties, political negotiations, or competitive markets. In these domains, having a careful eye for reciprocity protects one's interests. But even in lower trust domains, "tit for tat" as a vibe can be misleading.

Suppose someone breaks established norms by pulling out of a business deal last minute without cause. The move that feels most intuitively like tit-for-tat—engineering another deal just to burn them back—is obviously unwise, even in purely self-interested terms. True strategic reciprocity might look more like carefully imposing reputational costs. Even in physical conflict, our most primal domain, martial artists train for years precisely to override emotional tit-for-tat impulses. They develop automatic responses that work across scenarios without requiring heated calculations in the moment.

Think through why vigilante justice wreaks such havoc. Civilization itself emerges from recognizing that we're all agents optimizing for self-interest most of the time. Across different domains—relationships, business, or even physical conflict—we need robust norms and heuristics to protect our interests. But these rarely involve calculating, in the heat of the moment, whether it's worth scoring a retaliatory point. The mechanisms that actually prevent exploitation look more like clear boundaries, established protocols, and measured responses—not the immediate emotional satisfaction of getting even.

To friends, family or strangers that have been at the receiving end of my reflective tit-for-tat, let me take this opportunity to apologize deeply and sincerely.

Open Borders advocates often start with the premise that it’s immoral to keep people stuck in terrible places when they are willing to move to our country of immigrants and want to contribute to the American experiment. A worker from Country X can be 6x as productive in the United States. We shouldn’t force him to stay poor and deny our fellow citizens of his contribution. But this isn’t an argument for open borders. It’s an argument for holding America, its institutions and culture constant (not to mention the characteristics of its typical immigrant), while increasing its working age population by one. 

If 'open borders' is just a rhetorical device, a way of arguing for more immigration broadly, or an attempt to widen the Overton window, my only issue is with the political wisdom of using the term 'open borders.'. But presumably, open borders advocacy implies support for letting in far more people than most western countries currently do or have historically, and support for a new paradigm in which the default is to accept new arrivals unless one has a very good reason not to (eg. is on a terrorism watchlist)

If you’ve already drunk the open borders kool-aid, you’d be forgiven for thinking there’s a magical cloud that hangs over the geographical boundaries of rich countries that makes everyone within them hyper-productive. You can thus arbitrarily swap out significant chunks of the populace, and the country would remain just as productive, progressive and pristine. Almost by definition, a paradigm shift does mean we should re-evaluate the assumption of holding constant America, given such a paradigm shift implies significantly changing a key variable that we know shapes culture and institutions: demographics.

Admittedly, (or anyone else I can hope to rationally engage on this topic) probably won’t refute the premise of endogenous growth theory. Caplan would concede that it’s America’s institutions that make it a special place. He’d probably concede that culture does shape institutions, and that institutions can in fact deteriorate. But he’d insist that American institutions will be fine, since “a billion people won’t move here overnight” and “western civilization is a hardy weed”. Moreover, he’d claim that there’s no reason to think immigrants pose any specific threat to institutional quality that natives do not. 

The extent to which this is persuasive depends on the expected scale and quality of immigration in the wake of such a policy shift. I’ll attempt to paint a picture of Caplan’s world and answer the question: Should we be worried?

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How many would come and how fast would they come?

Consider the Diversity Visa lottery, one path to residence in the United States. The Diversity Visa program is open to applicants from countries with ‘historically low rates of immigration to the United States’. Staying true to the spirit of a lottery, this process offers each applicant a truly abysmal ~0.3% chance (varies with country or origin) of obtaining a green card. 

But the stipulations of the DV path, without the “diversity” or “lottery” parts to constrain it, is close to what libertarian proponents of open borders want. DV applicants are told that “the U.S. government will not pay for your airfare, find you a place to live or find you work. As part of your visa application, you will have to prove that you are unlikely to become dependent on the U.S. government for your living expenses.” (Note that the requirement to prove financial independence to the US government seems at odds with the spirit of open borders and would be impractical if all applicants, rather than just lottery winners, needed vetting.) This strikes me as a reasonable proxy to estimate the potential demand for immigration into America under an open borders style immigration policy.

 The Diversity Visa (DV) program receives over 20 million applicants annually, all competing for approximately 50,000 green cards. Since there is no limit on reapplying in subsequent years, we should expect a significant proportion of these to be repeat applications. Let’s assume only 50% of applications every year are new unique applicants - which amounts to an inflow of 10 million immigrants from these countries with historically low rates of immigration. (Note: The unique applicant rate could plausibly be much lower but we should also expect increasing the odds from 0.3% to something like 90% to drive much more demand) 

However, the DV program explicitly disallows applicants from 7 of the world’s 10 most populous countries - India, China, Bangladesh, Pakistan, Brazil, Nigeria and Mexico. It also excludes the United Kingdom and Canada, cultural cousins of the United States with significant potential for migration flows.

It’s difficult to estimate the latent demand from these countries into the United States because even a college degree and a job offer from a US employer leave you with less than even odds of residing in the United States (let alone getting on a path to permanent residency). If anyone who wanted to move and could afford a plane ticket could move here, we should expect annual demand of at least as many applicants from these countries as the US receives from underrepresented DV visa countries. Many of these countries also have English as one of the official languages.

Conservatively, let’s assume the US receives 20M petitions annually under an open borders regime (most of whom Caplan would want to let in). An inflow of 20M represents 6.67% of the US population or 66 new immigrants per 1000 US residents. Bryan Caplan cites the example of Puerto Rico to argue why the ramp up in immigration flows is more gradual than you’d expect in an open borders regime. 

So the best example we have of this in practice is Puerto Rico. In 1902, the US gets open borders with Puerto Rico, and at first there are only a few thousand Puerto Ricans that want to move. And you might say, “Hey, well they just don’t like the weather here. They don’t like it.” But the next decade, then it’s tens of thousands — then the decade after that, it’s a lot more. It falls off during the Depression, then it revives.

Notice how this argument works for fewer and fewer countries every year, and I wonder if it works at all now. The Diversity Visa lottery has ensured that almost every nationality has built up a diaspora in the United States. The “dipping my toes in” bit is done. If 20M people are ready to spend weeks of their life applying to a disheartening lottery, you’d bet they’d take the next flight to the US if the doors were open. 

America never had effectively “open borders”

Open borders advocates find solace in America’s immigration history. Quoting Caplan again: 

the US had open borders for centuries. The US population today is about 100 times what it was when the country first started. A great deal of that is due to immigration, and yet the country remains recognizably American when you’re multiplying population 100 times 

This is misleading. In the decades that saw the most immigration into the United States, 1847-1854 and 1900-1914, the rate of immigration did not exceed 1% (10 per 1,000 of the population). 1907 was the busiest year at Ellis Island, during which 1.29M immigrants resettled into a country of ~85M - representing a rate of 1.5% or 15 immigrants per 1,000 residents.  

Even when America had no legal barriers to immigration, it had a gigantic natural barrier to immigration: the Atlantic Ocean. In the 1850s, America had even fewer legal barriers to immigration than in the early 20th century, but received only about a tenth as many immigrants. Timothy Hatton explains why: 

Over these six decades the average time on the crossing fell by 80 percent—from around 40 days to 8 days. Perhaps equally important, uncertainty about the length of voyage also diminished—the standard deviation of voyage durations fell from 7.6 days in 1853 to just 1.5 days in 1913. It seems very likely that the upward trend in outward migration from Europe to the United States and Canada, and especially the growth in return migration (Bandiera et al. 2013), owes something to the steep decline in the time component of the costs of migration and the increase in reliability. In 1853 the opportunity cost of the emigrant’s time, valued at average UK earnings for all wage earners, was approximately equal to the cost of a ticket but by 1913 it was just a fifth of the fare.

Basically, immigration from anywhere other than Europe was near impossible and even immigration from Europe was quite expensive when you factor in opportunity cost. It also carried significant physical risks. As that constraint eased, the flow of immigrants increased dramatically and America quickly turned more restrictionist. Today, the United States is at most two inconvenient flights away from Sanaa’, Lahore or Colombo. The risk of death on a commercial flight is 1 in 13 million , not 1 in 1000 as it was in the early 20th century. 

American history won’t tell you much about what would happen if the US were to welcome unlimited numbers of immigrants from the world over, including from countries at significant physical and cultural distance from the United States. Immigration to America has always involved significant selection. After the first wave of English speakers from the Old World, “the second wave was dominated by Irish and German catholics.” The third wave brought southern and eastern European (including Jewish) immigrants to the US. You can call it what you want - but this looks a lot like accidental selection for cultural closeness, even if it was driven primarily by geography. America also explicitly restricted non-European immigration for much of the early 20th century, right up till 1965, when the Immigration and Nationality Act was passed. In the latter half of the 20th century, if you were born anywhere outside the Americas, immigration to America has been very challenging for high-skilled immigrants and near impossible for anyone else.

In the Short to Medium term - Housing, Crime and Backlash

For the last few years, Canada has been accepting immigrants at an unprecedented rate. Last year, Canada accepted roughly 15 immigrants per 1,000 residents (~1.5%), This is well below what we should expect under Caplan’s immigration regime. Yet, the short term effects have been far from stellar. Good old NIMBYism has joined forces with an acute increase in demand to send housing prices skyrocketing in Canada’s cities. Caplan seems to have noticed that it’s not exactly easy to build in America. In fact, I can almost hear Caplan say “ just build more housing”, as if he hadn’t just written a whole book to persuade people to get started on that project. In response I’d say “Yes, but can we focus on your last book first?” Here’s a general theme worth pre-empting, most of which I’ll come back to later:

Me: “Massive spike in immigration will push up housing prices”

Caplan: “Yes, let’s build more housing”

Me: “But, zoning laws?”

Caplan: “Yes, we need to deregulate housing completely”

Me: “With our current welfare system, low-skilled immigrants are a net fiscal drain”

Caplan: “No welfare for immigrants. In fact, let’s cut welfare in general” 

Me: “Uh..okay.. What if people won’t leave if they can’t find a job? We already have a homelessness problem.”

Caplan: “Well, we can be stricter about homelessness and deport people that break the law, including sleeping on public land”

Me: “How about we work on the housing deregulation, get homelessness under control and in the meantime deport people who break immigration law, before we roll the dice with 20M immigrants?”

Concerns about housing have much more to do with the pace of immigration than with the specific demographic mix of immigrants. But a host of other issues are contingent on the type of immigration over which you basically lose control under an open borders regime. If we want to understand the potential consequences of open borders, we should look at circumstances in which countries, for some period of time, didn’t exercise much discretion over the immigrants’ skill level or cultural background, apart from verifying they had some national identification. 

Angela Merkel's decision to open Germany's doors to approximately 600,000 Syrian refugees during the civil war serves as a case study. Between 2020 and 2023, Germany also roughly doubled its Afghan-born population. The consequences of these policies have become increasingly apparent, even to the most ardent supporters of open immigration.

The writing was on the wall on New Year's Eve in Cologne, when 1,000 women reported being sexually assaulted. Since then, the prospects for successful assimilation have grown increasingly dim. Over half of the gang rapes in Germany were attributed to foreign-born suspects. While asylum seekers constitute only 2.5% of the population, they account for 13.1% of all sexual assault suspects.

Regardless of how one interprets these statistics, German public opinion clearly reflects growing unease. This year marked a significant shift in German politics, with the AfD becoming the first far-right party to win a state election since 1945. Even more telling, the not-so-right-wing Social Democrats, took the unprecedented step of deporting 24 Afghan refugees back to Taliban-controlled Afghanistan. You might have noticed the pattern: perceived lack of control over borders emboldens far right parties who don’t pussyfoot around problems of assimilation; those far right parties tend to have crazy ideas on a whole host of other issues, including immigration, but some significant part of the populace is understandably inclined to give them a chance, since mainstream parties have categorically failed them on an issue that potentially threatens the fabric of the nation.

Caplan: “This is crazy. America is not Europe. We have an exceptionally well integrated immigrant population”

Me: “Yes, and the difference between American immigration policy and German or Scandinavian immigration policy has been that the American regime is further away from open borders. From the parts of the world that are especially dysfunctional, you have to have a college degree and a lot of luck to even think about moving here. Your policy is unlikely to look like that.” 

Long-Run effects - The Culture Transplant

Open borders — even in its watered down politically defensible form — is a paradigm shift; it is the relinquishment of political control over immigration, allowing instead the global demand for immigration to drive the demographic and economic destiny of a nation.

The global demand for immigration is driven by both opportunities and adversity. The higher the delta between one’s current life and an envisaged life in America, the higher the incentive to move (assuming one can afford a plane ticket). We should thus expect an overrepresentation of countries and cultures with “bad institutions” in the global demand profile, since bad institutions are upstream of both dysfunctional economic conditions and political violence.

While bad institutions trap highly productive and pro-social individuals in bad equilibria, the open borders position argues against explicitly selecting such people , assuming that wanting to come to America automatically qualifies someone as a desirable immigrant. We should thus worry about adverse selection on cultural norms. Under an open borders regime, we might disproportionately select individuals shaped by the institutional and cultural norms they're moving away from.

In "The Culture Transplant", economist argues that immigrants import attitudes from their homelands, which persist for generations in their new homes. These cultural traits, shaped by centuries of evolution in diverse ancestral environments, could significantly impact the long-term political culture, national productivity, and institutional quality of the host nation. These considerations seem inconsequential while assessing the impact of the marginal immigrant, whose cultural impact on the new homeland can be rounded down to zero.

However, in an open borders paradigm, full assimilation ceases to be a reasonable assumption. Larger diaspora communities are better positioned to preserve distinct cultural norms through increased intra-group interactions. In democracies, even culturally insulated minorities can shape the country’s politics and institutions. In this context, the Spaghetti theory of assimilation offers a more apt model than traditional assimilation theories.

When and I interviewed Jones on the , Jones clarified that his work is not an invitation to filter immigrants simply based on country of origin. But that the persistence of cultural traits warrants a more prudent consideration of the long-run effects of immigration, which may be less legible but the magnitude of which could completely swamp the shorter term economic calculus.

The long-run effects of immigration, including via 'culture transplant', need not be negative. In fact, Jones is a vociferous advocate of poorer countries importing higher productivity cultures through immigration, citing the positive impact that the Chinese diaspora have had in shaping southeast Asian economies like those of Indonesia, Malaysia and Singapore.

However, from a culture transplant perspective, a country like the United States faces a different calculus. As one of the world's most productive and stable nations, America has more to lose and less to gain that almost any other country. Moreover, the world at large has a lot more stake in America’s long run success. Even if the imported cultural norms aren't inherently detrimental, the rapid demographic and cultural change itself carries significant risks.

The difficulty in measuring these risks is not a valid reason to dismiss their potential impact on the future. While we can identify prosperous countries and the institutional features correlated with their success, our understanding of how to build or reform such institutions remains surprisingly limited. We struggle to pinpoint the exact cultural dimensions crucial to institutional excellence, much like we might struggle to articulate the precise ingredients of America's "secret sauce" for success.

However, our inability to fully articulate this "secret sauce" doesn't mean we can arbitrarily alter its components without consequences. This uncertainty, combined with the rarity of highly functional institutions, suggests adopting a stance of cautious stewardship.

America’s immigration policy

Given these risks, it’s rational for Americans to demand higher expected returns on immigrants, compared to nations still developing their institutions or stuck in poverty. America's immigration policy should be treated as an optimization problem, one that primarily serves American interests. However, due to America's role as the world’s innovation factory, we should expect outcomes that are bad for America to be bad for everyone. Moreover, if the public wants to add on more immigration for humanitarian reasons, it's best to view that separately.

One loose analogy (which I hope to expand in more detail in a later piece) would be to constructing an investment portfolio. Immigration can have a few types of impacts - fiscal, economic, social and institutional — think of these as the return streams of immigration. The variance in these (specifically downside variance) returns reflects the risk.

Within the constraints of political feasibility, prioritizing high-skilled immigration offers much higher returns and lower downside risk across the boards. From a fiscal perspective, high-skilled immigrants are overwhelmingly likely to be fiscal net contributors. According to at the Manhattan Institute, each immigrant under the age of 35 with a graduate degree reduces the budget deficit by over $1 million in net present value during their lifetime. Martino suggests that number is likely negative for low-skilled immigrants but acknowledges uncertainty.

Perhaps more importantly, given America's comparative advantage at the frontiers of science and technology, the returns to highly skilled labor can be non-linear, with the potential for significant positive spillovers. As Garett Jones notes, America has the privilege of bringing in individuals who can elevate the overall human capital of the nation, potentially boosting productivity and institutional quality. Immigrants like Jensen Huang, Elon Musk, or second-generation immigrant Steve Jobs haven't just helped pay tax bills; they've shaped industries, inspired countless others and created immense and lasting value.

High-skilled immigrants also tend to assimilate more effectively, reducing the risk of cultural backlash. Unlike those who move primarily due to family ties or to escape adverse conditions, high-skilled immigrants often seek out neighborhoods and social circles aligned with their professional aspirations instead of clustering in ethnic enclaves. This tendency promotes intergenerational integration as their children grow up in more integrated environments.

A common counterargument to this approach is that favoring high-skilled immigrants assumes we know exactly what skills the economy needs, falling into a central planning fallacy. However, this misunderstands the proposal. The goal isn't to micromanage specific skill categories or engage in economic forecasting. Instead, it's about using education and professional achievement as proxies for adaptability, innovation potential, and positive externalities.

America could and probably should make it easier for people across skill levels with job offers to secure short-term work visas visas, addressing immediate labor market needs. However, for more flexible visas and longer-term residency, prioritizing high-skill individuals offers significant advantages.

One interpretation is that your present self simply doesn't care about your future selves. A more charitable view is that your present self doesn't trust your future selves enough to make this sacrifice. If your present self could be reasonably confident that abstaining from the cookie now would lead to much healthier, happier, and fitter future selves, it would most likely make the trade.

Our present self is capable of acquiescing to long-term payoffs when the expected value is clearly positive. We willingly submit to the unpleasantness of having our teeth drilled or our wisdom teeth removed because we're certain of the long-term benefits: preventing severe pain, maintaining oral health, and avoiding more serious complications in the future.

However, foregoing the cookie once only incrementally improves your chances of building healthy eating habits. Each of your future selves has to reinforce your present self's choice by making sacrifices themselves until this choice becomes the default (habit). If it extrapolates from how past versions of you have behaved and the strength of its current desires, it seems reasonable for your present self to assume that future versions of you will likely defect in this prisoner's dilemma, making it rational for it to defect as well.

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Habit formation, then, is about changing your prior beliefs about yourself or, in simple words, trusting yourself. But to trust yourself, you need evidence, and to build evidence of better behavior, you probably need to behave better. But if you knew how to behave better... you get the drift. We're stuck with a chicken-and-egg problem.

This isn't literally a catch-22 because most of us do build new habits sometimes. One plausible path is to find other ways to convince yourself of your changed identity. This is probably why people report that buying new equipment or clothes often helps build new habits, as they signal a legible change, albeit superficial. Or you could introduce a different physical or psychological payoff to compensate your present self for each time it forgoes the cookie. Or you could somehow break the association between cookie and feeling good, such that the present self is starting from a much more neutral place that can be moved by a much smaller chance of future success.

My intent here is not to give people habit formation advice. Much of this has already been said, and this framework won't necessarily help make that more actionable. Instead, I want to point out how this concept of trust informs morality at every scale - while negotiating with ourselves, interacting with other people, and in interactions between tribes, groups, and nations. More on that in Part 2.

The Indian government, led by Mr. Vajpayee, failed to send personnel to storm the plane when it briefly landed at Amritsar airport in India. At a subsequent stop in Dubai, the terrorists rolled a dead body off the ramp, presumably to demonstrate to the Indian government that they meant business. Under pressure, the government caved and released three terrorists from an Indian prison, all of whom were serving sentences for abducting westerners from the Kashmir valley.

One of those men, Masood Azhar, returned to Pakistan and founded Jaish-e-Mohammed (JeM), a prolific terrorist organization which would go on to launch attacks on the Indian parliament in 2001, an airforce base and consulate in 2016, and a suicide attack in 2019 that killed over 40 Indian personnel. Another released man, Omer Sheikh, would later be arrested for the abduction of WSJ reporter Daniel Pearl, whose execution was horrifically broadcast to the whole world.

The casualty count from all JeM terrorist attacks thus far is 431. Even assuming JeM ceases to exist tomorrow, it would seem that saving the lives of the 191 hostages on that flight, while understandable, was simply not worth it. Worse still, two of those three men continue to live freely in Pakistan, running an organization of 1,000-2,000 fighters and a network of Madrassas that churn out freshly baked Mujahideen by the year. In summary, a bad fucking trade that can only get worse.

We must recognize how hostage negotiations fundamentally differ from other types of negotiations. Typically, parties negotiate to find win-win solutions. It might often involve each party making sacrifices, sometimes even on important dimensions, but only because the outcome makes everyone better off. Can hostage negotiations or any negotiation with terrorists take this form?

The objective function of terrorists

The clue is in the word "terrorism". If terrorists could achieve their aims through negotiations, they would. Even the most murderous and ideological of them are somewhat instrumentally rational. If they are carrying out operations against a democratic state, you can safely assume their end goals are fundamentally at odds with the interests of the population at large. The contest between us and terrorists is typically a zero-sum one.

It’s worth clarifying this point about instrumental rationality. The vast majority of terrorist attacks are carried out by Islamists. The belief in martyrdom and paradise makes standard game theoretic analysis tricky since terrorists seem to display little to no self-preservation, which we consider the bedrock of rational self- interest. But we shouldn’t then be tempted to conclude that Jihadis don’t value their lives, because they seem willing to blow themselves up or fly planes into buildings for reasons that seem absurd to us.

The Jihadist is not exempt from the universal instinct for self-preservation. But these biological instincts are contextualized within a powerful ideology as just another base impulse that can be overriden - just like hunger or lust - and one that pales in comparison to the cosmic significance of the mission at hand. Yahya Sinwar is not ambivalent between his own life and death. Osama Bin Laden certainly was not. Their actions aren’t compatible with a desire for death per se, nor are they compatible with valuing human life intrinsically. Whether you believe them or not, they have convinced themselves that their lives, while insignificant in the cosmic scheme of things, are worth protecting, because they are instrumental as individuals, in waging the holy war effectively.

The stakes may be cosmic but the ends are political - reclaiming Muslim lands or moving forward to bring more and more territory within Islamic control. But that doesn’t mean political compromises with Jihadists are possible. As a citizen of a liberal democracy or as a Muslim who does not wish to live under a caliphate, there are unlikely to be many exchanges you can make with these people that will move them closer to their goal and not leave you worse off. 

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Do hostages change this calculus?

Terrorists know all of this, which is why they engineer situations in which you seem to benefit from giving them what they want. They create an illusion of temporary alignment of incentives by positioning themselves to impose a cost on you. If you want to neutralize that cost, you have to help them move closer to their goal - by releasing their comrades, ceding territorial control, or something else that they perceive as a tactical or strategic advantage.

Notice how their interests are still fundamentally misaligned with yours. If anything, they've only reinforced that by holding innocent civilians hostage. You could argue that perhaps saving the hostages offers a higher benefit than the cost you incur by helping terrorists. Is this plausible? Perhaps I cherry-picked a particularly bad example in this post?

Reframing the situation helps. When a terrorist group murders an equal number of your fellow citizens by planting a bomb in a shopping mall, that is a message to you that it can happen again. And it probably will. But most people don't then pressure their government to negotiate with terrorists to avoid the next bombing. People generally recognize that as a society, we have to be willing to pay some price to live freely and repel brutal adversaries. So you should ask why this intuition changes when people are taken hostage?

Moreover, we will always be at the losing end of information asymmetry in these situations. When terrorists demand that we release prisoner A or reduce military presence in location X, we don't have a full handle on exactly how it will help them strategically, which makes it easier for us to lie to ourselves. But we should expect them to have better information about what would help them strategically and expect that giving in will be against our own strategic interests.

Why do states negotiate with terrorists?

Why do people negotiate with terrorists then, if it's not in their interests? Because terrorists correctly recognize that they can capitalize on misaligned interests within democratic societies. When viewed through the lens of long-term self-interest of the nation state, it's clear that caving to terrorism is misguided. But to the families of hostages, the benefit of retrieving a loved one is almost infinitely greater than the diffused costs of future attacks, which have only a small probability of directly affecting them. Most families thus pressure their governments to "do whatever it takes" to bring their loved ones back.

These negotiations turn into a classic public choice problem. The concentrated benefits to a small group (hostages and their families) create intense pressure on policymakers, while the diffuse costs to society at large are easier to overlook or discount. Moreover, the emotional appeal of saving identifiable lives tends to override the rational calculus of people who are not directly affected too. So when governments cave, it is because doing so is in the rational interest of a few and by extension, in the rational self-interest of decision makers, not the nation.

The only obvious solution is to credibly pre-commit not to negotiate with terrorists for hostages, as the United States has done. USG has at least once publicly violated this commitment by selling arms to Iran in exchange for securing the release of American hostages held by Hezbollah. Regardless, we’re unlikely to find evidence of efficacy of any such commitment by a single nation, since most kidnappings are opportunistic with very little nation-specific targeting. This leaves us with yet another international coordination problem.

Israel’s Dilemma

I opened with an example that's far less painful than the topical one - Israel's ongoing hostage negotiations with Hamas. Israeli politicians need no utility calculations or abstract game theory to recognize how hostage deals tend to turn out. In order to save one abducted Israeli soldier, Gilad Shalit, Israel released over 1,000 Palestinian prisoners including Yahya Sinwar - a move that saved one Israeli life and killed over 1,400 Israelis and an order of magnitude more Palestinian civilians. Yet, many Israelis have convinced themselves, in the face of understandable pressures, that this time is different.

Hamas' immediate goal is to ensure its survival and increase the likelihood that it will eventually control Gaza. Gaza is Hamas' home turf and it knows exactly what factors are most important for its survival. They almost certainly know this better than anyone in Israel. If they are willing to release hostages and give up all the leverage they currently have, it will be for something that increases their likelihood of survival. Giving Hamas anything that increases its likelihood of survival cannot be in Israel's interests as a nation.

The fact that your adversary is a Jihadist death cult should only make you less inclined to negotiate. These are people who have internalized an ideology that makes them fear death far less than most of us. Moreover, Israel has indicated it would happily give amnesty to Hamas leaders in exchange for a full hostage release and complete disarmament. If Yahya Sinwar's goal was just to survive and live as a rich man, he would have already found a way to make that happen. The fact that he's willing to walk away from the deal on the 'Philadelphi corridor' issue is itself rich in information. This is at least one factor that Hamas considers instrumental to its survival; more so than any debate about which prisoners get released, and that is reason enough not to give it to them.

Netanyahu is a distraction

A high proportion of Israelis see the central problem as Netanyahu's intransigence, apparently motivated by his desire to cling to power. Notwithstanding the validity of the moral indictment on Netanyahu, this is not a serious explanation of the incentives at play here.

The anti-Netanyahu crowd seems to be making these implicit claims: that a hostage deal worth taking is on the table; and that Netanyahu is adding terms and conditions that are likely to sabotage the deal.

For all the reasons I've highlighted above, it's unlikely that a hostage deal worth taking is on the table unless Hamas is seriously miscalculating. It's not impossible, but Israelis should be skeptical of assuming this when doing so also happens to justify taking the emotionally easier, short-term focused decision.

But I guess Israelis could tell me and everyone else to fuck off and hold Netanyahu responsible for not doing a deal most of the country wants to do. But this results in a contradiction given the motivations they attribute to Netanyahu. If walking away from a deal is advantageous to him politically, it is presumably because it represents the interests of people in his coalition, who in turn represent a significant part of Israel's population.

It could be that Netanyahu's coalition is grossly misrepresenting voters' interests on this issue. But it seems much more plausible that on this issue, Netanyahu’s critics are letting their disdain for him obscure the impossibility of a “good deal”.

We're used to thinking about skills and experience in terms of their market value - how useful they are and how much employers or customers would pay for them. But  another, more subtle dimension gets less attention: liquidity.

Just like in financial markets, some human capital is easier to price and trade than others. This is not about the absolute value of your skills or experience, but how easily the market can assess and exchange them.

Consider Jim - with 4 years of experience as a management consultant at McKinsey. In the job market, potential employers have a good idea of what they are buying - someone smart and conscientious enough to be hired by McKinsey; meets a reasonably high bar on commercial acumen and communication skills; and polished enough to have managed clients and moved one step higher on the well-defined McKinsey ladder.

Jim's skills are highly legible to every potential employer. They can estimate his salary within narrow confidence intervals, given that McKinsey's pay structure is essentially public information. If Jim decides to switch jobs or move countries, all else equal, he can be relatively confident about his chances of landing a job that pays him his "market value". Much like publicly traded stocks, his legible experience and skills can be sold quickly at the prevailing market rate.

On the flip side, picture someone who's spent two years at an AI startup, followed by a stint running operations for a non-profit in Asia, and is now working on a political campaign. How comfortable would you be guessing this person's potential earnings or, more fundamentally, the value they could generate?

If I were hiring for a high-leverage, entrepreneurial position requiring an exceptional young candidate, I'd be more inclined to interview this person over most McKinsey consultants. However, I'd evaluate them more rigorously than someone with the McKinsey stamp, and might even limit my search to candidates within my social or professional network.

When human capital is built through non-linear or less legible paths, the lack of legibility increases variance from the employer's perspective. This isn't necessarily negative, but it does increase the value of additional information. If the cost of obtaining this information doesn't justify the potential upside, candidates with less legible backgrounds may be passed over in screening processes.

In essence, linear, legible paths represent liquid investments in human capital - easily valued and traded. Non-linear, "customized" paths, on the other hand, are illiquid investments. They could be accruing significant value or none at all, but they're hard to mark to market. Even with an impressive skill set, you can't easily cash out by simply applying to a few publicly posted jobs.

So, what makes some career paths and skill sets more liquid than others? 

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Dimensions that drive liquidity

In financial markets, liquidity is defined as the efficiency or ease with which an asset can be converted into cash at a given price or within a given price range.

In the context of human capital, liquidity is a function of two factors: the overall demand for your skills/experience, and the ease with which others can verify that you possess these skills at the level you claim.

Several dimensions drive the liquidity of human capital:

1. Industry growth and activity: Skills that can be deployed in high-growth industries or sectors with high levels of activity tend to be more liquid. The increased "trading volume" of human capital in these areas enhances liquidity.

2. Skill specificity: Counterintuitively, more specific skills often enjoy higher liquidity. A carpenter's abilities are well-defined and easily understood, whereas "project management" can vary widely based on context. This clarity makes it easier for a carpenter to market their skills, even in a new location.

3. Testability: Skills that can be easily and quickly assessed tend to be more liquid. For instance, a software developer's competence can often be gauged through a brief coding test. In contrast, evaluating leadership or managerial skills typically requires more time and varied assessment methods, resulting in lower liquidity.

4. Context dependency: If your value primarily stems from familiarity with a specific organization or geographically limited social capital, your skills may be less liquid. However, this can sometimes correlate with skill specificity, so the net effect on liquidity isn't always straightforward.

5. Institutional brand: Larger, more established brands often provide greater liquidity to their employees' human capital. This is due to their well-known screening processes and the larger sample size of previous employees, allowing potential employers to better estimate the value typically generated by individuals from these institutions.

The Appeal of Liquid Paths is the Case for Illiquid Ones

Legible (liquid) paths offer non-monetary compensation in the form of psychological comfort and optionality. With each additional year of experience, your career capital becomes highly visible - salary increases, promotions, or clear market rates for your level. You can probably move to a different country (or even industry) and have your skills valued easily.

There's another reason these liquid paths are in high demand. Sure, competing for a McKinsey job isn't easy, but everything from recruiting to promotions is structured and streamlined. Job seekers and employers are cushioned from uncertainty and ambiguity in a way that only becomes obvious when you consider the counterfactual. Moreover, one can also more reliably predict future income and gain psychological security  (or at least perceived security) around one’s career trajectory.

Given these hidden benefits, you'd expect these paths to be crowded. That’s one argument in favor of pursuing non linear, illiquid paths instead. You should expect “alpha” in these paths precisely because lots of smart, conscientious people are terrified of uncertainty. Maybe you can afford to be less of those things if you're willing to be brave?

In financial markets, illiquid assets often command a premium - investors accept lower liquidity for the prospect of higher returns. I can't prove empirically that this is replicated in human capital markets but that's a reasonable prior.

Costs and Constraints of Hierachies and Standardization

Another source of alpha comes from avoiding the costs that hierarchies and standardisation impose, especially on the “weird” amongst us.

The most obvious “weirdness” that comes to mind is neurodivergence. Navigating the politics and bureaucracy of a more institutional set up requires skills that aren’t always made explicit in job descriptions. You can’t have no filter. Or boycott team bonding events because they’re dumb. Or even openly challenge someone’s obviously wrong ideas in a meeting. Some liquid paths, such as academia, may be a bit more forgiving on these aspects. But linearity and structure almost always necessitate soft skills that come less naturally to some of us. 

Another source of weirdness is your innate distribution of abilities, relative to peers. Communication skills and strategic instincts are probably both incredibly important to a business leader’s success. However, a young person who clearly outperforms his or her peers on these abilities probably won’t make it up the corporate hierarchy to become CEO if as an entry level executives, they fail to excel in a role that tests their attention to detail and ability to process high volumes of routine tasks to perfection . As someone who struggled with this early on, I’m convinced that cultivating a minimum amount of organization and attention to detail is important no matter what one wants to do, but the degree to which this can be emphasized to the exclusion of almost everything else may not predict future success. Be that as it may, your boss probably won’t care that he’s failing to see the flashes of brilliance in you that could transform the company 15 years from now. 

While charting a non-tradition, illiquid path, the strengths of weirdness can be leveraged and its downsides managed. As I detailed in one of my previous posts, in early stage startups, you’re more likely to be judged on your ability to add direct value in some tangible way. And you can pick roles that are likely to allow you to showcase your relative strengths, and where your relative weaknesses have less of an organizational and thus personal impact. If you’re good at talking to investors and negotiating term sheets or at synthesizing customer insights, people won’t care that you struggle with formatting powerpoint decks perfectly or organizing and retrieving documents meticulously.

More generally, avoiding linear paths means the ability to choose roles based on the skills that you want to work on and develop at any given point in time. This flexibility aligns well with Scott Adams' concept of a talent stack. In non-traditional paths, you can strategically select roles and experiences that allow you to build a unique skill set based on your situation or their future value when stacked together, which might be larger than the sum of the parts. 

Navigating Illiquid Paths: Psychology, Career Management, and Social Capital

All that said, one disanalogy between financial market participants and job seekers is that the latter is both the market participant and part of the asset being traded. As a result, the market participant's psychology and personality is endogenous to the success of each strategy. Illiquid paths demand both psychological resilience and active management. 

It's not enough to simply make an illiquid investment in your career. You have to be holding an illiquid investment that someone is willing to pay for. Acquiring and refining valuable skills is just one part of it. One has to define and communicate one’s value proposition.

In a structured corporate environment, the value creation structure is already in place and you’re the missing piece of the puzzle that can be plugged in to create value. On illiquid paths, you need to figure out how to cash your skills out in value or find people that will help you do that.

As a result, success in illiquid paths almost always flows through people and social capital (and to some extent, ideas). Almost no one can generate significant value without coordinating with others. The breadth and quality of your network will be a much larger driver of success in these illiquid paths.

Choosing an illiquid path doesn't guarantee good social capital, but it does allow you to choose roles that increase your surface area of professional interactions. When I was an early-stage employee at a startup, I worked directly with founders, investors, and vendors. These weren't just people I saw at industry conferences – these were folks I collaborated with on real deals and projects. Moreover, you might find yourself working in flatter hierarchies, collaborating with individuals who, in a more hierarchical setting, you'd only be able to meet for a mentorship coffee.

Risk management takes on a new dimension too. Without the safety net of a predictable career ladder, you need to be more proactive about managing your financial and professional risks. This might mean having multiple income streams or being more intentional about saving during high-earning periods to cushion potential dry spells.

Being proactive, having good social skills, and a bit of charisma is important regardless of your career path. But my sense is that these qualities can take you further in a more customized, illiquid path. And not having these, all else equal, is a bigger disadvantage.

Conclusion

Illiquid career paths typically yield a wider distribution of outcomes. For those aiming at the extreme positive tail, leveraging unique strengths and actively managing one's career become crucial. This approach can potentially lead to outsized returns in terms of impact, personal satisfaction, and financial rewards.

But they also demand higher tolerance for uncertainty, proactive career management, and often rely more heavily on social capital and personal initiative. So if you’re looking for a nice job that pays the bills and can fund your lifestyle, you should probably chase liquidity at the expense of expected return. 

In the next part of this series, I explore what you can do to manage risk on an illiquid career path.

It’s indisputable that each dollar goes much further in the poorest parts of the world. But it goes further towards saving lives in one the poorest parts of the world, often countries with terrible political institutions, fewer individual freedoms and oppressive social norms. More importantly, these conditions are not exogenous to the cost of saving a life. They are precisely what drive that cost down.

Most EAs won’t need convincing of the fact that the average life in New Zealand is much, much better than the average life in the Democratic Republic of Congo. In fact, those of us who donate to GiveDirectly do so precisely because this is the case. Extreme poverty and the suffering it entails is worth alleviating, wherever it can be found. But acknowledging this contradicts the notion that while saving lives, philanthropists are suddenly in no position to make judgements on how anything but physical disability affects the value/quality of life. 

To be clear, GiveWell won’t be shocked by anything I’ve said so far. They’ve commissioned work and published reports on this. But as you might expect, these quality of life adjustments wouldn’t feature in GiveWell’s calculations anyway, since the pitch to donors is about the price paid for a life, or a DALY. But the idea that life is worse in poorer countries significantly understates the problem -  that the project of minimizing the cost of lives saved while making no adjustments for the quality of lives said will systematically bias you towards saving the lives least worth living. 

In advanced economies, prosperity is downstream of institutions that preserve the rule of law, guarantee basic individual freedoms, prevent the political class from raiding the country, etc. Except for the Gulf Monarchies, there are no countries that have delivered prosperity for their citizens who don't at least do this. This doesn't need to take the form of liberal democracy; countries like China and Singapore are more authoritarian but the political institutions are largely non-corrupt, preserve the will of the people, and enable the creation of wealth and development of human capital. One can't say this about the countries in sub Saharan Africa.

High rates of preventable death and disease in these countries are symptoms of institutional dysfunction that touches every facet of life. The reason it's so cheap to save a life in these countries is also because of low hanging fruit that political institutions in these countries somehow managed to stand in the way of. And one has to consider all the ways in which this bad equilibrium touches the ability to live a good life.

 More controversially, these political institutions aren't just levitating above local culture and customs. They interact and shape each other.  The oppressive conditions that women (50% of the population) and other sexual minorities face in these countries isn't a detail that we can gloss over. If you are both a liberal and a consequentialist, you should probably believe and act as if individual liberties and freedom from oppression actually cash out in a significantly better life. 

You can get a better sense of this by looking at the list of countries AMF buys most of its DALYs in:

Democratic Republic of Congo is the country that tops the list, with over 100 million bednets. These excerpts from the World Bank country profile may not come as a surprise to most of you: 

"DRC ranks 164 out of 174 countries on the 2020 Human Capital Index, reflecting decades of conflict and fragility, and constraining development.."

"Congolese women face significant barriers to economic opportunities and empowerment, including high rates of gender-based violence (GBV) and discrimination. Half of women report having experienced physical violence, and almost a third have experienced sexual violence, most commonly at the hands of an intimate partner..."

"DRC has one of the highest stunting rates in SSA (42% of children under age five), and malnutrition is the underlying cause of almost half of the deaths of children under the age of five. Unlike other African countries, the prevalence of stunting in the DRC has not decreased over the past 20 years. Due to the very high fertility rate, the number of stunted children has increased by 1.5 million."

Quantifying quality of life

Valuing a life (or life year) has three components: 

1. Hedonic value of the life itself

2. Psychological trauma/grief averted by family members (when you save a life) 

3. Externalities (how the person’s life affects others) 

Whether you save a life in Congo, Sri Lanka or Australia, I can’t think of strong reasons for why #2 would vary all that much. 

We should expect #1 and #3 to be some function of per capita GDP, human capital development, individual freedoms etc. As Give Well reports “People in poor countries report that they are on average less satisfied with their lives than people in rich countries. The average resident of a low-income country rated their satisfaction as 4.3 using a subjective 1-10 scale, while the average was 6.7 among residents of G8 countries”. But this doesn’t help us quantify the differential value of lives. 

You could ask reasonably well off people in the developed world at what level of fixed yearly income in their own country they’d be indifferent to moving to sub-Saharan Africa with all their money. But we’d need to deal with the challenge of disentangling how much of that effect is simply an attachment to one’s own relationships, sentimentality etc. ANother way into this would be to study demand for immigration from the poorest countries. For example, “In 1990, an estimated 300,000 Congolese migrants and refugees resided in one of the nine neighboring countries. By 2000, their number had more than doubled by 2000 (to approximately 700,000), and by mid-2015, had risen to more than 1 million in the neighboring countries.”.  The vast majority of migration out of Congo took place after the official end of the war, which tells us something about the baseline conditions, not just threat of imminent violence. But we should note that economic migration, both legal and illegal, is not affordable and accessible to the people who are worst off within the poorest of countries. And trying to find the cheapest lives to save will systematically bias you towards lives which are worse than any estimate gathered from immigration data would suggest. 

Present vs future quality of life

Notwithstanding the methodology used, the adjustments here need to incorporate two factors - the present quality of life and expected future quality of life, especially since most life saving interventions are targeted at children. 

(1) Present quality of life is a function of per capita income, income inequality and measures of human development and freedoms.

(2) The expected future quality of life is some function of growth prospects, institutional quality and trends in institutional quality. 

What does this point to? 

At first glance, this favors saving lives in countries that are still poor or have very poor parts but much better state capacity and institutional quality and thus better prospects.(eg. Bangaladesh, India vs DRC) In these instances, DALYs may still be available at a low price but those future DALYs are much higher quality DALYs than the ones you’d be buying in countries that seem to struggle with bad political equilibria. 

More generally of course, based on the magnitude of adjustments, it could just move one away from the project of saving lives in the developing world altogether, perhaps towards more of alleviating acute suffering or interventions that would have an impact on human capital (like lead removal) and institutional quality in the long run. 

Conclusion

Here's how GiveWell concludes its analysis on standard of living in poor countries : 

"On one hand, people in the developing world have a tangibly lower quality of life. On the other hand, a life saved probably means many more years of functional life. We feel strongly that it’s worth addressing a major problem (such as tuberculosis or immunizations) even if other problems remain unaddressed."

While I agree with that general sentiment, we still have to contend with the fact that these other problems remained unaddressed are not independent of how valuable it is to solve specific problems within these countries. The conclusion may or may not look vastly different from the status quo but the prospect of adverse selection means that we shouldn't be too surprised if the shift is significant. 

Chamberlain's actions, while misguided, largely reflected the prevailing public sentiment of his time. This episode highlights a recurring dilemma faced by open, democratic societies: how to effectively deter aggression from authoritarian regimes while remaining responsive to their citizenry. At its core, this challenge stems from a widespread misunderstanding of the fundamentally adversarial nature of international relations, especially when dealing with despotic governments. The public's reluctance to engage in conflict during the late 1930s is understandable, given the devastating toll of the First World War. However, while we can contextualize our current geopolitical timidity, we cannot justify it.

In adversarial relationships, each party has incentives to deceive for strategic advantage. Open, democratic societies are particularly vulnerable in this dynamic due to information asymmetry. explains in her piece on Iran:

Iran knows far more about us than we do about them. An open society is an open book. Ours is unusually open and unusually closed in the sense that flow of information between us and the world only goes in one direction. We pump out news of our culture, political life, strategic deliberations, war-making capacity, and morale by the metric tonne, and it quickly spreads to every corner of the globe, where our adversaries pore over it attentively. No comparable volume or quality of information about the world flows in to America, however.

This availability of information combined with the logic of election cycles make us far more readable to adversaries. The incentives facing decision makers are clearly visible to adversaries, since decision makers in democracies are beholden to voters; and open societies have entire industries dedicated to studying voter preferences and constraints. Predicting China’s or Iran’s behavior necessarily entails obtaining access to the inner workings of the CCP or the IRGC, institutions which ‘manage’ their domestic press, and to which access is closely monitored and controlled. Gauging public sentiment alone, which itself is complicated by preference falsification, won’t get you very far in analyzing these nation states as actors, at least over short time horizons.

Our openness is a clear window through which our leaders' payoffs remain visible, making it easy for adversaries to pick the most favorable time to escalate and basically foreclosing our ability to ever surprise our enemies. But the benefits of openness far outweigh its costs. While the openness of democratic societies creates vulnerabilities, it also makes us prosperous. However, this very prosperity introduces new challenges in confronting international aggression. As democracies become wealthier and more liberal, they develop an increasing demand for safety and an aversion to risk, further complicating their ability to deter threats effectively.

Prosperity increases the opportunity cost of death and physical harm. Death is as bad as the life it cuts off prematurely would (counterfactually) have been good. This is mediated through what has been casually named safety culture. You can see safety culture and its impact all over our institutions - FDA trials, building codes, and anything else that can ever so slightly reduce the risk of legible death or injury, notwithstanding its opportunity costs. Our foreign policy apparatus is no exception.

Now, it is perfectly rational to worry more about downside risks when you have more to lose. The problem is our biased assessment of risk itself. We are hypersensitized to short term, legible risks and impervious to diffused, longer term or second order effects. This is unfortunately synergistic with our moral intuitions that are far too concerned with acts of commission while neglecting acts of omission. The FDA would rather protect one healthy volunteer from legible harm that could be attributed to them even if it means a lifesaving drug never makes it to the market.

Similarly, our foreign policy seems narrowly focused on avoiding short term confrontation. Listen to Joe Biden's speeches over the last few months (or assess his actions) - the undertone and sometimes substantive content is something to the effect of "Hey, we really don't want to fight, because fighting is bad. We're rich and we want to keep it that way - so let's really try not to fuck this all up". Unfortunately, this consumerist attitude towards buying safety won't work.

When we pay a price for safety, we think we are buying safety, just as we'd buy anything else. "Here, we will give up some of our power or wealth and let you be a bully because our life is damn good and we want 1 more year of it". Notice that the supply of safety is controlled by the other side. They know that you have a deep almost never ending demand for safety. So if they have more safety to sell you, you'll buy it. This process can basically carry on forever unless you make them pay for breaking this contract - by communicating a red line. Do the words "red line" ring a bell?

Consider something more concrete. The American public is terrified of anything that could lead to nuclear escalation with Russia, which is palpable in America's lack of total resolve in supporting Ukraine in a defensive war. It's totally rational to not want nuclear war. But it's unclear that really not wanting nuclear war makes nuclear war less likely. This is because the concession we're typically making is still exacting a cost from us. Weakening our credibility or power that we spend resources and human capital to build is still a cost since ultimately, different sources of power - be they economic or military or something else - are fungible. So at some point, America can't not respond. And when it does, it will face an adversary that believes we are likely to back down if they push us hard. So if you can reason by induction, you would have long figured out that there's no way for this to end well, if your adversary believes the cost you will pay to avoid conflict is arbitrarily high.

This is the point at which someone will accuse me of relying "too much on theoretical frameworks", at which point I will ask them to demonstrate the actual logical leaps I have made. Then they will say something like "C'mon, your adversary doesn't believe they can keep pushing you without consequence". It might be useful to remember that this relationship is adversarial. That means you either have no direct channel of communication or that even if you do, each party has an incentive to deceive and lie for strategic advantage. This is why adversaries have to analyze all the signals they receive from each other - what they say but more importantly what they do. So if we act like we would do pretty much anything to avoid military confrontation, perhaps our adversary knows it doesn't mean we literally have no limits. But they have no idea what those limits are, because we don't draw lines in the sand with credibility. Red lines, ring any bell yet?

I've spent all this real estate bitching and moaning about the handicaps of openness and democracy. I probably come across as envious of our morally bankrupt adversaries and their ability to withhold information and gain strategic advantage. Nothing could be further from the truth. Democracies should play to their strengths and embrace transparency. We should clearly and honestly state what we care about most, broadcast our promises and threats to the whole world and then follow up on those promises and threats.

The reality is that we don't draw lines in the sand because we don't know what we're willing to fight for and what we're not. We don't even have a coherent political conversation about our foreign policy goals and aspirations. This is especially strange for a country that has historically maintained a lot more democratic pressure on its foreign policy apparatus, relative to our allies across the Atlantic.

We should be clear about what our goals are and what we want in the world and what we will absolutely fight for. There are other less important things we can have strategic ambiguity around. That gives people a sense of what we will fight for and what we want. This saves everyone time.

Louie's date then says what no man wants to hear – "I totally get it, you did exactly what you should have. But if I'm being honest, that was a turn off, to watch a guy debase himself just to be safe". It's a gut-wrenching scene. Most men can't help but play this hypothetical situation over and over again in their heads, finding ways to reassure themselves that should they be the ones facing the choice between risking grievous injury and deep humiliation, they would muster the courage to roll the dice.

Part of this is surely the internal model of women that men run in their heads, incessantly processing the impact of every action on perceived mate value. To some extent, this model seems flawed. Frankly, I'm not sure what proportion of women would feel the way Louie's date felt. But I'm confident any woman worth being with would be capable of overriding any such impulse by making the most basic contact with reality. Any middle-aged man who tries to take on a group of violent teenagers to protect his ego is probably not someone you want as your partner. Moreover, she could have gotten them both out of that mess by dialing 911 immediately or threatening to do so. Instead, she just sat there, took it all in, and passed judgment.

In fact, I think of the woman in this scene as a projection of male psychology, representing the judgment that men fear awaits them when they turn the other cheek. This is so even though the different dimensions of mate value are far more fungible for men than women.

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Take the policies of the CCP or the economic incentives within Chinese corporations. Are these cultural forces? It's hard to say because we usually use "culture" to explain forces that can't be clearly categorized as political or economic. Some argue that culture refers to low-level interactions and bottom-up processes that would occur naturally without external or top-down institutional forces. But this dichotomy seems off.

Consider the zero-covid policies in China. They're clearly instituted by the CCP in an authoritarian, top-down fashion. But doesn't culture - defined as what people believe and how they interact - affect everything, including the norms within the CCP and the behavior of its individuals? These institutions might not perfectly represent the general populace, but almost everything in a society can be captured by culture at different levels of aggregation.

I'm not trying to police the use of the word "culture." In normal conversation, we almost always know what we mean by it. However, in politics and meta-politics discussions, deferring to "culture" as an explanatory variable is almost always a cop-out. Take the pro-natalist policy debate. Every time tangible solutions like financial incentives are discussed by someone like , you can bet that some people on Twitter will chime in with, "But we have to change culture." This is supremely unhelpful. For one, as points out in this piece, culture can be acted upon by a variety of forces, and it’s unclear why financial incentives can’t be one of them.

It's fine to claim, as people have done with the fertility debate, that financial incentives won't make a dent based on past evidence. But attributing issues to "culture" without further explanation adds nothing other than saying it's tied to some undefined dimension of human belief and behavior. If you want to use culture as an error term that captures unexplained variance, fine. But to make a contribution, you have to explain what dimensions of culture are worth honing in on. Otherwise, "But we have to change culture" is just begging the question. Of course, we need to change the culture. The question is how? What are the specific beliefs and norms making the problem worse, and how can we intervene?

I'm not demanding that public intellectuals approach every issue with a policy mindset. In fact, writers, bloggers and podcasters are all best poised to influence culture. The interesting question is how we should influence culture. If we want to get meta about this, we can discuss the cost and benefits of making some arguments versus others, or talk about what people other than public intellectuals should do - education, art, etc. But again, the demon of specifics will haunt you. How should we change our education system? What should we be teaching kids about population growth? What narratives should our art be countering?

If we want to make progress on complex issues, we need to move beyond vague invocations of culture and focus on identifying and targeting the specific beliefs, norms, and dimensions of culture that matter. Anything else is just a cop-out.

In our last podcast episode, and I responded to Freddie DeBoer’s case for socialism, which we think is at least honest, in so far as it acknowledges the progress achieved under capitalism, arguing instead that wealthy countries like the United States should now switch gears. His core thesis is that once a nation becomes prosperous enough in aggregate, they should focus on reducing variance within their society instead of trying to become even more prosperous. The emotional appeal of this argument is something like this - “Cmon, rich people, give up some extra cool stuff you don’t need so poor people can lead a half decent life”.

It’s probably true that wealth has diminishing returns for human welfare (though the evidence on this is not nearly as unambiguous as people on the left make it out to be) at the individual level beyond some arbitrarily high threshold. Unfortunately, this is a red herring. The counterfactual world in which you get to fund all your favorite social programs is one in which you also significantly increase taxes on the middle class (look across the Atlantic), something Freddie acknowledges. It’s not just the middle class (and the rich) that socialism takes from. I’d argue it also takes from two other groups that socialists pretend don’t exist: future people and people in the developing world. Here’s a claim more grounded in reality: Socialism, at its best, is about preferencing the perceived immediate needs of some people living today over other people living today, people in other countries AND over future people.

The Disconnect Between Ideal and Practical Socialism

Socialism in practice differs greatly from its ideal form and what is politically feasible or plausible in the near future. An optimally designed plan to minimize this article's length would likely argue for higher taxes on the rich and middle class, increased cash transfers, and phasing out most existing welfare programs. This approach would be the least distortionary and most cost-effective form of socialism, but it remains a political fantasy in American politics today, for reasons that aren't flattering to the project of socialism itself.

In so far as tax and spending fall within the remit of the state, these decisions cannot realistically be immune from political considerations. Politicians will use it to favor constituencies (and fund programs) that offer the highest political return. To be clear, this is not unique to the left. One is hard pressed to find Republicans today who would favor desperately needed reforms in social security, since perpetuating wealth transfers to rich boomers continues to be in their electoral interest. Once a social program is implemented, mustering political will to roll it back is a herculean task. The interests of the new bureaucracy becomes one more force for perpetuation of the status quo. Only one program from the 1935 Social Security Act has ever been repealed - the Aid to Families with Dependent Children Act repealed in 1996.. 

Spending is often easier to increase than to cut or replace. When one political class benefits from a spending program, politicians may find it simpler to appease another political class by allocating more funds to them as well. This path of least resistance is particularly tempting for a country that prints the world's reserve currency. The can is kicked down the road, seemingly offending no one, until the day arrives when taxes must be raised, more money printed, or debt obligations defaulted on. These blunt instruments ensure that those who lobbied for or received increased spending do not bear the full consequences of their actions. Printing money or raising taxes makes it harder for the middle class to build wealth, while across-the-board tax hikes have the same effect. Defaulting on debt obligations in the future significantly reduces the living standards of future generations and hampers their ability to defend themselves or borrow during emergencies.

Put another way, the political process is an excellent way of externalizing the costs of spending. If you meet a socialist, ask them a simple question: In a system where people can vote to spend money that will most likely be paid for by other people, are they likely to vote to spend just the socially optimal amount of money? Basic game theoretic analysis reveals a fatal flaw in socialism, which is why they despise the whole field of public choice.

Socialism as parochial presentism - Effects on the Middle Class

Freddie concedes that anything we can reasonably call socialism would require more than just looting the rich - tax increases on the largest segment of the population - the middle class. In fact, even the term “middle class” is misleading. If you take a closer look at the tax system of a country like Sweden, you’ll see two glaring differences compared to the United States: first, all income above SEK 598,000 (US$ 55,000) is taxed at the rate of ~52 percent. 15% of Swedes pay this rate. Second, a value added tax of 25% is slapped onto all goods and services with no exemptions. The City Journal of the Manhattan Institute lays out the implications neatly:

America’s income taxes are highly progressive. The top-earning 20 percent of families pay 92 percent of all federal income taxes and 75 percent of total federal taxes. The Internal Revenue Service reports that the typical middle-income American family earning $70,000 pays an effective federal income tax rate of just 2 percent, and a total tax rate of roughly 12 percent when including payroll and state income taxes. Families earning $100,000 pay an average federal income tax rate of 5.5 percent and roughly 18 percent overall.

Nordic nations do not let middle-income families off as easily. A full-time worker earning the U.S. federal minimum wage of $7.25 would pay an astonishing 33.7 percent in income and payroll taxes in Sweden. Tax rates also rise steeply: in Scandinavia, the top income tax rate kicks in at an average 160 percent of each country’s average wage, or roughly the equivalent of $96,000 in the United States. In Sweden, the typical full-time worker earning a national-average income of $49,800 (adjusted in American dollars) would thus pay 17 percent in income tax, plus 24 percent in payroll tax. Incorporating the sales tax and excise duties pushes the effective tax rate to 52 percent. A higher-earning Swede making $100,000 would face an effective tax rate (including sales taxes) of 60 percent.

Income distributions have fat tails so just taxing the rich punitively will get you some of the way, more so in a higher variance distribution like that of the US. But to finance a meaningfully higher level of spending, you have to raise tax rates across almost the entire tax base. As a result, most parts of the distribution have higher disposable income in the US. While Swedes enjoy benefits like free education and higher unemployment benefits, large swaths of the American middle class have more freedom to choose the goods and services they deem important. The trade-off is not pro-poor vs. anti-poor; it is between a state that narrows the distribution and presumes to know what is best for the population and one that taxes mostly the rich to provide a lower level of social safety for the elderly and disabled.

Socialism as parochial presentism - Effects on Innovation and Developing Countries

If you digest this, you should have a strong prior that taxing large swathes of the population heavily will have some detrimental effect on their incentive to work and innovate. Frankly, pointing to Nordic countries being innovative or productive is a lazy throwaway line and does not count as evidence. Nordic countries have lower corporate taxes and a fairly deregulated economy. They also have a relatively homogenous, high-trust society with high quality institutions. Nobody sane is arguing that tax policy and levels of spending are mono causally responsible for productivity. The fact that Nordic countries exists tell us virtually nothing about the potential effects of moving America in a more socialist direction.

Moreover, America should be particular cautious about moving in this direction. Holding the national budget constant, moving towards a more socialist America (higher tax revenue and higher spending as % of GDP) is positive for consumption and negative for savings and investment. Higher tax rates mean businesses and households have less capital to save and invest which is compensated for by higher consumption through government spending. This means lower levels of capital available to finance businesses and innovation, both domestically and globally. In so far as socialism also hampers innovation, we have to price in the effects of this globally. The US is one among the world's seven countries that produce most of the world's innovation, and we don't capture most of these benefits, which accrue to people globally in the form of knowledge spillovers. 

Socialists don’t like to admit that socialism is nationalistic and anti-cosmopolitan by default. It is the idea that resources be forcefully redistributed to people within a country than make it available to people globally that are either happy to pay for them or that are far poorer than people within your country. 

Socialism as parochial presentism - Effects on Future Generations

Socialists have to acknowledge that in so far as socialism is even mildly detrimental to growth rates, it will have an impact on the welfare of future generations. The difference between a 1% growth rate and a 2% growth rate compounded over a 100 years amounts to a difference of 167% in per capita GDP - roughly the relative difference between Germany and Russia. Is it fair for us to decide politically that future people will be fine with the lower end of that range? Freddie offers a clue into how he thinks about the future:

But I will say this: I’ve never met anyone who doesn’t agree with the system of universal abundance in Star Trek, given the conditions in Star Trek. This isn’t a joke: I mean that, if you present people with a society where technological progress is so advanced that abundance for everyone is possible, even the most ardent capitalist will concede that it would be immoral to perpetuate a system that did not allow for the distribution of abundance to everyone. But then, Star Trek is Star Trek. The compelling questions are, what level of abundance is sufficient to prompt this moral imperative, and how do we know when we’vee gotten there?

This Star Trek thought experiment reveals a flawed understanding of economic progress. In a world of abundance, with almost infinite supply at near-zero marginal cost, there would be no need for redistribution. Capitalism has already dramatically reduced the cost of essentials like food, clothing, and painkillers, making them accessible to virtually everyone in the developed world. The Star Trek utopia is only possible if we continue this process for an ever-expanding range of goods and services. Even in such a world, scarcity and problem-solving would persist, prompting calls for redistributing the benefits of progress.

One may argue that for most of us in the Western world, life is already pretty good and that there aren't many more discoveries or improvements to be excited about. This resonates with quite a few people, likely because they primarily think of progress and growth as synonymous with producing more "stuff." Do we really need more buildings or even faster airplanes? Do we really need to be able to buy more furniture? Once again, this is a fundamental misunderstanding of what economic activity entails.

Economics is not about "stuff," it's about value. Value is ascertained by humans based on how some good or service adds to their subjective experience (or that of people they love and care about). This doesn't imply that people always spend in proportion to their inherent preferences. In fact, people may consume lots of "stuff" that is detrimental to their well-being. At the same time, they also consume experiences and services that enhance their subjective experience. Markets are a mechanism to solve problems that people want solved – better entertainment, better baseline well-being, painkillers with fewer side effects, medical procedures that slow down hedonic adaptation, longer lives, and the list goes on.

So the question we should ask people like Freddie is the following: It's likely that in 100 years, we could have a society in which humans experience much less pain, have mental health drugs that actually work, live longer and healthier lives, have access to meat that doesn't involve torturing billions of animals, and have fewer alcoholics or people in need of institutionalization. That will become "normal" for people in that future. Some future Freddie would think it's a travesty that some people in that society don't have those "basics." What will present Freddie tell that future Freddie? That we decided that today's standard of welfare would be enough for them, just because it seemed enough for us?

Conclusion

As you might have noticed, one problem that plagues the debate of socialism vs capitalism is that we can’t conduct randomized experiments. explains:

Part of the problem is practical: Researchers can’t treat countries like guinea pigs.  There is no way to get a sample of forty poor countries, randomly assign some to laissez-faire and others to socialism, then measure their prosperity gap ten years later.  You can’t even get a sample of two countries to submit to such experimentation.  True, you could call West Germany versus East Germany, North Korea versus South Korea, or mainland China versus Hong Kong “natural experiments on markets versus government.”  But top journals these days will never let you get away with that.  The sample is too small, the randomization too questionable, and the question too big.  Way too big.

The sample size might be small but natural experiments from Korea, Germany and China -two of which control for geography, culture and genetics - all tell the same story; and basic economic theory can explain why markets allocate resources better and lead to more long term prosperity. After partition, the story of India and Pakistan tell a similar story. Pakistan set up a much more pro market system than India (which adopted a centrally planned socialist system) and grew much faster for the first few decades after partition. India only began outpacing Pakistan after it started on the path on liberalization in the 90s. Socialism has also left us with a graveyard of cautionary tales to pick from, even if one is disinclined to draw causal inferences from them. All this leaves us with the following as the only reasonable prior: Markets are better than collectivist policies at allocating resources, creating wealth and improving human welfare.

In fact, we have no reason to think that we are somewhere near the optimal level of markets and capitalism. As explains in one of his recent pieces, these natural experiments tell us that capitalist states have done better than similar socialist states. But since most of these market economies also made concessions in the form of welfare programs and some amount of central planning, we have no reason to believe that the purely capitalist counterfactual wouldn’t produce even more prosperity.

Admittedly, Freddie doesn’t dispute much of this. But he insists that we should now switch gears. He doesn’t give us any particularly compelling reason why now is the best time to do this. It’s only fair that we ask for some evidence, if he’s asking us to turn our prosperity engine around, which is exactly what Russ Roberts did in this conversation with Freddie:

I think the bigger challenge for your worldview, which I want you to defend is -  People that have embraced your view fully… it hasn’t turned out so well historically. The most dramatic small scale examples would be the Kibbutzim in Israel. They still exist and some of them are socialist but most of them weren’t palatable to the people inside.. They got older and they left..The cultures, the societies that have socialism fully have had a major problem with the phenomenon we’re talking about - effort. Cuba, North Korea, Soviet Union have had trouble with effort. How do you respond to that?”

For those who share your views, I would encourage people to do these kind of things at much smaller levels. Still give them the opportunity to vote with their feet…which is what happened in Israel as it evolved into a different society… What do you think of this idea of doing at a smaller scale?

The next time someone comes waving the socialist flag, tell them that before they get to run this experiment with all of us and our collective futures, we need some evidence. What better way to gather evidence than to round up some comrades, buy some cheap land and demonstrate to all of us that the individual is just another dumb construct standing in the way of collective utopia.

Human capital trades much more like real estate than equities. If you're on the market to buy a basket of S&P 500 stocks, millions can exchange accounts with one click. However, if you're looking to hire someone for a job or find a suitable partner to combine genetic material with, the last step of the evaluation process is always offline, in person, and high touch, much like a house inspection before you seal the deal.

In the job market, some predictive attributes can be translated into text - whether they went to college, what they studied, etc. But for several things we care about - integrity, confidence, ability to think on one's feet, and most importantly, red flags that are quite hard to put a finger on, a 15-minute in-person interaction can tell us things that resumes, cover letters, or a thousand other fields on a digital form can't. Much of our cognitive machinery has evolved precisely to observe and evaluate other human beings, and to spot deception.However, these in-person interactions or even phone calls are much less scalable. In any evaluation process, you can do a fixed number of them. The typical recruitment funnel is set up to maximize the expected value of these high-touch, personalized interactions.

The earliest stages of the funnel typically involve a low-touch process like screening resumes where recruiters look for signals that might correlate with success (being hired). But at this stage, the type of information that's available is very different. You get almost no information about things like trustworthiness but get data points on degrees, achievements, experience, etc. An ideal recruiter is basically trying to identify the most predictive fields out of those available to select people for the next stage of the process, even if these fields are not necessarily the primary determinants of success in the final stage.

The limitations of the hiring process: An example

Let's say XYZ is a think tank looking to hire a Research Analyst. XYZ is a small organization working on fiscal policy. They are looking for someone that combines quantitative skills with written communication skills. Some research experience is a must. Experience in fiscal policy is not a must. Since XYZ is lean, it's important that the new hire be able to work independently with little supervision and handle uncertainty and ambiguity.

For simplicity, assume they only have two stages to their evaluation process. The first is a resume and cover letter screen, and the second involves in-person interviews and a short research assignment. Given how time-consuming the second phase of the selection process is, XYZ has decided they can only invite 5 applicants to this stage.

The CEO of XYZ has laid out the following rubric for evaluating the new hire:

The recruiter from XYZ receives 1,000 resumes and cover letters. They decide they will screen all the resumes (spending <1 min per resume) to select 100 applicants for further screening. They will read cover letters for these 100 applicants before deciding which 10 applicants they invite to the second round interviews.

When the recruiter screens the resumes, the only metric they can reliably screen for is familiarity with fiscal policy - since this would manifest in prior work experience, internships, or coursework. The recruiter can also check if applicants have experience that might be indicative of the ability to handle quantitative work. One could perhaps make a weaker case for written communication skills, but with written communication, the question is one of quality, not whether someone can literally write. Moreover, almost everyone is likely to include something that claims they've written research reports. Even though relevance of work experience is far from the only metric that matters, it's the only one in this case that can be reliably screened for.

The disadvantage faced by unconventional applicants

Now imagine you were applying to this job. You have strong quantitative skills and have been writing on Substack - mostly data-heavy pieces on areas like immigration policy. You've gotten good feedback and grown your subscriber base by yourself. This already makes you a pretty good fit for the job. You've demonstrated that you can work independently and have validated your research and quantitative skills without any institutional support. You also have a math major, so working in a different quantitative domain is unlikely to be a problem for you. But if the recruiter were rating you (out of 10) on relevance of work experience, they might give you a 6 or 7, especially if a majority of their applicants have worked in other think tanks, for example.

Now, of course, if you could make the recruiter click on your Substack or even chat with you for 2 minutes, you would probably be invited to the second round. But the recruiter doesn't have time to validate this; they only have time to eyeball the relevant metric on which they can rank people into 0s and 1s. From the perspective of the recruiter, even if they're well-informed about what matters on the job, their immediate goal is to find a way to rank order the large pile they have in front of them, and on that metric, you're not very likely to make it through to the next round.

The role of institutional incentives in recruiter behavior

Institutional incentives probably matter too. Recruiters are probably not incentivized sufficiently to maximize the expected value of the hire. If they are in-house, they are probably paid a salary to do a job, in which case they will care first and foremost about not being perceived as incompetent. If this Substack writer guy turns out to be a great hire, the recruiter won't get applauded. But if he presents as a moron during the interviews, then the CEO might ask the recruiter why they brought someone who had little relevant work experience.

Sometimes firms hire external recruiters who are compensated in the form of commissions if the firm hires a candidate they bring in. In this case, recruiters do have an incentive to bring in people that get hired. But they are still going to try to sort by fields that are most legible in the early stages. They don't have the bandwidth to go find gems in the rough.

This presents a challenge for a few types of applicants - those who are looking to transition to a new area/industry, those who are a good fit because they have done something analogous in a different setting, and applicants who seem average on legible metrics but exceptional on soft skills. Basically, if you meet every item on the preferred qualifications list on a job application, you might be able to get away with applying on job portals, but otherwise, you're at a significant disadvantage. And so is the firm. But this is how the world works. Feedback loops are not very strong, and companies don't actually know if they end up with sub-optimal applicants long after they hire someone, and even then, they don't know the counterfactual of how much they would have accomplished with an even better candidate.

Bypassing the screening process: The value of referrals and networking

You should try to find a way to ease the company's constraints. The problem here is that the company can't find the time to carefully consider how some unconventional applicants might be great. But you could convince them if only they would interview you or look at some of your work. Well, find a way to help the company outsource this interview free of cost.

This is what referrals or warm introductions really are. It's taking someone else's word on a candidate's softer, richer attributes that are infeasible for them to know themselves beforehand. Since the screening process does very little to mitigate the risk of underperformance on attributes that can't be captured on resumes but are tested later on or on the job, any information on these attributes will be valued quite highly. If someone in the organization knows someone who has worked with you, they now have an applicant with much lower risk across a bunch of dimensions. Needless to say, the colder, more distant the recommendation, the more they'll discount this information. (By the way, companies that have large, structured employee referral programs might be an example of this. Some employees refer friends and acquaintances without much discernment, appearing magnanimous and buying lottery tickets on commissions. But internal recruiters probably learn to discount this appropriately over time.)

This brings us to the N word - Networking. Most people would rather apply for 50 jobs on LinkedIn than write one email to an acquaintance asking them for a chat. This lines up with our psychological constitution. Once you have a resume and cover letter ready, applying for the next job requires relatively little effort. Yet, checking that off your list gives you a significant psychological reward. Meanwhile, everything you can do to bypass that screening process is ridden with uncertainty and embarrassment.

Conclusion: Actionable advice for job seekers

The fact that psychological biases keep a significant number of people from networking adds to the value of pursuing this strategy. All else equal, the less common a strategy is, the more valuable it becomes for those who employ it effectively.

In summary, the hiring process, while designed to identify the best candidates, often falls short due to the limitations of the screening process and institutional incentives. Unconventional applicants, who might be a great fit for the job, are at a disadvantage because their strengths are not easily captured by the metrics used in the initial screening.

In the next post, I will dive deeper into practical networking advice - especially for those that worry a lot about coming across as a sleazy car salesman.

There are a few things that are uncomplicated about the conflict in Gaza - the brutality of October 7th, the reality of human suffering in Gaza and the incentives faced by either side. Way before the ICJ ruling, for virtually no money, I would have signed a contract ensuring my biological castration if it were to be established that Israel is committing genocide in Gaza. This is wildly implausible and flies in the face of incentives that we can infer from Israel’s behavior. In fact, throughout this essay, I will try to do just that. I won’t assume that Israel is the more moral actor by default. I’ll assume they are both amoral actors playing an adversarial game. From the events that have transpired so far, we infer each side’s incentives, even if you ignore most of each side’s historical behavior before October 7th. I will argue that given these incentives and the events of October 7th, one must logically conclude the following:  

1. Israel had to respond with disproportionate force - targeted strikes is a dumb talking point.

2. Given Israel’s response, the most rational action for Hamas is to deliberately embed themselves in civilian areas and maximize non-combatant casualties.

3. All the public and egregious seeming crimes attributed to the IDF are overwhelmingly likely to be genuine mistakes, bad apples or just propaganda.

Game 1: Israel's Response to Oct 7th

For the sake of analysis, let's assume that both Israel and Hamas are amoral actors who are instrumentally rational. This means that while they might have ultimate goals that you disagree with, they choose the most rational options to achieve those goals given their constraints.

Before October 7th, there was an equilibrium where Israel had no presence in Gaza, and Hamas had de facto control. Netanyahu believed this equilibrium was stable, but he was proven wrong when Hamas chose to attack Israel. We won't speculate on Hamas' motivations for now.

After the attack on October 7th, Israel had a few theoretical options:

1. Do nothing and invest in strengthening defenses.

2. Conduct targeted strikes in Gaza to take out senior Hamas members while minimizing civilian casualties.

3. Level Gaza using mostly air power, guaranteeing the elimination of Hamas but killing hundreds of thousands, if not millions, of Palestinians with little human cost to the IDF.

4. Take actions to decimate Hamas' military infrastructure and take out a significant majority of its fighting force.

Option 1: Israel Does Not Retaliate; Chooses Instead to Invest in Strengthening Defenses

For the sake of argument, let's assume that if Israel had done nothing, Hamas would have freed the hostages, even though this is highly unlikely.

In this scenario, Hamas, having proven it can strike Israel with impunity, remains untouched. It can take credit for expelling thousands of Israelis from the south of the country. Moreover, it has created powerful propaganda material - videos of terrified Jews as the Al-Aqsa Brigade infiltrates their homes.

The existence of these videos reveals Hamas' preferences and incentives, as they were recorded to showcase Hamas' brutality. Notably, Hamas had no incentive to broadcast its brutality to the Western world. Given that Israel has faced international pressure to end its offensives in the past, it's inconvenient for Hamas that the Israelis can use the October 7th videos to counter images of suffering children in Gaza. In fact, if Hamas could showcase its brutality to Israelis and the Middle East but not the West, it would likely choose to do so. However, the internet makes this impossible. These videos could plausibly serve two purposes: first, to terrorize the Israeli population and push them to consider leaving the Middle East; second, to broadcast the glory of October 7th to Hamas' allies and potential recruits.

This seems like a great outcome for Hamas. The only downside is that they would probably need to invest more effort to successfully attack Israel next time, given that Israel would certainly strengthen its defenses. But even this is a win for Hamas. While Israel might throw money at the problem, it would need to bolster its military presence on the Gaza border. This means less surveillance in the West Bank or on the northern border with Hezbollah. When your enemy is surrounded by allies on all sides, reallocating resources is rarely a loss.

It’s clear to most people that responding to attacks by strengthening defenses alone is game-theoretically infeasible. It leaves the enemy intact and emboldened while leaving you with all the costs. 

Option 2: Israel conducts targeted strikes in Gaza to selectively take out Hamas leadership and minimize civilian casualties.

Welcome to targeted strikes - the silver bullet that seems to be the preferred strategy of every center-left pundit - Ian Bremmer, Tom Friedman and the villain from my last piece, Rory Stewart.

Leave the substance of the argument aside - it’s oddly convenient that they sincerely believe this is the option that is in Israel’s best interest, while it also happens to be the most politically correct option for them to endorse and defend. We should have all been more suspicious of this claim when it was floating around because it’s really two claims disguising as one. Targeted strikes apparently optimize for two things: Israel’s strategic goals AND minimizing civilian casualties in Gaza. In general, if someone tells you that the same action optimizes for two things, you should be suspicious.

Of course, one doesn’t need formal logic or proof to intuit this. This piece of advice implies the only thing stopping Israel from conducting targeted operations to destroy Hamas in the past was willpower - like Israel was a high school kid that just needed a slap in the face like October 7th to realize it should really conduct targeted strikes to remove the genocidal death cult at their doorstep. Israel always had an incentive to weaken Hamas by taking out leaders when it could reliably do so, as detailed by this glorious video footage.

This is perhaps not as convincing as it would have been in a world in which Netanyahu wasn’t seen as supporting the existence of Hamas to sabotage the dream of a Palestinian state. But this is overdone. Hamas has been more popular and exponentially more militarily capable than the Palestinian Authority for a while. The former deposed the latter in a violent coup in Gaza, remember? It would have taken serious military involvement from Israel to shift this balance of power. This might still have been a good investment for Israel but it’s ludicrous to claim that this wouldn’t itself have escalated and that these pundits wouldn’t be on air once again asking Israel to exercise restraint.

Some may argue that targeted strikes, even with some civilian casualties, would be less messy and garner more international support for Israel. This concedes that protecting Palestinian civilians may not always align with Israel's strategic interests. It appears that proponents of this view first considered what would minimize Palestinian civilian casualties and then sought to rationalize why it would also serve Israel's interests, often citing international reactions or public opinion.

Then comes my favorite: “An invasion is exactly what Hamas wants Israel to do so Israel should exercise restraint”. Pay attention to how this phrased. It could have been phrased “This will be good for Hamas” or “This will be bad for Israel” but instead they try to dangle in front of Israel the psychological satisfaction of not killing people that just killed and raped Israeli civilians. Isn’t this an argument to never respond to an unprovoked attack?

If what Hamas really wants is for Israel to fight them, then why are they bargaining for a permanent ceasefire now? And why did they release hostages in exchange for a temporary ceasefire? What Hamas wants is for Israel to fight, lose a bunch of soldiers and then be pressured by the international community to negotiate a ceasefire in which they also get thousands of Palestinian prisoners released. What they categorically don’t want is for Israel to stay and eliminate 95% of their fighting force. 

Okay, so maybe what the pundits mean is this instead: “If you go into Gaza, you might get in a long counter-insurgency battle or kill too many civilians such that the international community will pressure you to stop.” This is somewhat circular reasoning. You can’t use your position that Israel should try to minimize civilian casualties in Gaza as justification for the claim that Israel should do that. It’s as if these pundits and politicians are Israel’s therapists giving them advise on the margin, while holding exogenous forces of the “international community” constant.

Most importantly, this is a naive course of action. If Israel makes it clear that it’s going to be carefully targeting leadership, the easiest thing for Hamas leaders to do is temporarily exile themselves. This leaves the military infrastructure intact; still allowing them to fire rockets into Israel every now and then; all the while regrouping for another attack or waiting for the Israelis to cool off so that they can return. It leaves military infrastructure intact and the very fact that Israel would through its actions advertise targeted strikes as their strategy would end up making them much less effective.

Option 3: Israel could level Gaza (using mostly air power) to guarantee the elimination of Hamas, and kill hundreds of thousands if not millions of Palestinians

We assumed that Israel is an amoral actor. So, it theoretically could have done this. They would have lost fewer soldiers and presumably finished the job sooner but incurred collateral damage in the order of double-digit percentages (of Gaza's population). The fact that they didn't do this, assuming you think Israel has no inherent moral compass, is most likely due to reputational risks - losing US support or peace treaties with their neighbors.

At minimum, this is evidence that a significant part of Israel's payoff function is affected by these reputational considerations that arise from too many civilian casualties. This reputational cost always has to be balanced against the military advantages that come with being more callous. I'm happy to concede this. It is, of course, true that the option to wage war more viciously is a military advantage. It must be, like any other form of optionality, by definition.

Option 4: Do what it takes to decimate Hamas’ military infrastructure and take out a significant majority of its fighting force

This is what Israel ended up doing, and it's the only one that makes sense. One can argue on the margin about the pace of the invasion and the specific tactical choices. But just because one can argue about this doesn't mean one is well-positioned to evaluate this on its military merits.

Think back to Israel's incentives here. We have already established that reputational or diplomatic costs are part of its payoff function. At any point, Israel is balancing military benefits against these reputational costs since the latter increase the likelihood that they'd be pressured to stop fighting. Not only does it make zero sense for Israel to deliberately bomb a hospital or strike civilians, but it also probably doesn’t make any sense for them to send troops into a hospital unless the military advantage from doing so actually overrode the reputational costs.

This is the context within which one should inform their priors about things like Al Shifa or shooting at the aid convoy. Unless strong evidence to the contrary, you should believe that Israel went into Al-Shifa Hospital because they believed significant numbers of militants were seeking refuge there. And that the incident with the aid convoy was clearly either a mistake or bad apples. The institutional incentives say so.

With the blocking of aid trucks, it's true that the incentives that Israel faces aren't as clear. Aid is easily diverted and stolen by Hamas, increasing their viable duration underground. One could also argue that, more cynically, starving the population is one way to break the will of the people without whose support Hamas can't effectively operate. But this calculation is far from obvious. Even though the support for Hamas increased right after October 7th, it almost certainly decreased when Gazans had to reckon with the destruction caused by the war. In that context, it's plausible that being "nice" to Gazans on aid is a benefit to Israel and not a cost. I mostly see this one as a wash. In so far as the aid includes fuel, Israel has a strong reason to block it. Hamas doesn't have infinite fuel stores, which are necessary to sustain ventilation inside tunnels. So, since Hamas has every incentive to steal fuel and aid more generally, Israel has some opposing incentive to limit that.

Consider the present halt on the offensive in Rafah. Every day that Israel stalls on the invasion is a day that Hamas can use to regroup, strategize, or flee. The operation in Rafah has been on hold for over a month, despite popular support for it among the Israeli public. This is direct evidence of reputational costs being a part of Israel’s calculus.

Israel’s payoff looks something like this:

• Eliminate Hamas with no reputational cost: 100 (basically impossible)

• Significantly degrade Hamas’ infrastructure and leadership with some reputational cost: 70

• Ceasefire with Hamas weakened: 50

• Ceasefire with Hamas intact: 30

• Withdraw with Hamas intact: 0

Hamas’ optimal strategy

Conditional on Israel’s hands-on military operation in Gaza, how do incentives line up for Hamas? Leaving any assumptions on morality aside, Hamas are already international pariahs. They have no external incentive to care about playing by the rules of war or to reduce civilian casualties per se. One could argue that even though Hamas rules by force, all else equal, it’s better for Hamas to keep support from its population, as even dictators often seem to be inclined to do. However, all else is not equal. Israel’s invasion is an imminent existential threat to them, by far the biggest one they’ve ever faced. So, it’s completely rational to prioritize halting the Israeli offensive and worry about crushing internal dissent later.

As for the primary objective, they can’t hope for much more than halting the Israeli offensive. Neither Hezbollah nor Iran have done enough to give them a shot at shifting the balance of power. So, the most effective way for them to achieve this is to ensure that the international community pressures Israel to stop. The only plausible way to do that is to emphasize and exaggerate the human catastrophe in Gaza to elicit a visceral reaction.

Here is a plausible elucidation of Hamas’ payoffs:

• Unconditional ceasefire with military infrastructure and leadership mostly intact: 100

• Ceasefire with moderate military and infrastructure losses: 70

• Ceasefire with heavy military losses: 40

• Eliminated as a political and military force: 0

What does this mean?

The conflict between Israel and Hamas highlights a significant vulnerability in the international system, one that has implications far beyond Gaza. The global order is built on a set of norms and laws designed to constrain the behavior of states and promote peaceful conflict resolution. But these constraints only apply to those who participate in the system. When a conflict involves an actor that operates outside of these norms, it creates a fundamental asymmetry.

Israel, as a member of the international community, is bound by the rules of the global order. It is subject to the laws of war, the scrutiny of international institutions, and the court of global public opinion. These constraints shape its choices and limit its freedom of action, even in the face of provocation.

Hamas, on the other hand, operates by a different set of rules - or rather, by no rules at all. This gives Hamas a perverse kind of advantage. It can take actions that would be unthinkable for a law-abiding state, such as deliberately targeting civilians or using human shields. Yet Hamas can still leverage the rules against Israel, manipulating global opinion by provoking an Israeli response and showcasing the inevitable civilian casualties.

Crucially, despite the intense scrutiny and condemnation Israel faces, it has not been found to be in violation of international law in its Gaza operations. However, many politicians and commentators act as if it has, marring Israel's reputation and effectively kowtowing to Islamofascists and far-left activists in their own countries. This sends a troubling message to other nations and allies facing similar asymmetric threats, like India and Saudi Arabia. It suggests that adhering to international norms is a handicap rather than a virtue, and that the way to gain support is not to play by the rules, but to subvert them.

This is the challenge the Gaza conflict poses for the international order. It's not just about Israel and Hamas. It's about whether our system can adapt to the reality of asymmetric conflicts, whether it can find ways to support those who adhere to its norms while still holding wrongdoers accountable. The future of a rules-based international system may well depend on getting this balance right.

I recently got back from one of my longer trips to India. While staying with my parents, I used the gym in their condo when I could muster the requisite willpower. One of those days, as I struggled to neutralize the holiday fat, three cleaning ladies showed up to clean a gym not much larger than my living room in New York City.

They came equipped with brooms and ragged pieces of cloth that looked pretty suspect. They then proceeded to smack at different equipment with the dusty cloth and haphazardly swept the floor. There was no strategy or division of labor that made sense, just a resolve to keep themselves busy for a few minutes. No cleaning liquid or disinfectant was used. The gym looked no cleaner to me right after.

One more incident comes to mind. My girlfriend and I arrived at a hotel in a smaller city in time for their lunch buffet, which was supposed to start at 12 pm. But we were told to come back at 12:30. When we came back, they asked for “a few more minutes”. As I waited, I realized that the food looked ready to go. When I enquired once more, my voice dripping with impatience, I was told they were “just waiting for the mocktails to come out”. We couldn't have cared less about the mocktails, and nor could the ten other famished clients. When I told him so, he opened up the buffet.

In both cases, it’s obvious that these workers are being much less productive than they could be. For pretty much the same amount of time and effort, the gym could’ve been much cleaner, and the hotel guests could’ve been much more satisfied with their experience. In both cases, these workers weren’t shirking or being lazy. I also wouldn’t attribute it to skill levels per se. There are no pre requisite skills to be a gym cleaner - most people can do it, and I don’t have reason to believe the workers’ IQ or education level would be relevant if they were given the most basic training, or if they had ever had jobs before where they were given the most basic training.

Similarly, with the waiter at the hotel buffet - he spoke English well enough and seemed to understand the basics of logic and decency. The problem was two fold: he didn’t manage expectations by giving us a fair estimate of wait times; and that he didn’t feel empowered to make reasonable judgement calls to accommodate clients’ needs. Perhaps this also points to a lack of appreciation for his objective function - ensuring that clients are happy, and more likely to either return or recommend the establishment to others.

Now, we also enjoyed some of the best service and hospitality in India - especially while interacting with employees of VC backed startups, multinational companies etc. But it’s probably true that one can expect many more of such “unforced error” type situations in the developing world. , who spent a couple of years in Malawi, told me waiters routinely failed to mention if something on the menu was unavailable. They would sheepishly admit it wasn’t after bringing everyone else’s food out. These anecdotes have one thing in common: they demonstrate the impact of relatively soft and intangible things like culture and management practices on productivity, which is often less appreciated. Consider how one interprets a result below:

Indian workers in the US earns ~6x as much as their counterparts in India. Note that this result controls for not just traits such as education level and age that seem directly relevant, but also “implicitly controls for nationality-specific characteristics that affect productivity in the US (e.g. culture, language) and the quality and relevance of a country’s schooling to US labor market outcomes”1

First things first, we should note that this result applies more directly to skilled workers. But the insights generalize. Why is a worker with identical potential and skills paid significantly more in the United States? The study looks at wages adjusted for purchasing power, ruling that out as the explanation. It must thus be the case a worker can either produce more or produce better quality output in the United States.

Another way to restate this is that an employer in the US can squeeze out much more value from this worker than an employer who would employ him/her in India. One relatively uncontroversial mechanism is technology. Technologically advanced countries use more technology, which acts as a force multiplier on every unit of labor. So even if workers do nothing substantially different except learn to use these tools, they can multiply their output, create more value and capture part of it for themselves. For example, if that same cleaner moved to America, she would be given a vacuum cleaner which would allow her to do what three cleaners could in India, only better.

But we forget that advanced nations are also good at more intangible types of social technology - better training, management practises, efforts to align incentives etc. More importantly, each worker that moves to the US has the benefit of working with other people, who have all benefited from this better paradigm over the years.

Imagine that waiter from the lunch buffet came to America. Perhaps he’d be given training on hospitality that helps him develop a customer-centric view of his job. But even if he isn’t given any training, he would probably learn from people around him who seem to be more agentic and adaptive to client requests. He would probably notice that his colleagues routinely muster the courage to convey accurate information to hotel guests, even when momentarily unpleasant. But even if he didn’t learn naturally, his incompetence would probably stand out more in his new work environment. He’d be given feedback and a plan to improve his performance.

Regan also convinced me that there’s more to this than just bad management. In these interactions, we observed evidence of timidness and a lack of agency, that Regan hypothesizes has to do with classism and history of rigid social hierarchies. In India, the vestiges of feudalism are palpable. People at the bottom of the hierarchy have internalized the longstanding expectation that they ought to behave subserviently at all costs. It’s the difference between treating the customer as someone you want to please for transactional reasons, and viewing them as belonging to a superior class of people, who must not be contradicted or even disappointed.

It would also be naive to think that this is one way street. Employers and managers probably hang on to these beliefs too, likely exhibiting a lower tolerance for dissent and a preference for more hierarchical organizational norms that not only inhibit worker productivity but also pose barriers to information flow, which adversely affects quality of decision-making. This has a self-fulfilling component, since low productivity by employees - be it due to IQ and education levels or organizational culture, is taken as further evidence of their incompetence.

In developed countries, labor is more expensive. But this also means more of an incentive to make them as productive as possible, by equipping them with technology and motivating them with incentives. When we say labor is cheap in a country like India (relative to the US), it’s important to recognize that is also implies lower demand for labor- fewer organizations and employers that can use labor as productively as possible. In wealthier countries, more capital is allocated more efficiently to projects led by more skilled managers that can best identify and utilize inputs, including labor, to produce what’s most valuable for consumers

This is all facilitated by better institutional quality - the rule of law, enforceability of the contracts etc. This is the top down view of it all. Better institutions lead to lower expected losses from security concerns, unfair competition, government interference etc, resulting in higher expected profits and more risk-taking. Successful firms are selected under intense competitive forces for their ability to generate more value per unit input through technology and management practices. Individual employees are thus more productive in these systems, and are able to internalize some of that increased productivity through higher wages.

However, as economist Garett Jones points out, better institutions don’t just happen by accident. Institutions affect markets and culture; but people also shape institutions over time, especially in democratic countries. This is why protectionism is so bad for countries like India. Mobility of capital and labor does more than making smartphones more affordable for Indian consumers. It raises the productivity of the workforce, through these soft, less observable phenomena in addition to transferring tangible skills and technology. Capital and people from more productive countries are conduits for norms and practices that can provide countries the necessary escape velocity for better institutions and a more prosperous future.

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I lasted just 18 months in my first job at JP Morgan, where I was supposed to help bankers manage money for their uber-rich clients. "Help" is too strong a word, since they didn't seem to think I was contributing much at all. My resignation was a response to a Performance Improvement Plan, a corporate euphemism for "shape up or ship out."

Contrary to what my title suggested, the job was 0% "analyzing markets" and 100% keeping track of processes, documents, and client requests. I can't overstate how objectively bad I was at all of it. I didn't show up to the office on time, develop a system to track deadlines, or clear my mailbox effectively. In an industry ridden with regulatory compliance requests, my lack of attention to detail added fuel to the fire. I repeatedly failed at the most basic tasks and couldn't find it in me to try any harder to improve. Years later, but unsurprisingly in retrospect, I was handed an ADHD diagnosis, a couple of decades overdue.

Regardless of the underlying reasons, I was always ambitious but not particularly conscientious. This has been a handicap for most of my career, but also a blessing in disguise. A conscientious person underperforming and miserable in an entry-level banking job would instinctively try harder until achieving basic competence and finding a baseline level of peace, albeit not happiness, with their situation. My approach was to put in some effort, but not enough, until it all came crashing down. This turned out to be an adaptive strategy, as my incompetence propelled me from one job to another until I found a role where my strengths more than compensated for my weaknesses.

I later discovered that most of my more conscientious peers experienced a foreign failure mode. Years later, they had climbed the ranks at their first company or moved to a competitor in the same industry. While impressive to me personally, as I could never have done this even if I wanted to, I’m skeptical that the randomness of the "spray and pray" process used to land one's first job effectively maps them to the career path that best leverages their strengths.

Almost by definition, highly conscientious people are probably decent enough fits for many more career paths. They probably have an easier and consequently better time in jobs that aren't a perfect match for them. So one could argue that the incentive to go around looking for better paths is somewhat lower. But it's unlikely that this behavior is rational, given the role that inertia and status quo bias play. As highlights in her essay on quitting:

This is the issue with grit. It can get you to stick to hard things that are worthwhile, but it can also get you to stick to hard things that are no longer worthwhile – like after your fibula snaps at mile eight. Throughout our lives, it turns out we are not very good listeners when the world tells us that we should stop.

There are a host of reasons why we ignore obvious signals to quit, not the least of which is that quitting has a nearly universal negative connotation. If someone called you a quitter, would you ever consider it a compliment?

The sunk cost fallacy and status quo bias are closely linked - we are famously bad at cutting our losses and moving on, since it means actualizing the loss and leveling with momentary unpleasantness. The prospect of deferring this unpleasantness by doubling down will never cease to be appealing, especially when quitting also induces uncertainty, another one of our renowned enemies. Given that the decision to quit is like stepping into a quagmire of biases, you should be skeptical of whether your decision to carry on is really a rational one, especially if you have built your identity around resilience or “doing hard things”.

Voluntary or not, quitting paid off for me. At JP Morgan, hours spent in the office were clearly net negative to my conscious experience. Now, work is so comfortably net positive that the only reason I don't describe it as "enjoyable" is to refrain from being annoying to friends in less enviable jobs. The difference might be less stark for some people, but it's easy to underestimate the net present value of a better fit. Even in a 9 to 5 job, work constitutes about a third of your waking life. Moreover, careers are long and most people I speak with are barely a quarter of the way through, and the rewards of modest improvement can be larger than they seem.

Some might worry about the forces pushing in the opposite direction, questioning if we're sometimes too quick to give up or if we should be concerned about our quest for novelty. It depends. My fiance, who happens to be one of these high C people, was not remotely worried that a quest for novelty was behind her desire to quit. It’s a much more rational worry for someone like me, who has had trouble sticking with things and completing projects. But even so, choosing the wrong career is a ridiculously expensive way to build a habit of sticking through things.

This is why young, talented people, regardless of ideology or philosophy, should take a leaf out of the Effective Altruism playbook. In the past few months, I've spoken with over 50 people, mostly early in their careers, about half of whom identify as EAs. On average, EAs seem more willing to approach their careers "like scientists," as 80,000 Hours puts it, testing one hypothesis at a time while being mindful of overstaying. This mindset is not only socially accepted but considered wise in EA circles, and EA organizations are more inclined to hire based on potential, placing less emphasis on directly transferable experience, provided the candidate shares their values. (Note: I’m not necessarily endorsing this from an organizational effectiveness standpoint)

Regardless, the younger you are, the stronger the case for ruthless hypothesis testing. I've never done this hardcore version myself, since my flaws did the work for me, but I'm bullish on the idea of young graduates adopting a self-enforced policy of "Quit in 12 months unless this job is a great fit." This changes defaults and guards against status quo bias. You can be confident that you're not quitting "only because it was hard." If you decide to stay, you owe yourself an explanation; if you quit, you don't.

I recognize this is easier said than done. Parts of the corporate world can be overly resume-focused, often without good reason. Interviews might question why you "jumped around so much." Quitting also means giving up linear growth opportunities on your initial path. It might involve starting a soft search for your next role a few months into your current one. As a society, we should certainly do more to facilitate this kind of career exploration for our brightest minds.

Ultimately, enjoyment and competence are likely correlated (barring edge cases like your friend's mediocre guitar playing). Unless you were destined for the pinnacle of your first or second job, losing a couple of years seems a small price for exploring options that could vastly improve your life and career. As the CEO of your life, recognize that most of the value lies ahead. When you're young, your job is to identify paths that maximize this value.

About the newsletter

In Optima & Outliers, I'll be digging into the big questions about talent, innovation, and progress that keep me up at night. From the micro-foundations of agglomeration effects to the impact of LLMs on productivity, each edition will investigate the ideas, institutions, and incentives that determine how talent is identified, developed, and deployed.

About Me

Vaishnav manages Probably Good's 1-on-1 career advising service and is part of MIT's Sculpting Evolution group (now SecureBio), working on global catastrophic biorisk reduction. He holds an MBA from MIT Sloan and an undergraduate degree in Computer Science from Nanyang Technological University (Singapore).

This is because capitalism only needs one thing to work - rational self interest. If each actor can be presumed to want to be better off, and the path to making oneself better off necessarily flows through making others better off through consensual transactions, then “betterment” is sort of embedded in its natural logic. Each actor need only worry about what makes them individually better off.

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On the contrary, effective philanthropy necessitates not just identifying market failures but also estimating how different solutions will affect aggregate social welfare. Companies and startups receive real time feedback whether they like it or not. People either buy your product or they don’t. Nonprofits have to make sure they are measuring the right thing and measure it, even when there’s no “profit” incentive to do so for anyone involved. 

When we enter the domain of important but relatively hard-to-measure problems (eg. improving governance or institutions), one has to rely on a priori reasoning and guard carefully against cognitive biases. But it can still be worth trying, if the risk of unintended consequences is low enough. In other words, philanthropy can be great, if you try really hard to follow reason and evidence, and set up structures, incentives and cultures that make it easy for others to do so as well.

After spending some time looking through how Mackenzie Bezos chose to give away $17B, I’m convinced that she very likely did not do this. My claim is that Mackenzie Scott clearly spent her money sub-optimally for any conceivable set of consistent values and goals. I believe it was a mistake to give at the speed she gave, because it’s virtually impossible to find enough cost effective opportunities that can absorb $17B over the course of two years. I also think there’s a reasonable chance that it would have been better for her to do nothing.

However, I want to start by giving Mackenzie some credit. I think it’s generally good to be public about your philanthropy, since it likely encourages others to give more. Humility might be a selfish, overrated impulse in this domain. I’m also glad she made her giving public, which I believe is a good precedent to set. But it’s not enough that we encourage a culture of giving, since there’s nothing inherently good about giving. Giving is good if your giving ends up helping people more than if you hadn’t given. And that’s the only type of giving worth encouraging.

How do we know MacKenzie is granting on “vibes”?

This twitter thread by Alex does a good job of making the prima facie case. Mackenzie’s process involves “quiet research” and open calls. If you’re confused about the former, it means doing desktop research and coming to a grant decision before establishing contact with the organization, in order “to avoid diverting them from their work”. In other words, no detailed due diligence. So what does this desktop research entail:

Evaluate organizations through careful analysis of criteria specific to their size, geography, and mission for indicators of high potential for sustained positive impact, including stable finances, multi-year track records, measurement and evidence of outcomes, and experienced leadership representative of the community served 

Mackenzie’s evaluation criteria

They evaluate organizations. What do they evaluate them on? On important criteria. Important for what? Important for sustained positive impact. Ok, I’m being unfair. They do mention four indicators, but three of these have serious problems or inconsistencies:

1. Stable finances

The meaning of "stable" in this context is unclear. If it refers to being "well-funded" or having fewer funding shortfalls, it's questionable why this criterion is at the top of her list. In theory, philanthropists should seek out opportunities with high counterfactual impact—projects that wouldn't have been adequately funded otherwise. However, the presence of other funders can also serve as a positive signal, indicating that the organization has undergone due diligence and gained the trust of other donors.

This is similar to how venture capitalists often co-invest alongside other reputable funds, relying on the collective wisdom of the market. However, there's a crucial difference between the incentives of philanthropists and investors. While investors are primarily motivated by financial returns, philanthropists may have various reasons for giving, such as personal fulfillment, social status, or genuine altruism. As a result, following other philanthropists' lead may not always align with maximizing impact for beneficiaries.

Moreover, as one of the world's wealthiest individuals, MacKenzie Scott has the unique opportunity to identify and support promising but underfunded organizations. By conducting thorough research and due diligence, she could have uncovered hidden gems and catalyzed their growth, encouraging other donors to follow her lead.

2. Measurement and evidence of outcomes

Great, Mackenzie seems to want to fund organizations that diligently measure and track impact. However, it’s very unlikely that they screened organizations rigorously on this metric. For this to be possible, these monitoring and evaluation practices would have had to be public or easily available in some other way.

Consider Girls First Fund, a grantee that received $15M from Mackenzie (which is on the larger side of the check size spectrum). Girls First Fund, in turn, writes checks to smaller grassroots organizations, with the aim of reducing child marriages, primarily in South Asia and Africa. Look through their annual report, and you’ll find no evidence of their impact on the ultimate beneficiaries - how many women they reached, how these women were helped, and how many child marriages were averted in expectation.

The “evidence” is instead centered around how much money they managed to spend and how many “women-led” organizations they funded. That gets us no closer to understanding how many child marriages they are likely to avert in the future, which is what we should care about, correct? Even if the outcomes are difficult to measure, the annual report could have but did not contain other qualitative signals that they take impact seriously - perhaps how they vet the grassroots organizations or a fleshed out theory of change section. So either the quiet research wasn’t very quiet or it wasn’t particularly rigorous.

3. Experienced leadership representative of the community served

Visit Mackenzie’s website and you’ll see this point retierated in several places. Below is an excerpt from her essay referring to a previous, smaller round of giving:

On this list, 91% of the racial equity organizations are run by leaders of color, 100% of the LGBTQ+ equity organizations are run by LGBTQ+ leaders, and 83% of the gender equity organizations are run by women, bringing lived experience to solutions for imbalanced social systems.

It's hard not to notice that focusing on leadership representation is a great tool for signaling one's commitment to diversity and inclusion but what is its likely impact on beneficiaries? Even if you concede that in some theoretical sense, organizations serving “underrepresented” communities are best served by organizations led by someone from precisely that demographic, making this an important scoring criterion seems like a bad idea.

This should follow fairly straightforwardly from the fact that you think these communities are “underrepresented”. Presumably, this has implications for the preponderance of human capital, especially senior management talent. It’s preposterous to claim that systemic racism keeps people from skills acquisition and being represented in the upper echelons of a variety of professions, while insisting that these communities must produce the leaders with the requisite skills, experience, and networks to run all the organizations that meaningfully impact these communities.

Such insistence necessarily implies trade-offs that lower the expected impact of your philanthropic portfolio. If you’re hiring someone to run your business and you only hire from, or give extra points to, applicants from your family, community or even country, it’s less likely you’ll find the best person for the job. Insofar as one believes CEOs and senior management have significant impact on the success of a nonprofit, imposing additional scoring criteria that don’t track probability of success will detract from that goal substantially. This is especially true if the community in question is underrepresented, because there are fewer such people, per capita.

If anything, a preference for a significant proportion of employees or field staff being drawn from the beneficiaries’ community is more reasonable. One could argue that this has important implications for building trust within the community, which can impact the quality of feedback and the ability to deliver services that the beneficiaries are actually happy with. Even if you believe leaders from other ethnic backgrounds couldn’t possibly care as much, the obsession with representation in leadership makes no sense in a world in which people can be paid and incentivized to act as fiduciaries.

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Mackenzie’s focus areas

As Alex points out, one of the bigger clues for “vibes” based granting comes from looking at the top focus areas (by $ amounts). It looks an awful lot like what someone would fund if their only source of information about the world’s most important problems came from corporate social responsibility (CSR) brochures. At the level of identifying and allocating to different causes, this particular allocation seems inconsistent with any coherent set of values.

If Mackenzie’s goal was alleviating suffering or mitigating the worst injustices of the birth lottery, a lion’s share of the funds should have gone to beneficiaries in the third world. Out of Mackenzie’s disclosed grants of $12B, $10.5bn (~87%) went to charities with US only operations. To put things in context, consider this - India was recently in the news for eliminating extreme poverty. Only 2% of Indians - 28M people - now live on less than 2$ a day or $700 a year (purchasing power adjusted). In contrast, in America, only about 200,000-300,000 fall below that threshold (some claim even that figure is an overestimate). More than 700M people live below that threshold globally, most of them concentrated in Sub-Saharan Africa and South Asia. If you want to help the have-nots, I would think that allocating roughly 90% of your funds towards helping Americans would be a mistake, even if you do have some special obligation to help Americans more.

I’m not claiming that alleviating poverty in the developing world is the only noble philanthropic goal. Since innovation is concentrated in the United States and a handful of other countries, and innovation has large positive externalities/spillover effects, you could argue that it’s in humanity’s long term interest to be funding R&D efforts in the first world, especially those that the market wouldn’t otherwise fund. That would be a strategy that’s much less quantifiable relative to increasing vaccination rates in Africa but not clearly inferior (conditional on the details of execution and which technologies get funded). However, Mackenzie doesn’t seem to have done much of this. The keyword ‘innovation’ finds 35 matches in Mackenzie’s giving database, and all of those pertain to “innovations in equity” or funding “innovation centers” for underrepresented communities, not funding projects at the frontiers of science and technology.

Perhaps Mackenzie focussed on the US because she believes social and political stability in the US is the important cause, lest the whole word be thrown into disarray; and that social justice and racial equity are pre-requisites for a stable soceity as she alludes to here:

Like many, I watched the first half of 2020 with a mixture of heartbreak and horror. Life will never stop finding fresh ways to expose inequities in our systems; or waking us up to the fact that a civilization this imbalanced is not only unjust, but also unstable.

When it comes to pursuing systemic goals like “improving social mobility” or “strengthening democracy”, people argue that our inability to measure it accurately should not be a reason to not pursue them. I mostly agree. But the problem is that we don’t really know how to bring about systemic changes. This is almost by definition since “systemic” necessarily implies a web of complex and interdependent processes and relationships. Our democratic and bureaucratic institutions are large scale coordination problems (or prisoner’s dilemmas if you will) among thousands of stakeholders with different interests and preferences. Systemic change involves being able to move everyone towards a new equilibrium.

The answer to this need not be apathy. It’s ambitious but reasonable to say “I have $17B and I’ll pay people to figure this out”. However, intent is not enough. One has to be able to decompose the problem to make it tractable. Perhaps this means identifying the most tractable levers for change; or honing in on policies and laws that cause the most harm to the communities you want to help. If anything, this undertaking requires more focus on prioritization and a willingness to research, experiment, monitor and iterate.

This post would’ve been a lot shorter if all I disagreed with was Mackenzie’s priorities. But even if all that Mackenzie cared about was making African Americans better off, I don’t see strong evidence of a resolve to bring that future to fruition. Mackenzie sure has written checks to a bunch of black colleges and nonprofits focused on issues that affect the black community. But she doesn’t seem to have a broader theory of change or strategy that underpins her donations. In all her essays and across the content on her website, I didn’t encounter any material on prioritizing between issues that affect these underrepresented communities or discussion of the relative tractability of different problems and methods.

I’m not convinced that Mackenzie would have a good answer to a question like “Why did you donate $50M to housing reform and $100M to education? And within housing, why did you prioritize an org that works on X policy over Y policy?” My guess is her answer would take us back to her evaluation criteria - of track record, representative leadership etc. But anyone who’s committed to doing good should be able to draw a straight line between the world they want to see and how their donations will bring that to fruition. That seems blatantly absent.

Mackenzie’s insistence on giving fast

The question of philanthropic timelines, at least in its abstract form, is mostly a macroeconomic one. On the one hand, deferring philanthropic grants means they could be larger grants in the future, if your money grows with the market. On the other hand, philanthropic opportunities to do good will (hopefully) be scarcer and more expensive in the future, as diseases are cured, wealth is generated and the secrets of well-being are unveiled. But this argument is more about whether one should try to give away money in this generation or save it for humanity’s future problems. (I’d recommend Phil Trammel’s work on this). But even if you do decide to give away your fortune within your lifetime, it’s very unlikely you can give away over $6B per year cost-effectively for two or three years, as Mackenzie has.

In 2022, GiveWell, the organization that’s widely known as the gold standard for identifying and directing funding towards cost-effective charities in the global health and well-being space, set out to raise $600M but identified $900M of highly cost-effective opportunities. The remainder is what GiveWell calls its funding gap - or the additional amount it can move cost-effectively but couldn’t due to lack of funds. GiveWell is dedicated to finding new cost-effective opportunities every year, but it seems unlikely that they would have been able to move even a fraction of Mackenzie’s 17B over three years.

This is because virtually no high impact organization can absorb arbitrarily large amounts of cash and maintain their cost effectiveness. (much like successful hedge funds that cap the size of their funds). This is mostly a function of diminishing returns. If an organization has been implementing a cost effective SMS campaign to raise awareness about the benefits of vaccination, perhaps the first tranche of additional funding would help them expand and cover the entire country they’re operating in. Once they’ve sent text messages to every family in the country, they need to figure out a different way to reach people who weren’t already persuaded, which is likely something higher touch and more expensive (and less cost effective). At some point, they may expand to a different country and seek to improve vaccination rates already at a much higher base and so on. Moreover, as charities get larger and expand, the problems of coordination and bureaucracy chip away at cost effectiveness.

Absorbency is a concern - perhaps even more so - if your philanthropic interests are in areas that are far less measurable or quantifiable. If you’re funding research into some new promising area, you can only spend funds effectively if you’re sensitive to feedback loops that tell you whether certain research directions are promising. This probably means a phased deployment and waiting for results of Phase 1 before you move on to Phase 2. Hiring 10,000 researchers right away to work on a new promising area is likely to be mostly wasteful if all it took to uncover bottlenecks were 5 researchers and the incremental funds were best spent on engineering teams to work on those bottlenecks.

So what could be a justification for ignoring these concerns and giving tens of billions within a couple of years? One possibility is the belief that the scale of human suffering currently is so unconscionable that we can’t afford to think about the future or anything else. As I pointed out earlier, if that were true, there is no good reason to prioritize America over the rest of the world. You should be almost exclusively focused on the developing world. Another possibility could be a focus on catastrophic risks (eg . risks from pandemics or artificial intelligence). If one is convinced these are significant and imminent, it could make sense to pour all your funds into it. But you still have to find opportunities to effectively turn money into risk mitigation. 

Given her allocation however, it appears that Mackenzie believes the suffering of black, hispanic and female Americans is so intense and urgent that it overrides every other problem in the world. Even if you accept that premise, you have to ask what the best ways of helping these groups are. Unless you're willing to just wire "deserving" Americans their share of your fortune and call it a day (which might’ve been better than what Mackenzie did), you can’t keep this pace unless you prioritize giving fast rather than giving effectively.

Would it be better if Mackenzie did nothing?

You can’t stuff $17B under your mattress. So doing nothing here entails investing in a diversified portfolio - primarily bonds and stocks, but also likely including smaller allocations to real estate, hedge funds and private equity.

It’s not exactly fashionable to tell billionaires they should hoard their money. But absent great philanthropic opportunities, they probably should, at least for now. This is true even though the additional dollar has virtually no impact on Mackenzie or any billionaire’s well-being, because capital is the fuel that the process of capitalism relies on to keep producing welfare as its side-effect. All else equal, when Mackenzie’s advisor buys Company A’s bonds, it helps company A borrow at a slightly lower rate that helps them take slightly higher risks and produce slightly cheaper products for consumers. More so because capital is a renewable form of fuel. Insofar as Mackenzie’s competent advisors make her a solid risk-adjusted return, her wealth will keep growing, and can be reinvested ad-infinitum, contributing to the capitalistic engine. To top it off, if amazing philanthropic opportunities come by, she can liquidate some of these investments to write even more generous checks.

I can feel the retort coming. Well, when Mackenzie writes checks to these non-profits, even if the non-profits don’t end up helping the beneficiaries in some tangible way, isn’t she helping pay employees and transferring wealth from herself to people who need it more than she does?

Yes, she is. But virtually anything she does with this money is likely to do that. Assuming the wealth generated will at some point be consumed, this consumption will go towards employee’s salaries and vendor’s business accounts before it continues to circulate further in the economy. Imagine Mackenzie gave her son some of her money and he decided to buy a Lamborghini with it. Her son thinks it’ll make him happy but it doesn’t. But the money still flows through the company’s income statement and pays for employees and vendors before the surpluses end up ultimately being distributed to the shareholders.In fact, there’s a case to be made that buying products from companies with profitable business models is better than funding non profits that have little impact but that’s for another day. 

I can’t prove to you that Mackenzie would have been better off buying Gucci bags and Lamborghinis. I’m also not claiming that Mackenzie is worse than the median philanthropist. I’m glad that she donated $50M to GiveDirectly for example, one of the few organizations that can absorb large amounts of capital without diminishing returns. But these decisions seem like a natural consequence of spreading her money across thousands of nonprofits, some of whom will no doubt have a positive impact on the world. When you have $17B at your disposal, you have the ability to envision a new world, use your resources to answer questions that have never been answered, and pay the right people to turn those answers into better lives. Unfortunately, giving fast and giving publicly took precedence over that admittedly more difficult yet impactful path.

Rory fell back on his "lived experience" in Muslim communities, suggesting that Muslims are diverse, heterogeneous, and mostly just normal people trying to live their lives – all of which isn't disputed by most reasonable people. In fact, as Sam Harris tries to point out, it's people who are keen to exonerate Islam that might be forced to attribute pernicious Islamic laws and norms to something "inherent" about Muslims as people.

Their conversation, though frustrating, provides a framework for identifying key points of contention. Here, I intend to tackle three questions: Is Islam a meaningful variable when analyzing geopolitical risks, terrorism, and threats to freedom and human rights? How seriously should we take the theocratic aspirations of Islamist movements, and what are the implications for free societies? And finally, how can we foster an environment that encourages reform within Islam and empowers liberal Muslims to speak out against extremism?

The wrong question: Who gets to define Islam?

Rory Stewart: I concede that there are versions of Islam that are problematic. Groups like ISIS, Hamas etc. are mostly horrible. And you can’t understand them without understanding the strong religious motivations that underpin their ostensibly crazy actions. However, I don’t think there’s just one Islam. There are many different Islams - why do you let ISIS or the Ayatollahs in Iran define what Islam is rather than Muslim clerics who disavow violence and advocate peace?

Rory, and people in his camp, often respond to descriptive claims about Islam and Muslims with normative arguments about whom they would like to empower to define Islam as a religion. This line of thinking is not too different from the argument of some liberal women that mainstream feminism is really stupid these days, but real feminism, which they have the authority to define, is really good actually. But these discussions elevate the theoretical above the actual. If most people calling themselves feminists and making careers as feminists have bad ideas, at some point we need to be able to criticize feminism (à la Bryan Caplan). For a more extreme illustration, imagine you’re in the late 1930s, trying to make the case that German nationalism is problematic, citing the rise of antisemitism, subversion of political norms and an ideological obsession with reclaiming national pride that is likely going to lead to bad outcomes. Your debate opponent responds with the following:

“I agree that German nationalism can be problematic and has problematic elements, and I’m no fan of the Nazi leadership. But there are plenty of decent people who love their country and want to see it rise and prosper, and support peaceful means to get there. Why not empower the good actors to define what it means to be a German Nationalist?”

Your beliefs about who should get to call themselves the real German nationalists doesn’t change facts about the current momentum and character of an ideology, the power structures that control the dissemination of that ideology or the relative popularity of good and bad ideas within it. Now, there may be times, perhaps like at the end of World War II, when the Allies probably did want to empower liberal Germans to redefine German national identity, after having completely dismantled the previous system.

But if you’re having a debate in the 1930s about the source of all the worrying developments you see around you, pointing a finger at a particular ideology obsessed with righting historical wrongs and ensuring German revival would be a pretty good place to start. Similarly, arguing about what constitutes “real Islam” is futile, since the point of this exercise is not to judge Islam in some abstract way. It’s to identify the common variable that’s driving the cluster of bad outcomes/behaviors that we’re concerned about in a hope to point us to the right solutions.

Is Islam the right variable to focus on?

Now one could reasonably ask - Is Islam even the right variable to hone in on? One can find examples of reprehensible behavior by Muslims that is not attributable to Islam, for example the horrendous practice of female genital mutilation. Female genital mutilation (FGM) is prevalent in many Muslim countries. Yet, one can find little justification for the practice in the Quran. More importantly, the countries with the highest prevalence rates are heavily concentrated in North Africa, and many non-Muslim tribes and countries in this region also practice it. If you aimed to identify the causal drivers of this practice impartially, your focus would shift from Islam to the cultures and traditions of African tribes in the region.

Unfortunately, for a whole basket of other problems, Islam, the religion, seems to be a reasonable variable to drill down on. One such problem is rates of political violence and terrorism. Rory’s instinctive response to this is to claim that most of the violence in the world doesn’t have much to do with Islam; and that he doesn’t see Muslim regions of the world as that much more violent than non-Muslim regions. This is either vague enough to be meaningless, plainly false or attacking a straw man. If he means that Islam as a variable doesn’t explain most (>50%) of the variance in violence and war globally, that’s obviously true. But no one variable can explain most of almost any complex phenomenon.

I ran a quick regression to check how levels of violence within countries correlate with the presence and influence of Islam within a country. I used the Global Peace Index developed by the Institute for Economics and Peace, which scores countries on levels of violence, as the dependent variable, and proportion of the population that identifies as Muslim as the independent variable. We can explain ~16% of the variance in levels of violence within countries using the % of Muslims in the population.

How much better does per capita GDP do at predicting violence - lower levels of which most people would intuit correlate with higher levels of violence. Slightly better, but not by much - it explains about 19% of the variance in global violence. The proportion of Muslims within a country only explains 5% of the variance in per-capita GDP between countries. So it’s not just that Muslim countries tend to be poor and poor countries tend to be violent. If you’re unconvinced, try to think of other variables that might yield a stronger correlation. I doubt % of Christians would do it, or any other religion for that matter. Perhaps some measure of democracy might do better (but the potential for reverse causality is high there, since countries that are violent are unlikely to develop democratic institutions)

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The claim that gets thrown around then is that radical Islam is to blame, not the religion per se. But what exactly does the term “radical Islam” refer to? It’s not a special sect within Islam or some category that can be neatly separated from the rest of the religion. It’s just what we use to refer to members of Islamic groups who do bad things in the name of Islam. It’s true that some revivalist strains of Islam, like Salafi Islam, which originated in Saudi Arabia and advocates for returning to the 7th century life of the Prophet Mohammed, have radicalized previously moderate Muslim populations, in places like Malaysia or Kerala, India. But these moderate Muslim populations were able to be radicalized because the tenets of Salafi Islam have ample support within the text of the Quaran, which they already accepted as unassailable.

But the problem is not limited to the Saudi export of Salafi Islam. A majority of the religious fighters that formed the Taliban were drawn from Deobandi seminaries, a strain of Islam which has its roots in 19th century South Asia, and the greatest geopolitical threat that Islam currently poses is in the form of the Islamic Republic of Iran, which has not only birthed several hardline Shia militant groups like Hezbollah, but has also formed coalitions with Sunni groups like Hamas in an attempt to unite against the infidels.

A common counterargument is that Western foreign policy, rather than Islamic ideology, is the primary driver of Muslim violence worldwide. Notice that conceding this argument doesn't make much of a difference. No one is arguing that Islam doesn't interact with other forces in the world, or that it is monocausally responsible for all these ills. The claim is that given contact with the outside world and perceived grievances like oppression, invasion, or humiliation by non-Muslim powers, Islamic doctrines makes it much more likely that these grievances are channeled into violence, with worse expected outcomes.

More importantly, if the motivations were purely political, we wouldn't see second and third generation Muslim immigrants in the West, who enjoy political freedoms and economic opportunities, being drawn to jihad. The 7/7 London bombers and the perpetrators of the Paris Bataclan attack, for instance, were citizens of democratic countries, not people under direct foreign occupation.

We also wouldn't see the cavalier willingness on behalf of Islamist groups to murder Muslim civilians en masse, particularly Shia Muslims and other religious minorities, who had nothing to do with Western foreign policy. The prevalence of sectarian violence and the targeting of "heretical" or "impure" Muslims points to the significant role of religious ideology in justifying and directing terrorism, beyond mere political grievances with non-Muslim powers.

It thus seems clear that Islam, as a religion and ideology, is a significant variable that cannot be ignored when analyzing the drivers of political violence, terrorism, and sectarian conflict in the modern world.

Disagreement #2: How much of a geopolitical threat does Islam and Islamism pose?

While it’s true that Islamic terrorism isn’t the most likely source of catastrophic geopolitical risks, it’s important to remember that the world we live in now is a function of our efforts since 9/11. We decimated Al-Qaeda’s leadership and infrastructure, and stopped ISIS in its tracks, precisely because we took this threat seriously. As Richard Hanania argues in his piece on the American Empire, we can’t use statistics from today’s world order to argue for a live and let live approach with Jihadists, which would very likely produce different outcomes.

There are at least two good reasons to be worried about political Islam on the geopolitical stage. The first is its sincere imperialist aspirations for a global caliphate. This aspiration for political conquest and expansion is not a modern aberration within Islam, it's the continuation of a trend that started with the life of Mohammed and gained much more traction after his death, with Islam expanding and conquering large swathes of the old world. Even if Jihadi terrorism and suicide bombings are modern tactics with controversial theological support, the desire to spread Islam by the sword is deeply rooted in Islamic history and doctrine.

Unlike the Spanish Inquisition or other historical examples of religious violence that have no modern ideological flag-bearers, the fervor for a global Islamic caliphate has been passed on with high fidelity through the centuries. It survived the fall of the Ottoman Empire and reemerged in the form of revivalist movements like the Muslim Brotherhood. Today, groups like ISIS, Al-Qaeda, and the Islamic Republic of Iran openly declare their aim to establish Islamic rule worldwide, often citing religious justifications. As Joshua Hoffman puts it in his piece about Islamophobia:

What many people don’t realize about Islam is that it is not just a religion. Islam is also a political ideology. One aspect of this ideology is that Islam “doesn’t recognize a distinction between mosque and state, the way that Christianity recognizes a distinction between church and state,” according to Niall Ferguson.

The second is the embrace of martyrdom and the promise of paradise. October 7 gave us both quantitative and qualitative evidence of this, and people like Rory seem to have missed the former. Hamas was able to mobilize over 1,000 people within Gaza's population of 2 million to embark on a suicide mission aimed at murdering Israeli civilians. The annual homicide rate in Gaza is a mere 0.8 per 100,000 people, and the suicide attempt rate hovers around 20 per 100,000. If you apply these rates to Gaza's population, you'd expect about 16 homicides and 400 suicide attempts in a typical year. Most suicidal people certainly aren’t homicidal and most homicides aren’t committed by people who would kill themselves or random strangers. In the absence of religious justification, we might expect only a handful of citizens that would be capable of suicide AND murder in its most gruesome forms. Yet, Hamas managed to find more than a thousand willing suicidal murderers, and I suspect they could’ve found more.

Yes, they didn’t explicitly commit suicide but the mission was effectively suicidal, as evidenced by the infamous whatsApp call - “What do you mean come back? It’s either death or victory”. Even for the most delusional, it's clear that "victory" was impossible, making death inevitable. This is a truly astonishing feat of mobilization that should give us all pause. It's worth noting that the US, despite its relative prosperity and stability, actually has higher homicide and suicide rates than Gaza. This suggests that oppression and poverty are insufficient explanations, since Gazans aren’t killing each other or themselves at staggeringly high rates. Sure, you could argue that it’s hatred and not religion. But hatred alone doesn’t explain the religious ecstasy that was on display or the total lack of self-preservation as an instinct. The Japanese disregard for life and self-preservation during World War 2 had an explanation rooted in culture and ideology. Similarly, the Gazans left a footprint of their belief in martyrdom and hatred for the infidels all over Southern Israel that day. [Note: If you don’t trust any data from Gaza, you can uncharitably assume Gaza combines the world’s worst suicide rate with the worst homicide rate, that of Lesotho and Jamaica (thanks to Bukele). Assume 2% of homicides are murder suicides (that’s roughly the ratio in America), you still only get 20 murder suicides a year. And we haven’t started accounting for the ability to kill multiple strangers, the rape etc. ). Still nowhere close to explaining the behavior]

This has profound implications for how we think about conflict and deterrence in the face of Islamic extremism. When your adversary's payoff function is heavily skewed towards the rewards of the afterlife, the usual carrots and sticks of diplomacy are far less effective. If militant groups believe that dying while fighting infidels is a win condition, they'll be happy to keep rolling the dice no matter how many setbacks they suffer.

This isn't to say that all Islamist violence is driven solely by religious fervor. Political oppression, economic desperation, and other grievances undoubtedly play a role in fueling conflict. But the events of October 7th should disabuse us of the notion that worldly concerns are the whole story. The ecstatic expressions of the militants in Gaza, caught on video as they carried out their suicide mission, are hard to square with the image of reluctant soldiers laying down their lives for a purely political cause. There's an otherworldly zeal at work here, one that's inextricable from the theology of martyrdom in Islam.

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Disagreement #3: Does Islam pose a threat to free society? 

Consider the following names: Theo Van Gogh, Jean Cabut, Stephane Charbonier, Sabeen Mahmud, Naguib Mahfouz, Elsa Kayat, Philippe Honore, Bernard Maris, Lars Hedegaard, Mustapha Ourrad, Bernard Verlhac, Georges Wolinski, Salman Rushdie, Farag Fouda.

What do they have in common? They were all targets of assassination attempts, often successful, for the "crime" of criticizing or satirizing Islam. The Charlie Hebdo attacks in Paris and the fatwa against and stabbing of Salman Rushdie are just the most high-profile examples of a much broader trend of violence aimed at silencing dissent and criticism of Islam.

Most of these assassinations happened in free countries - in America, Netherlands, France, and a few in Pakistan and Egypt, where atheists and free-thinkers face persecution. Nearly all Muslim-majority countries have blasphemy laws on their books. According to the USCIRF, which studied blasphemy law enforcement from 2014 to 2018, out of 84 countries with such laws, 43 had no instances of enforcement.

Where were blasphemy laws enforced then? "In the 41 countries across Asia-Pacific, the Middle East, Europe, and Africa, researchers found that enforcement exists to varying degrees, from 1 reported case in 8 different countries to 184 reported cases in Pakistan during the study period." The distribution is far from uniform, with five countries accounting for 80% of enforcement cases. The common factor is clear. Four countries - Pakistan, Iran, Brunei, and Mauritania - have death penalties for insulting religion. Just a few days before I wrote this, a Pakistani student was sentenced to death for sharing "blasphemous" pictures that offended Muslim sentiments on WhatsApp.

Now, let’s talk about women. Our World in Data produces a women’s civil liberties index, which “captures the extent to which women are free from forced labor, have property rights and access to the justice system, and enjoy freedom of movement” Scores go from 0 (worst for women) to 1 (best for women). And surprise, surprise… civil liberties for women are strongly negatively correlated with the % muslim population within a country, the latter accounting for over 20% of the variance in women’s civil liberties between countries. Muslim-majority countries are also about three times as rich as African countries (in per-capita GDP terms), and yet fare worse as a group on civil liberties (median score of 0.50 vs. 0.59).

These statistics themselves are appalling, but they belie the actual scale of suffering. When countries persecute religious minorities, we’re quick to be outraged and rightly so. Meanwhile, in many Muslim majority countries, 50% of the population live perpetually as second class citizens. Women are often married off against their will -sometimes before adulthood, treated as baby factories in their prime years and criminally sanctioned for everything from daring to go out without a guardian to extramarital affairs. Worse still, women’s testimonies are systematically undervalued, restricting the potential for legal recourse from their ‘masters’. I’m surprised I haven’t heard any comparisons of this arrangement to “Apartheid”. To me, it seems worse than Apartheid and on a spectrum with institutionalized sex slavery. captures my view on feminists who fail to call this out in her piece on feminist cultural relativists:

If you’re a feminist you cannot be both philosophically consistent and a cultural relativist. The stable core of feminist ideology is anti patriarchal. What exactly being “anti patriarchal” means and whether you think America is still a patriarchal society will depend on what you believe about, sex, gender and history. Infighting within feminist movement goes back to its birth. But regardless, being feminist explicitly means that you think some cultures, the less patriarchal ones, the ones that treat women better, are better than others.

I’ve talked about laws here. But in the vast majority of countries, laws grossly understate the regressive social norms and practices. With the exception (perhaps) of Iran, the ruling elite in these countries is often more liberal than the population at large. The reason MBS, crown prince of Saudi Arabia, is lauded for his reforms in this area is because he’s pushing these through in the face of staunch opposition from clerics and the ultra-conservative population they represent. More people are killed in vigilante attacks on suspicion of blasphemy than are imprisoned by the state in Pakistan for the same crime. Most countries have laws against child marriage but have disturbingly high levels of child marriage with double digit percentages reported in countries like Jordan and Syria. This Pew poll released in 2013 that surveyed 38,000 Muslims in over 80 languages across every country with a significant Muslim population, is a bit dated but should give you some sense of what public opinion in the Muslim world looks like.

The evidence is clear and overwhelming: Islam, as it is currently practiced and interpreted by millions of people around the world, poses a grave threat to the core values of free society. The systematic suppression of dissent, the brutal subjugation of women, and the often violent enforcement of religious orthodoxy are incompatible with the principles of free and open societies.

Conclusion - so what now?

In conclusion, it is crucial that we incorporate Islam and Islamism into our geopolitical models. Non-religious liberals often fall prey to the similar mind fallacy, and certainly not only on this issue - they just can’t take beliefs that they deem crazy seriously, insisting that the only real motivation anyone ever has for doing anything is economics or physical safety. The answer to “Why are the Houthis doing this? Don’t they know they’ll get bombed?” is staring at you in plain sight.

Even if you're willing to shrug at the plight of women, minorities, atheists, and liberals in Muslim countries or argue that we can't do much, there's no good argument for being sanguine about importing these norms into Western societies. The last few months since October 7 have provided plenty of anecdotal evidence, including a Member of Parliament's resignation in Britain in response to threats from Islamist thugs. But apart from anecdotes, poll data consistently shows that over 50% of Muslims in Britain think homosexuality should be criminalized, over 39% think wives must always obey their husbands, and over a third refuse to condemn violence against those who insult Mohammed. Think about that last statement. In an anonymous poll where one can reasonably rule out fear as a motivation, a third of British Muslims supported, in principle, the right for Muslim vigilantes to enforce Islamic blasphemy law with violence in Western societies.

Another crucial reason to have this conversation is to create an environment that empowers moderate or secular Muslims to speak out against extremism and bigotry. While some may accuse these "moderates" of being silent out of solidarity, the reality is that remaining silent is the rational course of action for most people within these communities, given the risk of ostracization and lack of clarity on where the community en masse stands. It’s a collective action problem.

To incentivize Muslim communities to purge these extreme elements from within, we need to create external pressure that makes it untenable for Muslims to maintain both their religious identity and credibility in public life without actively denouncing extremism. In other words, we need to make it so that the cost of not speaking out against radicalism is higher than the cost of doing so. This can only happen if accusations of extremism or illiberalism within the Muslim community are taken seriously and not simply dismissed as Islamophobia.

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In this episode, we interview Bob Fischer, a philosopher and senior researcher at Rethink Priorities. While discussing his work estimating the intensity of valenced states of farmed animals,  we touch on likelihood of sentience, hedonism as a theory of moral value, evolutionary functions of pleasure and pain, correlation between intelligence and intensity of experience states  We also discuss the implications of Bob's work for cause prioritization and how risk aversion should impact philanthropic allocations across human welfare, animal welfare and existential risk. 

Bob  is an Associate Professor of Philosophy at Texas State University, a Senior Research Manager for Rethink Priorities, and the Director of the Society for the Study of Ethics and Animals. You can find him at https://www.bobfischer.net/

Some of Bob's work that we enjoyed reading
https://rethinkpriorities.org/publications/dont-balk-at-animal-friendly-results
https://rethinkpriorities.org/publications/welfare-range-estimates

Bob's recommended charities 

https://www.shrimpwelfareproject.org/

https://www.insectwelfare.com/

Transcript Summary

First things first, I don’t deviate one bit from the canonical EA line on factory farming being one of the gravest moral errors of our time. If there were a referendum on ending factory farming tomorrow (which legislating sufficiently high animal welfare standards would effectively do), I would not only vote to end factory farming but also devote a significant proportion of my time convincing others to do the same. I would do so knowing full well its implications - the price of meat that’s already above the bar would skyrocket to make it unaffordable, at least for a few months. After the market somewhat readjusts, the supply of meat would never rise to the same levels. In other words, my actions would have a lot of leverage. It would reduce consumption by everyone, perhaps even accelerate the process of bringing cultured meat to the market, but even if that were years away, it would still be worth it.

For now though, over 95% of my meals contain animal products. You can charge me with motivated reasoning (and part of it very well may be) but for me and many others, for whom going vegan or vegetarian would be a significant personal sacrifice, I’d argue it’s irrational to die trying when there are much better ways to reduce animal suffering. In economic terms, animal suffering is an unpriced negative externality, one that keeps the price of meat artificially low. If you refuse to buy this low-cost product, it’s a bit like refusing to take a Taxi to fight climate change. You’ve refused to participate in one transaction with a negative externality and that certainty counts for something, but you’ve done little to fight the system. Your consumption preferences don’t change laws, prices or other people’s consumption patterns, that will continue to perpetrate horrific crimes against farmed animals. 

The ideal type of action would move us all closer as a society towards pricing this externality. Or bringing the price of substitutes down such that meat becomes less competitive. As an individual, you probably won’t pass a new law single-handedly. But even the smallest action you take to facilitate systemic change acts uniformly on millions if not billions of consumers, thus multiplying the impact of your actions. Moreover, any systemic change will also likely stick, improving standards for billions of future animals as well. Such changes impose the lowest costs on humans per unit benefit to animals. If you’re someone who really enjoys meat, you probably won’t reduce your consumption even if prices increase by 20%. But several people who don’t value meat as highly will. So lobbying for such changes is a much more efficient way of reducing animal suffering, inducing behavioral changes first in those humans that value eating meat the least.

Before I delve into what these high-leverage actions look like, I want to pre-empt an argument that some of you are itching to make. Well, why not do both.? If eating meat is wrong, you should abstain from meat consumption AND do these “high leverage” actions. You’ll save even more animals, won’t you? Yes; the most moral thing to do would be to find the most effective way to improve animal welfare AND abstain from consuming meat. But presumably, you don’t just care about animal welfare. Each behavior change or action you take has a personal cost to you in terms of time, effort and money. Each minute you spend on one thing is another minute you don’t spend on something else. I happen to think animal welfare is undoubtedly something that deserves your attention. If you actually don’t really like meat, and it would be relatively low effort for you to give up meat, sure, give it up. But before you start struggling to find a path towards “veganism” and figuring out a careful supplementation regime, I would urge a rational inspection of opportunity costs. 

The cost of giving up meat.

I don’t have to convince myself of this. It’s not even so much that I love meat, it’s that I find most meals unpalatable without meat. That itself is a huge cost. For the short periods I’ve tried going meat-free, I also experienced lower energy levels and digestive health (but I’d guess the former is made up and the latter just means tolerating a longer adjustment period). If you’re not like me and are the type of person that was able to cut meat consumption in half without giving up anything of significance, good on you. Do that. Regardless, it’s uncontroversial that veganism or anything close to it necessitates careful and regular supplementation. Fun fact: 47% of the population in North India is deficient in B12 (want to guess what’s driving that?). So even if you don't particularly enjoy meat (which a lot of us do), there are costs in terms of time, money, attention, and effort. I’m sure you can find papers that point to long-term health benefits of giving up meat, but even if true, this is a non-sequitur. If the health benefits haven’t convinced you to give up meat, you’re probably getting something out of it. I’m here to tell you what to do about that.

The benefits of giving up meat

It’s worth doing a quick back of the envelope calculation. At the limit, assume all your protein intake is in the form of factory farmed chicken of the lowest ethical standards - the worst product from an animal welfare perspective. Say you eat chicken 3x a day - about 250 (0.55 lbs) grams each serving. That’s 750 grams (1.75 lbs) of chicken a day, well over the average protein intake. That’s 275 kilograms of chicken ( or~600 lbs) per year. The average chicken in America weighs about 5.7 pounds . This amounts to consuming ~105 chickens a year. Most chickens lead horrendous lives so that’s pretty jarring. But almost no one eats that much chicken. Even if you eat half of that, saving 52.5 chickens every year is not something to scoff at. So what should you do?

Donate 10$ a month

1. Support effective animal charities (eg. cage free campaigns): Chickens are the most tortured species on the planet (and we are 100% responsible). The use of battery cages is a significant cause of misery, cramming multiple chickens into a space that constrains most natural movements, inducing myriad debilitating physical ailments and psychological trauma. Animal advocacy has been successful in getting corporations to make pledges/commitments to going cage free. Organizations such as The Humane League make sure that corporations are held accountable and follow through on the commitments they make. Saulius Simcikas from Rethink Priorities estimates that a dollar spent on such campaigns has improved anywhere between 9 to 120 chicken life years (by making them cage-free). Assume the bottom end of that effectiveness range and a 10$ annual donation will buy you 90 chicken life years. The average life of a chicken is ~1.5 months in the US, which means your donation of 10$ will save 720 chickens from a caged existence. Now you could argue that chickens still have a net negative life in farms, so you have only made things less bad by removing cages. But let’s say being cage free reduces total suffering by 20%. This would be the equivalent of saving 144 chickens. Still better than going vegan. There’s tons of uncertainty around all of those numbers and to be safe, I would recommend something more like 10$ a month instead of a 10$ annual donation. Moreover, Humane League comes recommended from multiple sources that I trust. In fact, iI’ll put my money where my mouth is right now (you can verify the time and date of my recurring donation)

Click Here - Do it Now

2. Support the alt. proteins industry: There’s a case to be made that alternative proteins and food technology in general is what will end up making a step change in animal suffering. Buying these products on the market is fine, but it’s again, voting with your consumption - not very effective. I’d recommend donating to an organization like the Good Food Institute, that supports the entire alt. proteins ecosystem. By finding and funding promising research opportunities and advocating for favorable public policy towards alternative protein, they attempt to accelerate research in and adoption of suffering-free products.

If you’re interested in exploring other effective organizations in the space, this report by Founder’s pledge might be a good starting point.

Make others suffers along with you

This might seem obvious to some of you but guess what - you going vegan for two weeks has the same impact as hosting a dinner party for 15 people with vegan food. Insofar as you’re hosting an event and enjoying the food isn’t the primary motivation, consider ordering from a good vegan restaurant to multiply your impact. The food at vegan restaurants in NYC (like this one) or San Francisco (like this one) is genuinely good, although I’d guess it won’t be easy on your digestive system if you keep going back. This is basically a consumption strategy, but with more leverage. A side benefit of this is the signaling effect. This might be a good opportunity to tell people about why you chose to do this. Some people might call you weird for trying to increase philanthropic impact by ruining their dinner, but even if 1 person gets it, they’ll do the same at their parties, further multiplying your impact. I once told someone at a party that I mostly stopped eating chicken; and I heard from a mutual friend that it made them give up chicken, which brings me to my next point.

Consume low-impact meat

Multiple friends who work in animal welfare (vegetarians themselves) have told me that most cows in the United States (and Europe) probably have net positive lives, whereas chickens have by far the worst and easily net negative lives. Moreover, even if cows had slightly net negative lives, for every gram of protein, you’re killing far fewer cows than chickens. It’s worth reading Scott Alexander’s piece on this in which he also addresses arguments around climate change and the possibility that cows might suffer more.

If you eat meat and live in a big city like New York or San Francisco and can afford to buy ethical meat instead, look for one of these two labels - Animal Welfare Certified or Humane Certified. Most labels don’t mean what you think they mean, as this piece states. You could argue that every dollar you spend on ethical meat can be donated to those charities instead. This is true. Personally, I live around grocery stores that stock one of these two labels, and they don’t seem a lot more expensive than the alternatives in those stores. Also, I care more about these labels when I buy chicken. With beef, I mostly don’t bother looking for humane options. 

Lastly, if you don’t enjoy meat all that much and think giving it up would be fairly easy but find yourself worried about the impact on health, use supplements like Creatine and Whey Protein. Yes, they’re not technically vegan but they’re animal by-products which have an almost negligible footprint in terms of animal welfare.

Arguments against my position

Signaling. Making a personal sacrifice signals to other people that you’re serious about the cause, thus inspiring other people to action. I’d find this a lot more persuasive if there wasn’t also a sizable chunk of the population that finds vegans and vegan culture reprehensible. I could make an equally plausible sounding counter-argument that it’s better to show that one can contribute to animal welfare without making extreme personal sacrifices or associating with a part of the culture they have misgivings about.

I’ll make one concession that pointed out - if you work at an animal welfare charity and consider yourself an animal welfare advocate, then perhaps it could be a bad look to not be doing everything you could do to reduce animal suffering, including going vegan. But if you’re a normal person with normal friends, you should be trying to spread the message that it’s possible to have an impact while still leading the life you broadly want to lead.

I’m aware of the vulnerability to a reductio argument. Well, why not do anything and everything you want that may be morally wrong and then try to offset all the harms you commit via donations? Well, because, for societal functioning, we need to hold everyone to minimum standards without which institutions would collapse. You can’t donate your way out of breaking laws or even spreading misinformation. Rules have their place. Having said that, when we face a problem that society is mostly ignoring, that we have no rules or norms, the best course of action is to think on the margin to identify the best ways to develop those norms and standards for EVERYONE - beyond just changing your personal rules to match what societal rules should look like in some idealistic state.