I agree with this, yet im yet to hear of concrete ideas which could have significant impact at the kind of high level you are taking about. It would be great to see some ideas fleshed out here on the forum.
I’ve always been a huge advocate for the cost effectiveness of tractable systematic change on the margins, like lead paint policy and my wife’s work to ban certain types of alcohol in Uganda.
But at the really high level you talk about, the “fractured democracy” level I struggle to see where we could have clear impact. It might be one of the least “neglected” areas around, which of course doesn’t mean there can’t be niche highly cost effective areas we could move the needle
Like you suggest there’s also the counterfactual of what if we had been putting hundreds of millions into systemic changes that were then just deleted by the current world order situation. There are good arguments both for and against working on specific programs vs. Systemic change right now. At least the nets still save lives cost effectively as global conflict becomes more likely and global aid is slashed? Given the reduction in aid money donations in global health, donations become a bit more impactful now too.
It’s not as if people haven’t been thinking and even investing along these lines at times. Open Phil have thrust a bunch at “global economic stability”, but this isn’t an area I understand well and feel I can judge well.
There have been a few interesting posts on the forum such as this one recently, but I’m yet to hear convincing ideas—which is not to say those ideas aren’t there.
I provide evidence for the following claims on the adverse effects of looser macroeconomic policy:
Very strong claim: The first-order effects of too loose policy on the ’21 margin were unequivocally bad and will leave most worse off, even the poor, because we way overshot on inflation. Policy in ’21 added few jobs and real wages are down even for the poor (who suffer the most when their real wages go down even by a little). The second-order effects are that Dems will lose House, Senate, and Presidency. Populists (like Trump) will be elected, whose incompetence will make things even worse. The effects of looser policy in richer countries spill over into poorer countries, where inflation is higher, more persistent (hyperinflation), which leads to less growth, wellbeing, populism and instability.
Medium strength claim: Looser policy on the ’21 margin was good for the poorest 10% Americans (~30m) as it created more jobs and higher wages, but bad for the middle class (~150m) as their real wages went down. The first-order effects for wellbeing are still positive on average, as the poorest benefit much more than the middle class lost (a simple rule of thumb is that $1 is worth 1/X times as much if you are X times richer and poorest Americans are more than 5x poorer [utility is logarithmic in consumption]). However, because 150m have lost in terms real income, which can predict midterms and naïve extrapolation of current income decline predict Dems losing 50+ seats, the resulting populist incompetence will have, at the very least, high downside risks (like Trumpists starting trade wars). This will harm everyone (in expectation), even the poorest, in the longer-run.
Weak claim: Looser policy, even on the ’21 margin, was good for all Americans as it created jobs, increased real wages for most Americans (at least over the medium run) and led to GDP growth in the US and even for the world economy. However, even if real wages increased and inflation is transitory and mild over the medium-run, because voters are too sensitive to high short-term inflation, and inflation coincides with the midterms, and think it’s more persistent than the market, Dems will lose at least the House. Renewed gridlock and polarization will have bad effects and we could have avoided this by moving more slowly to a higher inflation target and being more expansionary under the curve in the longer-term.
I also highlight some general issues with macroeconomic advocacy like reducing central bank independence, problems with lobbying foreign central banks, and having to be very careful and do a lot of analysis before making grants that might have a lot of leverage and are not robustly good (like improving health).
I’ve now tried to clarify what I mean in my post, Nick.
I agree with you that concrete suggestions are lacking, my claim is that this is—at least partially—due to too little effort on this angle and that this seems worth re-examining in a change of rapid and profound system-level changes.
Sorry also to clarify I wasn’t saying you need to provide suggestions, more that there have been a few posts along these lines without any concrete suggestions yet and id love to see some.
Love the post a lot by the way, thoughtful and balanced. Nice one!
Wow amazing 2022 article by the way. I never saw it at the time, it was before I was on the forum!
After reading the thread I might fall marginally more on your side of the argument there, especially as inflation probably did contribute to the trump victory. But it is also yet another demonstration of how hard philanthropy gets, the higher level you get in politics or economics, with so much disagreement and uncertainty. There’s just so much disagreement from experts on almost every major issue, so it’s very hard to know on which side to push the money.
Taking a low percentage “hit based” approach on human welfare issues is one thing, but when it’s super unclear even if you make that hit whether its positive or negative EV is where I start to think why not just take a punt on something deeply uncertain but never negative EV like shrimp instead.
I agree with this, yet im yet to hear of concrete ideas which could have significant impact at the kind of high level you are taking about. It would be great to see some ideas fleshed out here on the forum.
I’ve always been a huge advocate for the cost effectiveness of tractable systematic change on the margins, like lead paint policy and my wife’s work to ban certain types of alcohol in Uganda.
But at the really high level you talk about, the “fractured democracy” level I struggle to see where we could have clear impact. It might be one of the least “neglected” areas around, which of course doesn’t mean there can’t be niche highly cost effective areas we could move the needle
Like you suggest there’s also the counterfactual of what if we had been putting hundreds of millions into systemic changes that were then just deleted by the current world order situation. There are good arguments both for and against working on specific programs vs. Systemic change right now. At least the nets still save lives cost effectively as global conflict becomes more likely and global aid is slashed? Given the reduction in aid money donations in global health, donations become a bit more impactful now too.
It’s not as if people haven’t been thinking and even investing along these lines at times. Open Phil have thrust a bunch at “global economic stability”, but this isn’t an area I understand well and feel I can judge well.
https://www.openphilanthropy.org/focus/macroeconomic-stabilization-policy/
There have been a few interesting posts on the forum such as this one recently, but I’m yet to hear convincing ideas—which is not to say those ideas aren’t there.
Ironically, this area has contributed to the current crisis as I argued in 2022:
I’ve now tried to clarify what I mean in my post, Nick.
I agree with you that concrete suggestions are lacking, my claim is that this is—at least partially—due to too little effort on this angle and that this seems worth re-examining in a change of rapid and profound system-level changes.
Sorry also to clarify I wasn’t saying you need to provide suggestions, more that there have been a few posts along these lines without any concrete suggestions yet and id love to see some.
Love the post a lot by the way, thoughtful and balanced. Nice one!
Wow amazing 2022 article by the way. I never saw it at the time, it was before I was on the forum!
After reading the thread I might fall marginally more on your side of the argument there, especially as inflation probably did contribute to the trump victory. But it is also yet another demonstration of how hard philanthropy gets, the higher level you get in politics or economics, with so much disagreement and uncertainty. There’s just so much disagreement from experts on almost every major issue, so it’s very hard to know on which side to push the money.
Taking a low percentage “hit based” approach on human welfare issues is one thing, but when it’s super unclear even if you make that hit whether its positive or negative EV is where I start to think why not just take a punt on something deeply uncertain but never negative EV like shrimp instead.