People should, as a starting point and first approximation, pursue their self-interest. And society should be set up to give people the freedom to control their own lives, so that they can. People are in the best position to know what they value and how to get it. They are in the best position to help themselves. And if they pursue their self-interest fully correctly, there will be no conflicts with others who are also acting correctly.
It’s much more reasonable if, as a starting point, everyone looks after and takes care of himself. If each person instead took care of his neighbor, it’d be chaotic, uneven and (accidentally) unfair, kinda random who gets taken care of how much, and broadly less efficient. It’d be hard to plan your life and future actions because you wouldn’t have much control over what resources you’d have in the future. And there’d be constant fights, resentments and suspicious that someone put some of his effort into his own self-interest and thereby got a larger share of help for himself, and there’d be fights about the distribution of help to others – some popular people would have thousands who want to help them, while some unpopular people would have no one.
People aren’t omniscient. They make mistakes, live in a society with flawed incentives and memes, etc. So just doing what you think is in your self-interest doesn’t always work well. The first check you should do is: do you think it’s in your self interest to initiate force? If so, seriously fucking reconsider and study up about the harmony of mens’ interests, the advantages of peaceful cooperation, how the claim that capitalism exploits the workers is false, etc. But if the thing you think is in your self interest won’t hurt anyone else or break laws, then you’re only risking yourself and your property, so just put thought into it relative to the importance, irreversibility and risks.
Do not consider the good of others as your starting point. If you do that, you will end up sacrificing yourself in some ways because you aren’t omniscient and significant attention to self-interest is required to do a good job of promoting your self-interest. Instead, start with self-interest and then consider the good of others secondarily. Any time your beliefs about your self-interest appear to clash with the good or self-interest of others, that’s an indication you have a misconception about your or their interests (because if there are no misconceptions then, in a free society, there’s a harmony of men’s interests). So try to understand where the apparent conflict of interests is coming from, and consider some adjustments – maybe there is a way to act which is better for others and a way to make that work for yourself too. Or a way to do almost the same thing but with a slight adjustment to avoid it bothering others. Your number one criterion to keep in mind is: do not sacrifice yourself. If you do, you’re betraying yourself and your life, and harming your ability to help yourself or others in the future. Such sacrifices ruin lives while also broadly reducing the total overall problem solving power of the world (especially effectiveness to act in reality, due to wealth and knowledge). You need to be happy and have your own house in order, and only spare things for others when it’s cheap and easy, not when it’s hard and difficult and significantly impacts your own progress. This is not the attitude expressed by Effective Altruism and others.
Charity should be and is a small fraction of the total economy. Charity is less economically productive, so having a mostly-charity economy would mean there’s a lot less total wealth. It’s better to have a bigger pie (economy, wealth), which is growing (a large amount of effort goes to efficient, productive activities to grow the economy and create more wealth), and which has a reasonably small fraction being used in other ways. A mostly-charity oriented economy would mean a smaller pie with less growth of the pie. Charity is generally short term focused, plus anything productive can be done at a profit so charity is unnecessary (it can still be done in a charitable way, but there’s no need to; I’d advise against doing things that could be done profitably, while passing on the profit, on a big scale, as a large part of the economy).
The more of money flows are related to productivity and profit, the more signal there is about the values and preferences of consumers. The more economic planning there is to decide how wealth is used. Charity is inferior at economic planning because it isn’t able to use the price system, and the profit and loss system, as well as normal commerce.
Humanity makes progress, overall, because people try to use lesser amounts of wealth (as measured in money prices, which are by far the best way to measure the value of some wealth in almost all cases) in pursuit of greater amounts of wealth, but not vice versa. And because some people save wealth – which means accumulating capital, which can be used to raise the productivity of labor (thus beginning a virtuous cycle in which the more productive labor creates wealth at a higher rate, allowing for even more saving, allowing for even more productivity increases. Note that scientific research is one of the ways that accumulated wealth gets turned into higher productivity of labor, it’s not just about building factories and tools.). Charity deviates from this system, largely in order to help with short term problems (because in the long term this system creates the best overall situation, the most wealth, the biggest pie, and so is best for everyone). It’s fine to spend a little on charity to help people who fall through the cracks (though there’s a lot of pressure to be more charitable to some of the worst people, not just to help a few good people who got unlucky, nor to help some great people who find that, as a (positive) outlier, they don’t fit into society quite right, so they have some difficulties.) But charity shouldn’t be a major priority, it’s not how things get better in the future. What makes things better in the future is, broadly, when people pursue their own self-interest efficiently (which generally includes valuing their own future, and the future of their children, and even, sure, humanity’s future – most people need not and do not narrowly value only themselves right now). If everyone keeps making their lives better, and interacts with others only for mutual benefit, then things will keep getting better. It’s dangerous when there are interactions without mutual benefit – then there’s the potential for loss, sacrifice, force, hatred, lying, war.
So, in broad strokes, I think charity should be under 10% of the overall economy. Maybe under 1%, but it depends how you count economy size. For each piece of consumer spending, there are many business-to-business transactions that go into that production. GDP or total consumer spending are poor measures of economy size.
These thoughts are related to this discussion.
Thank you Ludwig von Mises (books), Ayn Rand (books), and David Deutsch (discussions) for helping me understand these things.
See also my first comment below.