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ChristianKl comments on Taking Effective Altruism Seriously - Less Wrong Discussion
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I don't think Harvard is on any EA list for recommended charities. You also don't provide an argument that Harvard has a high use for marginal dollars and that more EA money should go towards Havard.
My argument is precisely the opposite. My argument is that Harvard is so rich that it has very low use for marginal dollars, but at the same time it has a credible commitment to its future state, so large donations to Harvard will serve to swell its endowment. And also that Harvard has demonstrated the ability to manage its endowment well. Therefore funds donated to Harvard are likely to be invested indefinitely - and therefore to provide increasing amounts of economic tools that will benefit mankind, both now and in the future.
Good usage of marginal dollars is one of EA principles. Of course you can argue that those principles are wrong, but it's makes no sense to expect the EA community to defend people who don't follow their principles.
They lost 8 billion of it in 2008.
Harvard's endowment has performed exceptionally well. Here’s the data: http://www.hmc.harvard.edu/docs/Final_Annual_Report_2014.pdf
Endowments are managed with long-term time horizons. Therefore, cherry picking one year of endowment performance and generalizing investment skill from it is misleading and inaccurate.
Also, percentage gains and losses are a more appropriate metric to use when comparing investment skill between managers. Otherwise, a large endowment will seem riskier than a small one, even if the two endowment allocations are identical.
They can "have a low use for" in the sense that they get little immediate gain, yet they can have "good usage" in the sense that the total utils created is large because they retain the capital and the capital continues to provide utility for a long time.
I would guess that a hedgefund billionaire has more skill in investing capital than people who manage the Harvard endowment fund.
If investing that money is good, he can invest the money directly. Yes, there are tax benefits involved in given to Harvard but those shouldn't drive the decision.
The difference isn't skill. A manager of a hedge fund doesn't have much in the way of leverage; the manager of Harvard's endowment has a direct line to the admissions office, which can be traded for information that can generate high returns.
Um. Are you suggesting that admission to Harvard is traded for stock tips? That is idiocy.
I bet it implicitly is. X gives useful advice to a Harvard investment manager, and a few years later the investment manager recommends X's son to Harvard's admissions office. Think of Harvard as mainly a hedge fund, and ask yourself if it is in its self-interest to do this?
I bet it is not.
People who want to buy their kids Harvard admission just do it directly: you give Harvard $X million and the admissions office accepts your kid (usually).
Think a bit: what kind of a useful advice can one give to managers of a $36 billion fund? That some company is about to be taken over? They don't care. There is not enough liquidity in the market for them to buy enough of the target stock to move their needle.
Very large funds are peculiar creatures: their freedom of action is severely constrained by their size and their investment choices largely boil down to slow drifts in asset class allocations.
Oh, and the characterization of Harvard (all Ivies, actually) as an investment business with a very minor sideline in higher education is common and even, ahem, traditional :-)
My knowledge of high finance is theoretical so this might be wrong but is $36 billion really that much compared to the size of the world's financial markets Harvard gets to play in? Yes, knowledge of one takeover wouldn't allow them to double their endowment, but knowledge of, say, ten material non-public events a year could let Harvard earn a significant above market return.
But by this reasoning, they also do not care about a $5M cash gift to get someone off the waitlist. If I know that my company is going to put in an offer for another company at 20% above the current trading price, that info is worth $5M if you have and can move $25M without raising any concerns. If anything, the larger a fund, the easier is it to make adjustments like that to take advantage of insider info without it appearing suspicious. ("Yeah, we bought $25M of that stock the day before the buyout offer was announced, but it was as part of $700M of rebalancing, because we like to adjust 2% of our total portfolio every month.")
Rates of util acquisition matter. Time integrals also matter. But the most common thing for invested money to do is not to grow ad-infinitum, resulting in its owner owning half the planet after 100 years, but instead to eventually go completely bust in some or other speculative bubble.
A rational market only has a finite need for capital. Attempt to invest beyond that need, attempt to supply capital beyond the demand for it, and you will run into problems.
Yes, correct, so? Would you take this to mean one should not invest one's money?
This is true. However I feel that dealing in aggregates is misleading: what matters is not really how much capital in total is available, but rather how it is distributed (aka available to whom). It is possible to invest capital successfully, it is also possible to waste it.