Michael Lewis is getting a lot of (probably deserved) criticism for being too favorable to Sam Bankman-Fried and the rest of the FTX people. But having been, and more recently worked with, many twenty-something techno-nerds, I can see his argument.
A group of young people, disillusioned with the state of the world, distrustful of anyone older than them, believing they’ve discovered new ways to live—new ethics and causes, enabled by new technologies and a changing world. Inspired by gurus preaching self-sacrifice and a focus on solving the world’s problems, they move to foreign countries, living together, disdaining traditional morality.
I’m talking, of course, about the 60s counterculture.
Okay, it’s far from an exact analogy. I realize SBF’s motives for moving to Hong Kong and the Bahamas were very, very different from the hippies going to India and the forests of N. California. But let me push it until it breaks.
The hippies didn’t trust anyone over 30. SBF thought older people had little “expected value” and thought all the people over 45 he hired just worried. Roger Daltry hoped to die before he got old. SBF at 31 thought he only had ten or fifteen years to have an impact. The hippies went to Woodstock and other music festivals. The FTX core went online and played video games. Both groups thought monogamy was outdated. Both groups had a strange relationship with personal hygiene. Ironically, the hippies didn’t want to get rich, but many of them eventually did. SBF wanted infinite amounts of money and eventually lost it all. Both groups saw their approach as a way to make a better world.
I don’t know if Michael Lewis would agree with this analogy, but this is my interpretation of the core of his message: there may have been terrible people behind the crimes of FTX and Alameda Research, but it is just as possible that was a group of idealistic, somewhat naïve young people, trying to do good and failing spectacularly.
Lewis says:
“Initially it felt like they were playing a game. They were all outliers in terms of their intelligence and the way they approached the world.” Soon enough, he saw that it wasn’t a game. They were all completely and utterly sincere. They judged the morality of any action by its consequences and were living their life to maximize those consequences.
So where did they lose the thread?
Lewis says:
One day some historian of effective altruism will marvel at how easily it transformed itself. It turned its back on living people without bloodshed or even, really, much shouting. You might think that people who had sacrificed fame and fortune to save poor children in Africa would rebel at the idea of moving on from poor children in Africa to future children in another galaxy. They didn’t, not really—which tells you something about the role of ordinary human feeling in the movement. It didn’t matter. What mattered was the math. Effective altruism never got its emotional charge from the places that charged ordinary philanthropy. It was always fueled by a cool lust for the most logical way to lead a good life.
I don’t think you can lay the blame for this at Peter Singer’s feet. Lewis’s SBF comes off as profoundly weird, clearly pretty far along the spectrum, with little or no empathy or understanding of other people; he was obsessed with ethics, but at some level, it was just an intellectual exercise—another game--rather than being about real people.
And in the end, the numbers blew up in his face. All that effort to harness probabilities just vanity in the face of unquantifiable risk. You could say what happened to FTX was a Black Swan, except we’ve seen this over and over with LCTM and other hedge funds, with mortgage-backed securities and credit default swaps, and countless prior manias. It’s not a Black Swan when so many people (mostly old) could see it coming. It turned out that his system was another Spherical Cow—not just FTX and Alameda Research, but his whole approach to life.