What legal ways do people make a profit that produce the largest net loss in utility?

by Punoxysm1 min read25th Mar 201485 comments

1

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This is an offshoot of a thread I made earlier, but which wasn't eliciting the sort of responses I'd hoped for.

So let me pose a clearer question with less potential to get people on watchlists.

What legal ways of making a profit are the most anti-altruistic, the most damaging to society, the opposite of effective altruism in result. 

I am using utility loosely. The answers need not be given from a utilitarian perspective at all, but instead merely deal with any means of making a profit that seems to you clearly wretched, and such that the world would be better if nobody participated in it.

I'd also like to emphasize that these things should be legal. There are some obviously wretched illegal businesses that would top the list otherwise. If something is legal but only in a particular jurisdiction, then you should only discuss it within the context of the jurisdiction where it is legal.

If it's a grey area, go for it, but extra points for society-harming enterprises definitely legal in both the letter an the spirit of the law.

This is NOT about whether the enterprise in question should be illegal, just whether it causes a net loss of utility (deal with counterfactuals however you see fit).

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End of life treatment.

Extending the literally worst part of most people's lives for as long as you can, to the tune of over 20% of medical spending in the US.

Obvious example: selling cigarettes.

The cigarette is the deadliest artefact in the history of human civilisation. [...] Cigarettes cause about one death per million smoked³⁵ with a latency of about 25 years, which is why the 6 trillion smoked in 1990 will cause about 6 million deaths in 2015. [...] One-third or one-quarter of those deaths will be from lung cancer; about one every 15 or 20 s. [...] Cigarette companies make about a penny in profit for every cigarette sold, or about US$10 000 for every million cigarettes purchased. Since there is one death for every million cigarettes sold (or smoked), a tobacco manufacturer will make about US$10 000 for every death caused by their products.

Presumably there are even worse legal ways to make a profit, but this sets a nicely unambiguous lower bound, I think.

5Jack7yA lot of industries are going to look really bad if you only score one side of the ledger. Given that a huge number of people continue to smoke and enjoy it, despite knowing the negative implications for their health it seems reasonable to assume that tobacco companies supply the world with a great deal of utility, in addition to the lung cancer.

Enjoy it? Or want it because they're addicted? What we want and what we enjoy are not guaranteed to be aligned.

2Jack7yAs someone who occasionally smokes while not being addicted to it: it is definitely enjoyable for people.
0Alsadius7yI smoke cigars once every couple years, and they're genuinely nice. Never tried cigarettes, but I'd imagine they're possible to enjoy. I know a couple folks who are not addicted and smoke recreationally once in a while.
8A11AF827yThis would likely be true of many other (hard) drugs if there had been a history of legally selling them instead of nipping their markets in the bud. In fact, this would probably be true of wireheading too if it was practical, and ultimately, orgasmium [http://wiki.lesswrong.com/wiki/Orgasmium]. Willing to bite that bullet?
3Eugine_Nier7yHuh? Jack said that there two sides to the ledger with respect to tobacco. He didn't say which side would necessarily prevail in this case. Furthermore, there is no reason why the side that's stronger for one drug is necessarily stronger for another.
-2A11AF827yAnd I replied there were similarly two sides to the ledger with respect to many other drugs. Neither did I. Are you saying that out of all existing non-legal drugs, not even one would have a similar profile to tobacco?
1Jack7yYes, other drugs are not unmitigated evils either. I've heard heroin is a 1000 times better than sex. The fact that it will eventually kill you and likely ruin your family life doesn't change that. I think alcohol and caffeine probably come out on the positive side of the ledger while most don't. But it is hard to say.
6satt7yAbsolutely. However. While that's obviously true... ...I think that's misleading. While smokers like and presumably enjoy the relief cigarettes provide from cravings, I doubt that at reflective equilibrium they'd want to be smokers, or would approve of their smoking. When samples of smokers in Canada, the US, the UK, and Australia were surveyed [http://www.davidhammond.ca/Old%20Website/Publication%20new/2004%20ITC%20Regret%20-%20NTR%20\(Fong\] .pdf), about 90% agreed with the proposition that if they could live their lives again they would not start smoking, and a clear majority (67% to 82%, depending on the country) reported an intention to quit within the next year. In Gallup polls [http://www.gallup.com/poll/157466/smokers-light-less-ever.aspx], most US smokers say they believe they're addicted to cigarettes, and most say they'd like to give up the habit. The CDC reports [http://www.cdc.gov/tobacco/data_statistics/fact_sheets/cessation/quitting/index.htm] that in 2010, 43% of US adults who usually smoked cigarettes daily actually did stop smoking for multiple days because they were trying to quit. Not true in general. Another paper [http://tobaccocontrol.bmj.com/content/15/suppl_3/iii65.full] based on data from that four-country survey tells us that "[a]bout 10% or more of smokers did not believe that smoking causes heart disease. Over 20% and 40% did not believe smoking causes stroke and impotence, respectively." I remain extremely sceptical, not only because of the evidence I summarize above, but also because of economic, philosophical & cognitive considerations of the sort LW likes: * Tobacco manufacturers, in effect, value a life at ~$10k. This is far less than other estimates of the monetary value of a life [https://en.wikipedia.org/wiki/Value_of_life#Estimates_of_the_value_of_life], at least in developed countries. Is everybody else effectively over-valuing lives, or are tobacco companies effectively under-valuing them? * I can a
2Jack7yThere is a lot of moralizing around smoking and I suspect those numbers are inflated. It's like if you call people up and ask them if they recycle or plan on voting. People give answers that they think others want to hear: that's not the same as reflective equilibrium. Also, the fact that people are interested in quitting doesn't have anything to do with whether or not it is pleasurable. It's very pleasurable, which is why people start and continue. They often want to stop because they know that it causes cancer. But they still derive pleasure from it. So up to 90% of smokers know some of the less well-publicized health risks? The numbers for lung cancer and emphysema must approach 100%. Don't cherry pick your evidence. As to the rest of your comment: I'm not claiming cigarettes are a boon to humanity. The question was what ways of making a profit cause the largest loss of utility and I was objecting to an answer that failed to consider the actual value created by an industry.
-2satt7yAlthough I expect that plays a role, I believe the effect is small. Even in 1978, when anti-smoking campaigns were far less intense than in the 1990s & onwards, most smokers in a Gallup poll agreed [http://www.gallup.com/poll/163763/smokers-quit-tried-multiple-times.aspx] that "[a]ll things considered" they'd like to give up smoking, and while there was more agreement in later surveys the increase was gradual (66% in 1978 vs. 74% in 2014). Unfortunately the data for the other attitude-related questions don't reach back as far, although it looks to me like the proportion of smokers answering yes to "Do you consider yourself addicted to cigarettes or not?" has been broadly constant since that time series began in 1990, though the 1990 data point does happen to have the highest proportion answering "No" (graph available further down the page at the previous link). Meanwhile, the proportion answering "No" [http://www.gallup.com/poll/157466/smokers-light-less-ever.aspx] to "If you had to do it over again, would you start smoking or not?" has grown at only a sedate pace (83% in 1991, 88% in 2013). A reference [http://tobaccocontrol.bmj.com/content/22/suppl_1/i27.full#xref-ref-14-1] in an anti-smoking journal article by Robert Proctor points the way to some older data from "A Study of Cigarette Smokers' Habits and Attitudes in 1970 [http://legacy.library.ucsf.edu/action/document/page?tid=plw56b00&page=2]", a market research survey of "a representative nationwide cross section [http://legacy.library.ucsf.edu/action/document/page?tid=plw56b00&page=3]" of adults, prepared by Roper Research Associates for Philip Morris. In that sample [http://legacy.library.ucsf.edu/action/document/page?tid=plw56b00&page=15], 23% of smokers said they "have no intention of quitting", whereas 72% responded that they'd either "like to stop smoking" but doubted they would, or that "[i]n all likelihood [they]'ll quit smoking before too long". Another table [http://legacy.library.ucsf.edu/action/
0[anonymous]7y“Odd numbers are prime” would normally be interpreted to mean that all odd numbers are prime, with no exception. Conversely, “ducks lay eggs” would not [http://languagelog.ldc.upenn.edu/nll/?p=3545] be normally interpreted to mean that all ducks, including males, lay eggs. Which one does “smokers know the health effects of smoking” resemble more?
0satt7y"Odd numbers are prime" IMO, although there's room for disagreement there. Most people would automatically read "ducks lay eggs" as referring to a strict subset of ducks, but I don't think "smokers know the health effects of smoking" would automatically be read as referring to only a strict subset of smokers. It's true that "smokers know the health effects of smoking" wouldn't be interpreted as rigidly as the mathematical statement "Odd numbers are prime", but I doubt it'd be interpreted as loosely as "almost all smokers know the most famous health effect of smoking, and most of them know some of the less famous ones" either. (There's at least one way to interpret "smokers know the health effects of smoking" a bit less literally than I did: if smokers knew the total health risk they ran by smoking, one could reasonably assert that smokers were fully informed for the purpose of deciding to smoke, even if they couldn't name every individual health effect, or every effect's individual magnitude.)
0[anonymous]7y-------------------------------------------------------------------------------- Muhammad Wang fallacy. Those numbers sum up to less than 100%, so it's well possible that all (or nearly all) smokers aware that smoking causes heart disease (would claim they) want to quit.

Patent trolling?

Gold mining. Adding marginal ounces of gold to world supply adds very little utility because gold can be pretty much endlessly reused and there is plenty of it around that has already been mined. Central banks of fiat currencies sit on many years supply for no particularly good reason. Meanwhile, the industry consumes $billions annually of real resources (like fossil fuels and capital equipment) and produce pollution and environmental damage.

3CronoDAS7yIsn't the underlying problem gold hoarding, then, and not gold mining? (If gold were as cheap as copper, what would we do with it that we don't do already?)
2gwern7yAre you asking what uses would humanity intensify and employ even more gold for than we already do now, or what entirely new uses (which are currently uneconomical or have not been discovered) we would employ gold for? Because at least for the former, there's a variety of uses for gold: https://en.wikipedia.org/wiki/Gold#Medicine [https://en.wikipedia.org/wiki/Gold#Medicine] (and scroll down for further uses).
0CronoDAS7yBoth are good ways to answer.
1Lumifer7yA lot, actually. Gold is very ductile and completely impervious to corrosion, just to mention the first two characteristics that came to mind.
0CronoDAS7yAnd a really good electrical conductor. It's already used extensively in the integrated circuit industry, although they don't really use very much by weight...

One possibility is computer games, e.g. I've certainly lost a good chunk of hours to the game Diablo. Modern things like Farmville seem especially pernicious. [This is not to be construed as all gaming is bad, etc.]

I recently read Peter Leeson's paper, Better Off Stateless: Somalia Before and After Government Collapse, which argues that Somalia's government was so awful that anarchy was actually better in most of the ways we care about. It has an example of a profit-making enterprise with negative value:

Under government, a great deal of Somali production was military hardware that citizens did not consume. In fact, to the extent that this hardware was used to suppress the Somali population, this sizeable portion of pre-1991 GDP was actually negative value added from the perspective of citizens’ welfare

...

[Military spending] left few resources for investment in public goods, like education, health, or transportation infrastructure...[In 1990,] government spent less than one percent of GDP on economic and social services, while military and administration consumed 90 percent of the state’s total recurrent expenditure

So, weapons manufacturing for an evil regime seems like a candidate for effective malice.

9tut7yYour conclusion is probably true. But your Leeson quote is comparing the percentage of GDP that goes to things he wants to the percentage of the state's recurrent expenditure that is military spending. Those numbers are not even enough to distinguish Barre from for example a government that just defends the people against external enemies and otherwise lets everyone handle their own affairs.
4michaelkeenan7yOh, thanks for pointing that out! I'd not noticed he switched from GDP to the government budget; I'd been thinking it was all the government budget.

Homeopathy and naturopathic health cures. The only argument for these is that they work as well as a placebo.

Cosmetics and jewelery. These are particularly expensive mate attraction and social standing boosters.

Lobbying for government handouts/boons/subsidies. These have the potential to have net utility, but in many cases do not.

Monopoly businesses. Net loss of utility through inefficiency.

And finally, an overarching overemphasis on reliability. By declaring that 'failure is not an option', we spend vastly more resources than if we were to simply acc... (read more)

2ThisSpaceAvailable7y"Monopoly businesses" is a rather broad category. And "net loss" compared to what? Compared to if they were operating differently, or compared to if they weren't operating at all?
2CronoDAS7yThumbs up for this - selling snake oil is basically legal in the U.S. these days, but it's not exactly ethical.
2satt7yHowever, increasing returns to scale may make a monopoly a more efficient producer than a non-monopoly. In those cases the efficiency loss due to the lack of competition may be more than cancelled out by the efficiency gain from exploiting returns to scale.
0witzvo7yThe "canceled out" part depends on whether your interested in the utility of stockholders and the reduced resource consumption of the manufacturing process or the utility of the general population which might have to consume less of the product than they'd otherwise be able (because of higher prices) or more generally have less capital left to buy other things they need/want. Monopolies with regulated price structures sometimes work [https://en.wikipedia.org/wiki/Bell_System], I guess, though it's complicated.
1ThisSpaceAvailable7ySo... what utility will be calculated will depend on whether one arbitrarily excludes a set of humans from the utility calculation?
0witzvo7ySorry I guess it wasn't clear. I was contrasting two naive utility functions: a flat one which adds up the utilons of all people versus one that only counts the utilons of stock brokers. I'm not asserting that one or the other is "right". Both utilities would have some additional term giving utility for preserving resources, but I'm not being concrete about how that's factored in. [I'm also not addressing in any depth the complications that a full utilitarian calculation would need like estimated discounted future utilons, etc.] Did I clear it up or make it worse?
1ThisSpaceAvailable7yI took "or" in your previous comment to be exclusive, so that "the general population" does not include stockholders. Are you now saying that your two categories are "stock holders" and "everyone, including stock holders"? (And presumably meant "stock holders" when you wrote "stock brokers" in you most recent comment")
0witzvo7yyes, that's what I meant; thank you.

Your question makes me think of what economists call negative externalities. Wikipedia has a list of them

The problem with vice-type industries like gambling, cigarettes, and junk food is that one can make a reasonable argument that the users are deriving some kind of utility from gambling, smoking, and stuffing their faces with Cheetos. How do you measure utility? If it's strictly in terms of WTP (willingness-to-pay), then vice doesn't seem to be such a good candidate, you need to look at industries where there is an element of force or fraud, but not so extreme that the industry is banned.

Also one needs to distinguish between utility at an individual level... (read more)

Factory farming.

3Dentin7yI don't even remotely see how this is a net negative. Factory farms produce incredible utility through specialization and optimization.
3DanielLC7yThe positive utility they provide to humans is massively outweighed by the negative utility they provide to animals.
2Dentin7yFor clarification: I took factory farms as including those which focus on plants and produce, not just livestock. Regardless, I value utility given to humans much higher than I value that given to animals. It is far from obvious to me that the animal side outweighs the human side. Finally, please list three alternatives to factory animal farms which provide higher net utility.
3DanielLC7yWhy? Do animals feel less pain? I would expect a being with fewer neurons to feel less pain, in the same way that a being with the same number of neurons that's running the relevant operation on them for a shorter period of time (i.e. not in pain as long) would feel less pain. That's not enough to make factory farming worth it. Why three? In order to explain it, I only need to give one alternative with much higher net utility. There are two obvious alternatives. Not eating meat and raising the animals humanely.
4bbleeker7yVat-grown meat. If only I could buy that already...
9CellBioGuy7yI am compelled to point out that the vat-grown hamburger everybody's read about killed quite literally the most cows per hamburger of any burger in human history, by several orders of magnitude. It was assembled in tens of thousands of strips grown laboriously as near-monolayers of cells in sterile tissue culture (since the muscle cells themselves have no immune system) fed refined protein and cell culture products. All of this has to come from somewhere. Most hilariously, mammalian cells actually require various growth factor proteins around them to divide, they will not do so on their own. Even the HeLa tumor cells from the sixties that I've worked on in the past require at least a little bit of them, and straight up muscle cells require a lot. The best place to get these hormones is from FBS, fetal bovine serum - a fancy name for the filtered blood of unborn cows. This is a slaughterhouse product, made as a byproduct that they sell to labs whenever they get a pregnant cow coming through. Nobody's actually gone and figured out which of the thousands of substances in it are most important for its growth-allowing effects or synthesized them in vitro, and knowing how biology works it's probably a number of them that are necessary. I've lost the calculation I made, but I saw a source somewhere saying that something like a third of the cost of production was for fetal bovine serum. I went to a laboratory supply company's website and looked at bulk options, found sources from slaughterhouses about the amount of FBS they get from a single pregnant cow, and estimated that it required in the range of 300 pregnant cows to die to make that burger... edit: great now I'm going to need to go digging for those sources again... edit2: here comes the calculations: This [http://www.futuremedicine.com/doi/abs/10.2217/rme.11.112?journalCode=rme] indicates 1-3 cow fetuses per litre of serum, a Life Technologies catalog indicates a rate of about $700/litre but other sources indic
1Dentin7yNot eating meat has negative net value to me. Raising the animals humanely increases cost, and depending on 'how humanely' we're talking about, can easily become net negative value to me.
1DanielLC7yFactory farms have a large net loss in utility due to the suffering they cause animals. If you do not value animals, then it's not surprising that they wouldn't cause a large loss in your utility function. However, from the perspective of wanting to prevent harm in all sentient beings, they cause a large negative utility.
1Lumifer7yLet's take two ecosystems. One is rich and diverse, full of creatures mostly eating each other. Another is poor and sparse, hardly any creatures live there. Can you gain utility by converting the first ecosystem into the second one?
4DanielLC7yYes. If the lives in the first ecosystem involve more suffering than pleasure, then the second almost certainly has more utility. Considering that dying is a once-in-a-lifetime event, I think it's a bigger issue how they live than how they die.
1Lumifer7ySo, desertification is a good thing then, I guess? Actually, is there anything in that line of reasoning that doesn't argue for converting all wild nature into sterile empty spaces?
0hylleddin7yAny ecosystems which do not involve more suffering than pleasure shouldn't be exterminated, by that line of reasoning.
0DanielLC7yIf wild animals suffer more than they feel pleasure, I don't see why it would be better for them to live. I don't actually know whether or not their lives are worth living, but it doesn't seem all that unlikely that they're not. Do you think all life is worth living regardless of how terrible it is? Do you predict some long-term benefit of the wild that will make the horrendous amounts of suffering involved all worthwhile?
0Lumifer7yDo you feel the same way about humans, too?
3DanielLC7yYes. I am in favor of euthanasia.
0Lumifer7yFrom what I understand, involuntary euthanasia, right?
0DanielLC7yIf consent is possible, you shouldn't act without consent for several reasons that I won't get into. In the case of animals and people in comas, consent is impossible. I do not believe that never acting is appropriate in this case. It's like why I'm okay with humanely raising animals, but I'm not okay with slavery. If you need humans to help you, and you will treat them humanely, you can get their consent. If someone isn't willing to get their consent, that's highly suspicious, and they are almost certainly not treating them humanely. You cannot get an animal's consent, so it's not suspicious, and so long as you have a somewhat reliable method to tell if they're being raised humanely, it's okay.
0Lumifer7yWhat's your definition of "consent"? For example, if you own a dog, you generally have no problems seeing what your dog agrees to do (="consents") and what it doesn't. True, but it seems to me the intervention bar is much higher in this case. What makes you think you can clear it?
0DanielLC7yIt has to have some idea of what's going on. A dog is operating entirely on instinct. Humans still use a lot of instinct, but that's hardly a reason for one human to make a decision for another. Why? If you have some a priori reason to believe that a life is worth living, then it would take a lot of evidence to prove otherwise. If the opportunity cost of not living a life worth living is substantially higher than the direct cost of a life not worth living, caution would be appropriate. But these don't seem to apply. If you're not certain, it's easier to reverse a choice of life than a choice of death. That applies to the wild, but I don't think it's likely we'll find reason to believe that factory farmed animals' lives really are worth living any time soon. If you just consider action generally more dangerous than inaction, that would apply for destroying wildlife, but factory farming is action. Avoiding it is inaction. It's a point against factory farming.
1Antiochus7yThat's a question with an answer. Do wild animals suffer so much their lives aren't worth living? Then yes. My gut feeling is that it isn't the case, however, or it varies a lot from specie to specie - some might inherently suffer more than others by being kept in a naturally high state of stress, etc.
0ThisSpaceAvailable7yTo assert that animals experience qualia is hardly an uncontroversial claim.
3Douglas_Knight7yThat's not what the term means.
-2VAuroch7yHere are four, all of which have higher net utility for humans only: 1)Status quo pre-factory farms 2) Modern CSAs on a broader scale 3) General movement of the average diet to be closer to vegetarian (the demand for factory-farmed meat is mostly artificially created and superstimulus-based anyway) 4) The 'grass farmer' farm model
1ephion7yThey are incredibly damaging to the environment and health of consumers.
0Dentin7ySo are cars, yet few people would give them up because they yield substantial net utility. Please give three alternatives which are better.

Are we trying to maximize profit or utility loss?

0Multicore7yThere has to be a profit, but we're maximizing utility loss.
2Eugine_Nier7yOk: Step 1) double your money using an efficient business (or a hedge fund or whatever). Step 2) leave a dollar of profit and spend the rest of your gains to do TEH EVILZ.
5mare-of-night7yEfficient misanthropy :)
0hylleddin7yI believe the question is about things that are currently being done, not potential ways to legally maximize utility loss.

Zero-sum advertising for products like Coca-Cola, which are nearly indistinguishable from readily available substitutes?

What about all the positive externalities like free tv and websites funded by ads?

1Alsadius7yI enjoy Coke ads for art value, even if I'm fairly indifferent to the product.

Operating casinos? They're fairly harmless to most people, but gambling addiction has destroyed people's lives.

3RichardKennaway7yIf you donated the profits to an effective charity, would running a casino be a suitable career for an Effective Altruist?

Getting governments to change laws to protect your profits. A classic example of this is taxi cartels, enforced by medallion systems - it's bad for cabbies, astonishingly bad for users, not great for new entrants to the system(and bankruptcy-inducing if they ever unwind the system), but the guys who paid a hundred bucks for a medallion in 1950 and sell them for half a million today earned a gargantuan profit for no good reason except regulatory capture.

How do you measure arms-race type goods? For example, the world would be better off without any nuclear weapons. However the world is made better off if several reasonable countries can obtain nuclear weapons to serve as deterrents to others using them.

A similar analysis exists for guns.

Not sure it's a useful question - whether it's financially profitable or not, harm is harm. Doing harm for political or personal reasons is no better than doing so for profit.

There's probably no industry that doesn't cause some harm. Certainly we can all agree that career politicians, teachers, and surgeons all get paid and cause harm to some.

0ThisSpaceAvailable7ySo, if someone leaves food to rot in the fields, it of no concern whether there are institutional incentives that explain this action? We should just focus on the act itself, and not examine what forces produce it? And the issue is not whether some are harmed, but whether the total net effect is harmful.

Why are we thinking about this again?

4witzvo7yIt seems to me these are obvious targets for regulation. I'd guess the OP is worried that we've overlooked something. The game theory of it might make it difficult to implement in practice: e.g. if one country bans casinos that just makes casinos more profitable for the nearby ones. ... but that's what treaties are for.

The interconnected web of modern finance which produces a monetary and economic system which must expand exponentially or face instability. This causes us to in the course of avoiding short-term economic upset and recession on decadal timescales destroy our long-term prospects on millennial-plus timescales via incessant privatization of the commons into market systems, draining of irreplaceable resources such as fossil fuels soil fertility and ecosystem services from capital-analogues into one-time income boosts much more frequently than would otherwise o... (read more)

Hard to avoid being controversial: for-profit abortion firms.

I have better examples but it would be immoral to mention them.

0Alsadius7yTangent: How does one decide that something is immoral to mention?
2Dias7yAt least personally, I didn't mention the ideas I had that I thought were attractive to a new entrant in the market.
0Alsadius7yFair enough, I can accept that.