Sam Bankman-Fried, the disgraced former CEO and co-founder of the dissolved cryptocurrency exchange FTX was sentenced to 25 years in federal prison. His meteoric rise and literally overnight downfall is symptomatic of a society in which individual success is the ultimate thing to aspire to, in which low-level sociopathy is an asset or a means to achieving this. 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 correctly that goodness and honesty is no assurance of success at life. As it’s said, “No good deed goes unpunished.” I think this is 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. I’m sure we all know people are are arrogant assholes yet still highly successful and have high social status. Likely, these people don’t even see themselves as that way, because their success and status creates a self-reinforcing bubble of being a good person and insulation from critcism. If we have to constantly be reminded or tell ourselves that 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’.
Stoicism and ‘mindfulness’ are popular, not because it works, but because people want to believe it does “It has to work!”, or the popularity of such philosophies can be explained by social desirability biases. People will tend to identify with that which confers status. No one wants to be seen as being too emotional about things, as that is perceived as a weakness. Yet this is also how people like Bankman-Fried are able to get away with their crimes, because being too vocal in exposing these people comes off as unhinged or hot-headed, which were labels ascribed to Madoff whistleblower Harry Markopolos, that also served to discredit him.
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 Sam’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 U.S. 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.