Ze zouden het zo graag zelf willen geloven, de miljardairs. Maar … lees dit even:
“What a year for crypto it’s been, and it’s still only November. I cannot tell you how much I am looking forward to reading the Michael Lewis book on Sam Bankman-Fried and the FTX drama. Presumably, the man they call SBF first appealed to Lewis because it fit into his favored narrative of “how one clever guy overcame the idiocy of the crowd,” but now it has become so much more interesting.
A lot has been written on this saga already, but I think the most amazing piece I’ve read remains this bonkers “spotlight” feature from Sequoia, the venture capital company which invested in SBF’s companies, and which SBF then invested in (an endearingly circular relationship, which may be of interest to regulators). If read at face value, it gives the impression that SBF is the closest thing to Jesus that Earth has hosted for years. I could quote all of it, but I’ll content myself with a couple of snippets.
- “The exchange that SBF had started to build, FTX, was Goldilocks-perfect. There was no concerted effort to skirt the law, no Zuckerbergian diktat demanding that things be broken. And, yet, FTX wasn’t waiting to get permission to innovate. The company had based itself offshore precisely because it aspired to build an advanced risk engine that would support all sorts of hedging strategies.”
Yes, that I’m sure is the only reason it was based offshore. What other reason could there be? Read on and learn about a “web3 lifestyle app”, which is sort of like a Fitbit but which earns you a little bit of cryptocurrency for every step you take. A pair of virtual sneakers costs a mere $800 (“more sneakers owned gives more total energy”)! If there’s a goldrush, sell picks and shovels (“more picks and shovels owned gives more gold”)! Anyway, the author of this piece gets really into SBF, who apparently was going to be a trillionaire. All the breathless enthusiasm gives quite an edge to the fact that he is now bust and under investigation by governments everywhere.
- “I, like Fitzgerald, do think the very rich are different. Yes, because they have more money. But also, pace Hemingway, because they often have fewer friends. It’s not worth the salt in one’s tears to be sad for the plight of the oligarchy — but there is a downside to billions. Reciprocity becomes difficult between the post-economic and the merely civilian.”
Tragically, the article has been removed from the web site and replaced with a note saying that “a liquidity crunch has created solvency risk for FTX and its future is uncertain. Many have been affected by this unexpected turn of events.” This is true, if by “unexpected,” you mean “totally predictable.” If only someone had warned them about the potential downside risks of crypto in a widely-read investor-focused publication like, say, Forbes.
Anyway, the article is the gift that keeps on giving, because it introduced me to the movement called effective altruism, “a research field and practical community that aims to find the best ways to help others, and put them into practice,” which I was not previously aware of but which has slightly fascinated me ever since. The basic premise of it is undeniable/banal: if you want to do good, you should work out the most effective way to do so, so you can do the best good you can. But the implication is golden: the more money you have, the more good you can do; so the more wealth you earn, the better for the world.
Here’s an article about what they call “earning to give,” which lays out the highest earning careers for people to consider (“in short, it’s jobs in finance, management, medicine, law, real estate and technology”), and has the best shot/chaser I’ve read in a while.
- “Sam Bankman-Fried, inspired by these arguments, founded what’s now one of the leading cryptocurrency exchanges. He’s been named a Forbes 30 under 30, and estimates his net worth at an (illiquid) $10bn, of which he intends to donate almost everything,” states the last paragraph of a section called “what do we mean by earning to give.”
- “ Sam Bankman-Fried’s company, FTX, has filed for bankruptcy. We are very concerned for the depositors who appear to be at risk of losing money, as well as everyone else affected,” states a new final paragraph of the same section.
They are very concerned though, so that’s fine.
There’s an implicit insight here groping to escape, so I’m going to make it explicit. Doing good in the world isn’t entirely about how you spend what you earn but also about how you earn that money in the first place. After all, how much good would you have had to have done to make up for the fact that your crypto-exchange just vanished half a billion dollars, each of which presumably had an owner? How much crypto could you earn by walking, and would it be worth more than the $800 you spent on a pair of virtual shoes that won’t even keep your feet dry? How can clever people be so amazingly stupid? At least if you’d invested your life savings in a gold rush but found no gold, you would still have picks and shovels to sell on to someone else.
After all, the world’s financial professionals earned vast quantities of wealth before the great financial crisis of 2007-08 but even if they’d given it all away (which they didn’t) they never would have made up for the catastrophic harm they caused by wrecking the world’s economy. The world’s oil companies have earned hugely over the decades and no doubt given lots away to good causes, too, but they caused climate change, which will do far more harm than they could ever do good. This feels like a pretty undeniable/banal insight too, yet somehow it seems to keep being necessary.
What’s the answer? Well, in my opinion, it’s better to have taxation-funded democratic states governed by fair laws that take everyone’s interests into account, and which are enforced by well-funded regulatory agencies, rather than a selection of individuals convinced by TED talks that they can best improve the world by getting as rich as possible as quickly as they can and then spending the money as and when they see fit. I admit that’s not a very catchy insight, however. I’ll need to work on it if I want a TED talk of my own, or indeed to have a film made about me as SBF undoubtedly will.
(From .CODA)