I don’ t understand the first part of this argument. Can you explain the causal link between more charity and more corruption/inefficiency? Also the link between more inefficiency (caused by greater overall giving) and more death?
As for the second part, I wonder what assumptions led you to the conclusion that increased charity means decreasing marginal utility. Suppose, for example, that everyone buys dosages of antibiotics as their charitable donation. At no point does the utility of each dosage paid for decrease until you’ve solved the problems of Malaria, TB, etc. Indeed, because of the nature of infectious disease, there might be a stronger argument that the utility actually increases with more donations because the smaller the population with the disease the less it will spread.
Of course, it’s a little bit more complicated than just buying antibiotics (although that alone would save millions). But even when you get to the point in a problem where you’ve done everything you can with the present infrastructure, you can start spending money building that infrastructure. I just don’t see how decreasing marginal utility is an inevitable result, or even a likely one.
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I understand this argument as a hypothetical, but in the real world it seems a little silly. It’s not like good organizations are just throwing food at hungry people and hoping it sticks. Yeah, you’ve gotta avoid bad organizations just like any other aspect of life, but you aren’t taking a chance that you’ll save a life when you donate to most organizations.