FTX and Effective Altruism

"Let us build us a city and a tower, whose top may reach unto heaven..."

What a month. The crypto world was set astray for the third time this year in light of the collapse of FTX and Alameda Research. I won’t bore you to death with the details of the collapse, (your crypto naysayer friends have already done that) but would like to discuss the movement that helped convince Sam Bankman Fried, Founder of FTX, that stealing other people’s money was for the “greater good.” A philosophy that helped rationalize using stolen capital to donate to politicians. A movement that convinced FTX and Alameda that being high-leverage gamblers was somehow good for humanity.

Effective Altruism.

In a recent conversation with a friend he mentioned that “a problem with smart people is that they are often immersed in ideas, but the problem is most ideas are bad ideas.” Some of history’s most counterproductive ideologies were all at the hands of smart people.

The pervasive 20th Century movements of Communism, Eugenics, and Nazism were all introduced by bright thinkers. The Manhattan Project’s experiment with the first atomic bomb (despite the fact that half the scientists thought it would enlighten the atmosphere and destroy humanity) was initiated by brilliant scientists. The now seemingly harmless tech movement of Effective Altruism, is again, introduced by bright minds in technology.

I’m by no means trying to compare Effective Altruism with these more abominable movements, but pointing out that new ideologies rarely have nefarious origins. They are simply the result of smart people exploring new ideas. The inventors of these ideologies believe their movements are for the “greater good”. In the case of FTX collapse, much of it can be blamed on this new philosophy.

What is EA?

At the most fundamental level, the Effective Altruism movement makes a utilitarian argument about how the world’s privileged people should spend their time and money if they want to maximize their positive impact on the world. Using statistical analysis, effective altruists determine how to best deploy capital in a way that will help the most people.

Via the use of wholesome expressions like “help humanity” or “better the world for people”, it’s difficult to disagree with the tenants of the movement. It makes sense, most would say, that we maximize the good that each dollar does. Using complex formulas we can determine how to best spend each dollar effectively.

This sounds great until your statistical analysis leads you to repugnant conclusions. Using each dollar efficiently requires turning a blind eye to several problems. Nick Beckstead, former Head of FTX foundation, for example, came to the conclusion that “saving lives in poor countries may have significantly smaller ripple effects than saving lives in rich countries because rich countries have substantially more innovation.” Other EAs seem to believe that capital is better served in solving existential risks, (risks with the potential to eliminate humanity in the far future) rather than immediate global problems.

These individuals define “Good” as a measurable metric. EAs are committed to embracing good for the greatest number, regardless of what it entails. When morality is minimized to statistical analysis, it requires turning a blind eye to certain actions along the way.

SBF

This describes the philosophy and belief system of Sam Bankman Fried. The billionaire crypto savior who pledged to give all of his money away. Leave it to the oversized FTX T-shirts, frizzy hair, and harmless personality to convince the entire tech world that Sam could do no harm.

Turns out we were all wrong. As we soon discovered, Sam used FTX users’ money to help political campaigns, gamble with assets, and fill his own pockets. SBF’s altruistic goal was to give away billions, he just forgot to mention that it would be all your money. As the icing on the cake, via a bill for which he helped lobby, his wrongdoings may help regulate truly useful crypto applications.

With his deep history of effective altruism, SBF convinced himself that he could do better with money than FTX users could. He was using it for a greater cause. FTX and Alameda served as a corrupt scheme for Sam to fund the world he wanted.

Maybe this is why Ayn Rand was so cautious about the altruist. If you’re really serious about morality, shouldn’t you question the assumption of whether or not what you’re doing is moral? SBF, drunk on hubris behind his harmless persona, rationalized stealing billions of dollars for the “greater good.” Just like Nick Beckstead turn a blind eye to lives in poor countries, SBF was willing to turn a blind eye to stealing billions of FTX user’s assets. He believed he could use the money more efficiently.

This form of altruistic morality treats men like cattle to be sacrificed for the benefit of the group. Leave it to Soviet Russia or Nazi Germany to see the full extent of this type of morality in practice. Individuals are sacrificed for the benefit of the “greater good”, the State.

The real critique of Effective Altruism, just like The Enlightenment philosophy before it, is the belief that we can minimize life to purely math and rationality. The misconception that we can statistically determine morality. “Doing good” isn’t simply what the data tells us is good. There are certain elements of the human condition that can’t be minimized to spreadsheets. This is something religion has taught us throughout history.

Effective Altruism, in essence, is a Utopian vision attempting to replace the transcendent: A modern Tower of Babel.

The City and the Tower

In the Book of Genesis, after the events of the Great Flood, the descendants of Noah work to build a great city and a tower, whose top may reach heaven. By building the tower, the inhabitants of the city wanted to make a name for themselves and prevent the population from being scattered across the earth:

“Then they said, Come, let us build ourselves a city and a tower whose top is in the Heavens, and let us make a name for ourselves, lest we be dispersed over the face of the whole earth” - Genesis 11:4

The descendants of Noah are similar to SBF, Effective Altruists, and Rationalists with their utopian visions. They believed that they had the capacity to rival the power of God. The magnificent Tower of Babel would take the place of the transcendent. The result in both the case of the Descendants of Noah and SBF is chaos. God confuses their language, causing them to speak many different languages so they would no longer understand each other.

“So the Lord scattered them from there over all the Earth, and they stopped building the city. This is why it was called Babel—because there the Lord confused the language of the whole world. From there the Lord scattered them over the face of the whole earth.” Genesis 11:8

God is offended by the hubris of humanity and chaos erupts. Humanity once united, now speak various languages. Similarly … the pride of SBF, FTX, and the effective altruists has caught up to them. The collapse of Alameda and FTX has challenged the legitimacy of the social movement.

The poster child of Effective Altruism put a dent in the philosophy. While EAs will recalibrate and determine how to counter doubts about their ideology, this opens the door for a new movement to emerge. As Elon Musk wrote earlier this year, a new philosophy of the future is needed. While the EAs and rationalists are in retreat, now is the time to develop that new movement.

Turns out that “Heaven on Earth” won’t be created by statistical analysis alone. You can’t rationalize your way into paradise. We, in fact, do need a new philosophy: A movement that fulfills the soul. Western Technology leaves no room for the sacred. How do we synthesize the two worlds? Faith and Reason? Technology is merely a tool, not our new God. We need a set of values to aim towards. Let the principles lead and the tools follow.

I hope to explore this topic in the coming weeks.

In the meantime, I leave you with a quote from C.S Lewis’ Mere Christianity:

The moment you have a self at all, there is a possibility of putting Yourself first—wanting to be the centre—wanting to be God, in fact. That was the sin of Satan: and that was the sin he taught the human race. Some people think the fall of man had something to do with sex, but that is a mistake. What Satan put into the heads of our remote ancestors was the idea that they could "be like gods"—could set up on their own as if they had created themselves—be their own masters—invent some sort of happiness for themselves outside God, apart from God. And out of that hopeless attempt has come nearly all that we call human history—money, poverty, ambition, war, prostitution, classes, empires, slavery—the long terrible story of man trying to find something other than God which will make him happy.”