Until “effective altruism” figures out what drives innovation, those recommendations simply aren’t that reliable.
Addendum: John Sterling just wrote this in the MR comments section:
I think Steven Landsburg made the definitive “pro-Paulson gift” argument in his classic Slate piece defending Ebenezer Scrooge. Paulson could have pulled a “Larry Ellison” and built himself a $200 mm yacht. He decided to forgo (some) of his conspicuous consumption and instead let the Harvard Management Company steward some additional capital.
I’ve sometimes wondered whether the Harvard endowment is the ultimate way to be an “effective altruist” for an Austrian-leaning type. If you believe, like Baldy Harper did, “that savings invested in privately owned economic tools of production amount to … the greatest economic charity of all.” then the Harvard endowment makes a pretty interesting beneficiary. I can’t think of another institution in the world today that is more likely to hold on to its capital in perpetuity than the folks in Cambridge.
I am not saying he is right, just don’t be so quick to conclude he is wrong. By the way, I do not in fact donate my own money to Harvard.