SBF’s Fraud is an American Success Story

Sam Bankman-Fried (SBF), the disgraced CEO and co-founder of the dissolved cryptocurrency exchange FTX was sentenced to 25 years in federal prison. As I said, similar to Trump’s hush money trial, relatively few people are personally offended in any visceral way. Rather, everyone wants reassurance that ‘good’ will prevail, like in the movies. The people who lost money in FTX are likely not among those who are writing articles about it, as weeks-old videos about FTX pile up on YouTube, with new videos produced daily, piling atop of those too, as every development no matter how small is chronicled in detail.

SBF is a product of a society in which individual success is the ultimate thing to aspire to, and low-level sociopathy is an asset or a means to achieving this, not a liability. His mistake was getting carried away. He could have stopped at maybe ‘only’ a billion dollars and a successful cryptocurrency exchange, but now has neither. Here are some headlines from 2022 lauding and praising him as the next Warren Buffett or J.P. Morgan:

He did what he felt was necessary to be a valued person in society, and for that I cannot entirely blame him. I would even commend him for embodying the ethos of what it means to be successful. He knew also correctly that goodness and honesty are no assurances of success at life. As it’s said, “No good deed goes unpunished.” I think this is sorta what Michael Lewis was getting at in his new book, in which he is criticized for being too soft on his now-incarcerated subject. What he has done is held a mirror up to society, and we don’t like that we all collectively play a small role in this.

Things which are actually true, we don’t have to constantly remind ourselves or create an entire cultural hagiography or narrative contingent upon this ‘thing’ being true. If we have to constantly be reminded or tell ourselves that honesty and niceness pays off (such as being a good listener, which is one of the habits of ‘highly effective people’), or that hard work pays off, maybe it’s not true? Or regarding Covid, the media chorus to ‘trust the science’ or to ‘trust the experts’. Or regarding climate change, that ‘the science is settled’.

I’m sure we all know people are are arrogant assholes yet still highly successful and have high social status, and likely those people don’t even see themselves as that way, because their success and social status creates a self-reinforcing bubble of being a good person. It’s similar to the Mathew effect, in which success begets more success. Stoicism and ‘mindfulness’ are popular, not because it works, but because people want to believe it does “It has to work!” or social desirability bias. People will tend to identify with that which confers status among others. I think it’s situational: people are stoic about things which may not affect them, but emotional about more personal matters.

People think they are on the side of good, but are actually neutral, being bystanders to corruption, and then when it’s safe pretending they ‘knew it all along’. The same financial media that was praising Mr. Fried are writing articles about how his failure was inevitable in hindsight, or could have been prevented had people only been paying more attention and had spoken up. But people were paying attention, such as CME CEO Terry Duffy who warned of FTX, but were ignored, as is often the case with these situations.

Same for Theranos, whose CEO Elizabeth Holmes was likened by the media to Steve Jobs. Things were going well for a decade or so, until in 2018 it was revealed that the blood testing machines didn’t work as promised. Too bad this wasn’t known before investors collectively sunk $800 million into the worthless company.

Although SBF’s philosophy of effective altruism is about long-termism–that is–making making sacrifices in the present to create prosperity in the distant future–the thrust of US economic policy is the opposite. Pundits wonder “Why did Greenspan do nothing about the housing bubble?” or “Why are bubbles allowed to inflate so large even though so many people are hurt when they pop?” Capitalism and innovation necessitates risk-taking, which is preferrable to being overly cautious despite the occasional fraud or asset bubble. It seems as a society we’re content with this tradeoff, hence the enduring appeal of get-rich-quick schemes and the idolatry of wunderkind self-made billionaires, even when it’s all an illusion.