Mar 18 2013: short answer first: I just confused wording - I didn't mean inflation - I meant exponential growth (the concept that growth induces more growth etc.) - I somehow seem to connect that with inflation :S
for the rest, let me try to sort this a bit: the GDP is the total income of the population (it we put it simple), which can be spent in different ways. thus it can either be spent on non-profit or profit (e.g. you can either buy a coke or donate the same amount of money). in this way profit and non-profit-sector compete. what makes it complex is the fact that the money you donate does not directly contribute to the economy (even though indirectly a lot of charities do).
and of course he did not talk about this as he does not have any data supporting thesis 1 that non-profit-sector and profit-sector compete. however, there is also no data supporting thesis 2 that more advertisment leads ONLY to competition among charities (I think there already is a minor competition among charities). Both of theses theses are logical and he supports the first. as I said it should examined experimentally. I think he just did not consider this. The data he gives lead neither in the one nor in the other direction.
Mar 18 2013: Well, you forget the idea of exponential growth (edit: sorry for my wrong wording, should be closer to what I mean now): even if the amount spend on the cause in the first year is the same as it is now, it will be bigger in the years to follow. This is mentioned by Pallotta with the example of amazon, which didn't make any profit in the first years.
I think the only thing that could be problematic lies in the question why is spending on charity stuck at 2%? Palottas answer obviously is because charities do not have the means to grow (i.e. they can't take the money from the competitor, the for-profit-sector). But it also could be that this number won't grow no matter what you do - it could be a constant (under current ethical standards etc.). We can't know unless it is tried - a community-based experiment would be really interesting. I actually doubt that it is a constant.
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A reply on Conversation: Doing the math
for the rest, let me try to sort this a bit: the GDP is the total income of the population (it we put it simple), which can be spent in different ways. thus it can either be spent on non-profit or profit (e.g. you can either buy a coke or donate the same amount of money). in this way profit and non-profit-sector compete. what makes it complex is the fact that the money you donate does not directly contribute to the economy (even though indirectly a lot of charities do).
and of course he did not talk about this as he does not have any data supporting thesis 1 that non-profit-sector and profit-sector compete. however, there is also no data supporting thesis 2 that more advertisment leads ONLY to competition among charities (I think there already is a minor competition among charities). Both of theses theses are logical and he supports the first. as I said it should examined experimentally. I think he just did not consider this. The data he gives lead neither in the one nor in the other direction.
A reply on Conversation: Doing the math
I think the only thing that could be problematic lies in the question why is spending on charity stuck at 2%? Palottas answer obviously is because charities do not have the means to grow (i.e. they can't take the money from the competitor, the for-profit-sector). But it also could be that this number won't grow no matter what you do - it could be a constant (under current ethical standards etc.). We can't know unless it is tried - a community-based experiment would be really interesting. I actually doubt that it is a constant.