Category Archives: Trends to Ponder

Is Philanthropic Capital Scarce?

Over at this blog, Albert Wenger has been arguing that private capital is no longer scarce.

He writes:

This means that global investable capital exceeds by 2x the capital required to operate the economy. In fact working capital needs have been declining substantially due to just in time manufacturing, faster electronic payments and better working capital management (eg. through C2FO). If you can reduce the working capital needs of firms by 25% you would move investable capital to close to 3x of required operating capital for the economy.

That means we have massive amounts of capital available to invest in new endeavors. It explains why interest rates are low and there is fairly little that central banks can do about it unless they figure out a way to dramatically reduce investable capital – they can certainly shorten their balance sheets but even that impact is likely to relatively small in the overall scheme of things (eg US Fed about $3 Trillion).

Another way to think it about it is this: we have an oversupply of money and an undersupply of good ideas to invest in.

I’ve been in philanthropy for a year now, and Albert’s thesis led me to reflect on philanthropy.

Broadly speaking, philanthropy can be used to either (1) directly alleviate suffering or (2) help solve complex problems.

For the foreseeable future, there will not be an oversupply of capital to directly alleviate suffering.

If a philanthropist wants to save lives and reduce suffering, there is plenty to invest in; and there is always the option of simply giving cash to people living in poverty.

Many philanthropists, however, also desire to support efforts to solve complex social problems; i.e, to try and create better education, health, and criminal justice systems – or to invest directly in technological solutions in areas such as energy.

The goal here is to reduce future suffering rather than simply alleviate current suffering.

It is not easy to solve such problems. In my work, my days are not chalk full of meetings with people pitching tested, operationally scalable, and financially sustainable interventions that will lead to major improvements in our country’s educational system.

Working in areas such as education, criminal justice, and health is extremely difficult, and scalable solutions are hard to find.

So perhaps Albert’s thesis, in some form, is beginning to hold true for philanthropy.

For this second part of philanthropy’s mission – working to solve complex social problems – it is unclear to me that capital is scarce.

If this is true, it has numerous implications for philanthropists, non-profits, and government.

If I’m able to wrap my head around these implications and organize them in a thoughtful manner, I’ll write a follow-up post.

 

War! What WAS it Good For?

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I just finished reading War! What is It Good For?  by Ian Morris.

It is well worth reading.

Morris’ thesis is this:

  1. Government is the primary source of the reduction of violence in societies.
  2. Wars caused societies to merge, thereby increasing the scope, scale, and efficacy of government.
  3. It would have been great if societies had figured out a way to merge without war, but this, unfortunately, has rarely happened.
  4. So, like it or not, war has been the driver of government innovation.
  5. Therefore, wars have been the primary cause of our long-term decline of violence.

Or more fully:

  1. There was a lot of violence in the Stone Age.
  2. Back then, “wars” were just a bunch of back and forth raids that resulted in a lot of violence and not much productivity.
  3. However, then farming came along, which added territorial capture to what had previously been a plundering game.
  4. Once you capture territory, you have to figure out how to govern it in order to extract its resources.
  5. This requires you to figure out how to govern.
  6. When people govern better, violence goes down.
  7. So while wars cause a spike a violence, their long-term impact results in a net reduction of violence.
  8. However, with the advent of nuclear weapons, wars will likely soon become “unproductive” – in the sense that they might destroy humanity rather than lead to better governance. WWI and WWII gave us a taste of where modern war might be heading.
  9. Generally, massive war breaks out when a superpower declines.
  10. The USA will likely decline by 2040-2050. And global warming might also really start causing country collapses by then.
  11. This might cause humanity to destroy itself in a world war.
  12. The best way to avoid this is either to create world government or to turn into robots.
  13. The odds of turning into robots are higher than creating an effective world government during a time of superpower decline.
  14. Or perhaps we’ll muddle through another superpower decline even without a world government or turning into robots. We have survived this long, after all.

Depending on your viewpoints, you might find this historical analysis to be crazy. Or you might find these future predictions to be crazy.

Read the book and judge for yourself.

Personally, I find this historical analysis fairly convincing. As much as I wish it would have been otherwise, war has been the primary vehicle for scaling government, and government has been a boon for humanity.

But I’m surely not an expert so I could be very wrong.

As for the future, who really knows.

But I think we should heed Morris’ cautionary tale.

This Time Might Not Be Different.

The next time a superpower falls, history could well repeat itself, and we could be thrust into global warfare.

All of which surely puts education reform into perspective.

The sound and the furry of over testing will be nothing compared to the sound and the fury of humanity ending.

One last thought: given the above, would it be better or worse for USA to announce that it would never use nuclear weapons?

If you believe that the answer to our problems is maintaining USA dominance until we reach the singularity or create a world government, then you probably want the USA to maintain a credible threat of nuclear war.

If you believe that the USA will decline before we have a world government or reach the singularity, then you might actually view the USA never going to war as the only a way to avoid destroying humanity; as such, you might prefer USA to renounce warfare and simply be peacefully conquered by the world’s next superpower.

Trends to Ponder

Some trends on demographics, beliefs, and practices of public schooling. I do not know if they are causally related. 

1. Nonwhite students are projected to outnumber white students in the public schools this year

non white

2. The public supports charter schools by about a 2:1 margin (54% in favor, 28% oppose)

charter poll

3. Over 50% of families in Miami now select schools via choice mechanisms

Unlike Vox and Education Next, the Miami Herald provides no graphics. I leave it to you whether this signals anything about the future of journalism.