Effective Altruism and Business Ethics

Peter Singer has an article on The Logic of Effective Altruism. The idea is that you should make sure that your altruism is effective,  and that every spare dime you have ought to go to altruism. He does acknowledge that, of course, we all fall short of our ideals, so we shouldn't beat ourselves up too much if we do, so long as we continue to aim for the ideal.

The idea is not a bad one, so far as it goes, and he even acknowledges that one can in fact benefit others through starting a business and providing jobs. Quite frankly, I think that's the best way to help others overall. Which makes me consider the potentials in combining effective altruism with business ethics.

Egoistic business ethics would suggest you should do anything and everything you can to make as high of profits as possible and to keep your business in business. To the extent that you benefit others by hiring them, that's good from the point of view of altruism, but it primarily benefits those known to you (your employees) over others, and it is the effect on others not known to you with which Singer is concerned.

Egoistic business ethics would suggest increasing profits as much as possible. That is ethical in relation to one's investors. To keep one's own business in business may require one lobbying government to reduce or even eliminate competition. Or to get subsidies for one's business. One can (and one often does) come up with any number of good reasons why you should get the government to regulate your industry (you are fair and produce good products, but the competition may not), license others in your business (you don't want incompetents providing services or making products, do you?), or subsidize your business (to level the playing field, of course), but in the end, these are all designed to benefit you at the expense of others. Prices are kept up for your benefit. Keeping your business in business may of course benefit your particular employees, but at the expense of higher prices for everyone and less employment overall.

So what would an effective altruistic business ethics look like? First, you have to know what is most effective. That would require understanding basic economics (at the very least), and the consequences of various regulations on the economy in general and your sector in particular. You would then not necessarily do what is best for your business (outside of trying to create the best product at the lowest cost, of course), but what is best for the economy in general, and your sector in particular. Anti-competitive regulations are not likely to benefit the most people most of the time, so one should not engage in lobbying for anti-competitive legislation to be passed. This doesn't mean you should be a sucker and let everyone else exploit the system in place while you struggle and fail in it; rather, what it means is you should lobby to get rid of any legislation that is anti-competitive and benefits the already-wealthy and regulators at the expense of competition and broader wealth creation.

We may also see businesses using their profits for both sustainable growth of the business and for bonuses for all of the employees. Employee buy-in of the business through bonuses and programs that encourage loyalty (which should be rewarded with loyalty from the business owner) and stock ownership among the employees so that they have literally bought into the company and its success may also be considered forms of effective altruistic business practice (though one has to be careful with ownership through stocks, given the track record of stock owners wanting profits at any cost). Some profits may also be used to improve the local community, to make it a better place to live for everyone. If you can encourage people to live close to work (walking or cycling distance), that will benefit the community through reduced pollution and increased exercise. Business could also do the legwork of finding effective philanthropies to which the owner and employees could donate (once everyone agreed upon what kind(s) of philanthropy in which they wished to engage), ensuring many were engaging in effective altruism.

I am sure one could come up with a number of other scenarios which would demonstrate how one could combine effective altruism and business ethics. For them to be effective, such business ethics would strongly support free market principles, I would think, rather than profits at any cost for investors. It would be pro-market, but not necessarily pro-business, and certainly not pro-corporation. Corporations, after all, are beneficiaries of government largess and are in fact government-created entities. It would be difficult to imagine how one could maximize effective altruism within a pro-corporate civil society, even as it is easy (for me, at least) to imagine how one could maximize effective altruism within a free market, entrepreneurial civil society.

 And given the inefficiencies inherent in government actions, policies, and programs, support for government programs is the opposite of effective altruism. Government programs are ineffective altruism at its worst. One possible exception would be a basic income guarantee, which could be done with minimal cost (costs which primarily benefit highly paid government employees at the expense of those being helped) and result in maximum benefits. Of course, wealthy people could also set up BIGs for certain communities, benefiting those communities by allowing people to decide what is the best way to spend the money on themselves. That would be another form of effective altruism many have perhaps not considered precisely because too many think the government should do such things. Such crowding-out effects of government are also anti-effective altruism.

All in all, this seems an interesting idea. I think people ought to consider effective altruism as their guiding morals when it comes to helping others. It is easy to benefit those closest to you, but perhaps we are better judged by how we treat others we will never ever meet.