Rationally I have to question whether giving money to charities for use in third world countries is a rational decision at all. While there are obvious benefits to, say, exterminating diseases such as polio, measles, ect. I have to question whether many of these charities are even worth investing in at all. We may claim we are looking at X many years of better life, but we have to consider:
1) Does that take into account the fact that these people are now more likely to have OTHER problems, seeing as they aren’t dying from this one?
2) Are these numbers totally made up? (The answer appears to be yes)
3) Does this take into account that some lives are considerably less valuable than others?
If I am rescuing people in Africa, their median economic output is going to be far below what I would get for rescuing but a single person in the US, and moreover, the person in Africa is going to accrue additional expenses; their economic activity is unlikely to vastly outweigh the cost of sustaining them, while the person in the US is far more likely to generate a great deal of additional economic activity beyond what is necessary to sustain them.
While it may sound cynical, if there are fewer people in Africa, then that means there are fewer people who are living in poverty; if more people there starve to death today, there will be less people starving to death there in twenty years if we save them and allow them to reproduce. Moreover, if you save one person in the US and make them self sufficient, that is a huge boost. Additionally from a personal standpoint, helping out someone locally is far more likely to bring me benefits than helping out someone in Timbuktu, and, rationally, if I’m spending money and have the option of seeing benefits myself, isn’t it more rational for me to spend the money in that way, because then I can actually appreciate the benefits of my personal generosity? Doesn’t that also encourage me to be more generous in the future, and allow others to be more generous as well? Someone who can’t even make ends meet is not going to be of the same generosity as someone who is making $60k/year.
The first problem is that, given that average inflation rates have exceeded 2% per year, any investment at 2% annually is going to be a terrible investment in the future—you’re actually LOSING money every year on average rather than gaining it, in terms of actual value.
However, let us assume that for whatever reason you were actually getting 2% growth on top of inflation per year (an unlikely scenario for an unguided account, but bear with me a moment). The second problem is that the result is, obviously, irrational. There are not even a googol particles in the Universe; how could you have a googol dollars and have that be a reasonable result? There isn’t anything to purchase with a googol dollars. Ergo, we must assume our assumption is flawed.
The flaw in this assumption is, of course, the lack of understanding of exponential growth; all exponential growth is self-limiting in nature. In reality you run into real constraints to how much growth you can have, how much of the economy can be in your fund, ect. As someone else pointed out, you can’t assume that you will have indefinite growth; it is confined by the size of the economy (which will never reach a googol dollars in current day money), by the likelihood of you actually getting said returns (which is 0), whether anyone would recognize a currency when too much of the world economy was bound up into it, ect.
The truth is it is just a terrible argument to begin with. Anyone who promises you 2% growth for even a thousand years is a dirty liar. The rate seems reasonable but in actuality it is anything but. Do you think that the world economy is going to increase by 2% a year for the next 1000 years? I don’t, at least not in real, inflation-adjusted dollars. The total amount of energy we can possibly use on the planet alone would constrain such economic growth.