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Speaker 1: Pushkin.

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Speaker 2: In a penthouse apartment in the Bahamas, a billionaire is

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Speaker 2: hosting a meeting. It's the kind of place you might

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Speaker 2: expect to find a billionaire, marble floors, a grand piano,

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Speaker 2: a balcony with a hot tub, and views of the marina.

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Speaker 2: As the billionaire and his colleagues debate what to do

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Speaker 2: with his money, they look to one man in particular

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Speaker 2: for wise advice. A business analyst, a financial expert, no

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Speaker 2: a moral philosopher who's devoted his career to thinking about altruism.

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Speaker 2: This is the second of two cautionary tales about altruism.

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Speaker 2: In the first, we heard about a scientist called George Price,

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Speaker 2: who helped to unravel the mystery of how evolution produced

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Speaker 2: altruistic behavior, and who then became the most extreme altruist

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Speaker 2: you could imagine, giving away his last penny and the

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Speaker 2: coat on his back. But Wade, perhaps the billionaire in

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Speaker 2: the Bahamas is an even more extreme altruist. The only

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Speaker 2: reason he ever wanted to make money was to give

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Speaker 2: it away. He looks more like a student than a billionaire,

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Speaker 2: with his baggy cargo shorts, crumpled T shirt, and disheveled hair.

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Speaker 2: He's turned his penthouse into a dorm room. There are

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Speaker 2: bean bags for napping on, monitor wires trailing haphazardly across

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Speaker 2: the marble floor, a cheap bookcase full of board games,

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Speaker 2: a freezer stuffed with three dollar vegetable beryani from Trader Joe's.

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Speaker 2: Over the next year, he wants to give away a

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Speaker 2: billion dollars, and he wants to do it as effectively

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Speaker 2: as possible, hence the moral philosopher. The year is twenty

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Speaker 2: twenty two. The billionaire's name is Sam Bankman Freed, and

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Speaker 2: his altruistic activities are about to be interrupted by arrest

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Speaker 2: and imprisonment. I'm Tim Harford, and you're listening to cautionary tales.

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Speaker 2: It's nineteen seventy two. In London. George Price is spiraling,

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Speaker 2: convinced that Jesus wants him to give all his possessions

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Speaker 2: to homeless people. Fifty miles up the road, in Oxford,

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Speaker 2: a philosopher called Peter Singer publishes an essay titled Famine,

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Speaker 2: Affluence and Morality. Singer asks us to imagine that we're

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Speaker 2: walking along past a muddy pond, going about our day,

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Speaker 2: when we see that in the pond a small child

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Speaker 2: is drowning upon this shallow we could easily wade in

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Speaker 2: and save the child. That that would ruin the nice

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Speaker 2: new clothes we're wearing.

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Speaker 1: What do we do?

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Speaker 2: Of course, of course we wade in and saved the child.

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Speaker 1: If we didn't, we'd never be able to live with ourselves.

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Speaker 2: But think about this, says s across the world, a

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Speaker 2: small child is dying from hunger. We could save that

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Speaker 2: child's life by giving money to charity less than the

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Speaker 2: cost of the nice new clothes we were willing to ruin.

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Speaker 2: Surely our obligation to give to the charity is just

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Speaker 2: as strong as our obligation to wade into the pond.

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Speaker 2: Morally speaking, it doesn't matter if the child we can

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Speaker 2: save is right there in front of us or ten

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Speaker 2: thousand miles away. If you follow Singer's logic, spending money

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Speaker 2: on nice clothes instead of donating it to starving children

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Speaker 2: is just as immoral as walking past the drowning child

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Speaker 2: in the pond. Follow the logic further, and as long

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Speaker 2: as there's one starving child in the world, it's immoral

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Speaker 2: to own anything we don't really need. We should keep

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Speaker 2: on giving until we're only just better off than the

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Speaker 2: starving child ourselves. Nobody lives like this, of course, well

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Speaker 2: nobody except George Price. Peter Singer's essay became a fixture

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Speaker 2: in undergraduate philosophy classes, including the one I took. Students

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Speaker 2: tended to have one of two reactions. Either they tried

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Speaker 2: to find some flaw in Singer's logic, or they conceded

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Speaker 2: that Singer might be right, but shoved that thought firmly

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Speaker 2: to the back of their minds so they could resume

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Speaker 2: their normal lives without constantly thinking about all the starving

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Speaker 2: children they were thereby condemning to death. Will mccaskell was different.

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Speaker 2: In two thousand and five, aged eighteen, mccaskell read Peter

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Speaker 2: Singer's essay. He thought Singer was clearly right and decided

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Speaker 2: he should walk the walk by giving what he could

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Speaker 2: as a student. That wasn't easy. Students never have much money,

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Speaker 2: and mccaskell did also want to make friends. He tried

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Speaker 2: to compromise. When his friends went to the pub for

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Speaker 2: a drink, mccaskell ordered tat water, then quietly refilled the

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Speaker 2: glass with cheap lager he'd brought from the store. Mccaskell

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Speaker 2: got his degree in philosophy and a job in academia.

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Speaker 2: He decided that the first twenty six thousand pounds a

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Speaker 2: year of his salary would be enough to live on

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Speaker 2: about thirty three thousand dollars. Anything he earned above that

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Speaker 2: he give away. He researched the most effective ways to

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Speaker 2: donate some charitable causes. It turns out give you far

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Speaker 2: more bang for your buck than others. Bednets, for example,

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Speaker 2: save lives in countries with hilaria by stopping mosquitoes from

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Speaker 2: biting you while you sleep. By one estimate, around three

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Speaker 2: thousand dollars spent on bednets would save one life. Mccaskell

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Speaker 2: met others who shared his ideas. A movement emerged. Mccaskell

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Speaker 2: and his colleagues asked themselves what it should be called,

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Speaker 2: and came up with the name effective altruism. They became

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Speaker 2: the effective altruists, committed to giving away a significant chunk

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Speaker 2: of their income. In a modest basement office in Oxford,

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Speaker 2: McCaskill and his colleagues set up the Center for Effective Altruism.

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Speaker 2: They ate cheap vegetarian food, supermarket baguettes and hummers, and

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Speaker 2: debated the most effective ways to be altruistic. For instance,

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Speaker 2: might deworming pills do even more good than bednets per

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Speaker 2: day dollar spent? The numbers said they might. People with

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Speaker 2: money started to ask mccaskell's advice on where to donate.

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Speaker 2: That gave him a dilemma, because mccaskell was aware of

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Speaker 2: studies that show classically handsome people are more persuasive at

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Speaker 2: getting donations for charities, and mccaskell had always been conscious

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Speaker 2: of the gap between his two front teeth. Should he

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Speaker 2: invest in braces to make himself more handsome? On the

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Speaker 2: one hand, the money he spent on braces couldn't then

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Speaker 2: be spent on bednets or deworming pills. On the other hand,

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Speaker 2: it might make him a more effective advocate for those causes.

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Speaker 2: Mccaskell asked his old friends about this moral dilemma will

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Speaker 2: They said, if you want to get your teeth fixed,

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Speaker 2: get your teeth fixed. In a profile of McCaskill for

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Speaker 2: The New Yorker, one friend recalls it felt like it

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Speaker 2: subsumed his own humanity to become a vehicle for the

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Speaker 2: saving of humanity. Mccaskeal was getting asked for another kind

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Speaker 2: of advice too, career advice. Students at Oxford University wanted

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Speaker 2: to know what line of work they should go into

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Speaker 2: if they wanted to do the most good. Should they

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Speaker 2: become a doctor in a poor country, for example, or

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Speaker 2: a medical researcher to try to cure cancer. Mccaskell came

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Speaker 2: up with a surprising answer, none of the above.

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Speaker 1: You are at a top university.

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Speaker 2: He told them, you have a chance at careers that

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Speaker 2: could make you lots of money.

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Speaker 1: Why not make money and give it away?

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Speaker 2: If you become a high flying banker, for example, you

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Speaker 2: could easily fund a dozen doctors in poor countries, far

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Speaker 2: more effective than becoming a doctor in a poor country yourself.

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Speaker 2: The logic was impeccable. Mccaskal called the idea earning to give.

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Speaker 2: In twenty twelve, McCaskill visited Cambridge, Massachusetts, to spread his

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Speaker 2: ideas at other top universities. He heard about a student

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Speaker 2: at MIT who might be receptive. A physics major in

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Speaker 2: his junior year unkempt a bit odd, but clearly brilliant.

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Speaker 2: McCaskill sent the student an email, Let's have lunch. Sam

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Speaker 2: Bankman Freed was surprised to get an email from a

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Speaker 2: philosopher at Oxford University Who is this guy? Why is

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Speaker 2: he inviting me to lunch? Sam was bored of his

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Speaker 2: physics degree, just as had been bored at school throughout

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Speaker 2: his childhood. He was good at maths and a card

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Speaker 2: game called Magic the Gathering, but bad at social interaction.

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Speaker 2: He remembers having to teach him when it's considered appropriate

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Speaker 2: to smile. His classmates, he thought, saw him as smart

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Speaker 2: and maybe not all that human. He didn't feel close

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Speaker 2: to anyone except for one kid who also liked the

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Speaker 2: card game Magic Gathering. That kid remembers Sam as a

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Speaker 2: rare combination of hyper rational and extremely kind. Sam rationalized

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Speaker 2: his way to a belief system. I guess I should

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Speaker 2: care the same amount about everyone, which is pretty much

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Speaker 2: what Peter Singer said all those years ago. When someone

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Speaker 2: made the case to Sam that his beliefs were inconsistent

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Speaker 2: with eating meat, Sam thought about it and concluded, this

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Speaker 2: sucks because I love fried chicken. But they're right. He

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Speaker 2: became a vegan. In his cargo shorts, crumpled T shirt,

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Speaker 2: and battered sneakers, Sam met Will McCaskill for lunch. He

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Speaker 2: wasn't really sure what he wanted to do with his life.

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Speaker 2: He told Will Before he came to MIT, he'd thought

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Speaker 2: maybe he'd become an academic, but he now realized that

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Speaker 2: he'd find academia far too boring. Will pitched Sam on

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Speaker 2: his earn to give idea. If you want to make

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Speaker 2: the world a better place, he told Sam, you should

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Speaker 2: set out to make lots and lots of money. Cautionary

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Speaker 2: tales will be back after the break. Sam bankmin Freed

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Speaker 2: finished his degree at MIT and got a job on

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Speaker 2: Wall Street at a trading firm. The job involved spotting

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Speaker 2: tiny inefficiencies in financial markets, patterns data that others had overlooked.

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Speaker 2: It was all about making rational calculations and thinking and probabilities.

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Speaker 2: It wasn't easy, but if you were good, you could

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Speaker 2: make a fortune. Sam was a natural. In his first year,

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Speaker 2: he was paid three hundred thousand dollars, in his second,

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Speaker 2: six hundred thousand, in his third a million. He gave

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Speaker 2: most of it away to good causes, including Will mccaskell's

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Speaker 2: Center for Effective Altruism. How much might I be earning

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Speaker 2: in ten years, he asked his bosses, if you keep

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Speaker 2: doing as well as you are. They said, maybe as

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Speaker 2: much as seventy five million dollars a year. But Sam

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Speaker 2: wasn't happy. I don't feel anything, he confided to his journal,

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Speaker 2: or at least anything good. I feel nothing but the

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Speaker 2: aching hole in my brain where happiness should be. Sam

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Speaker 2: began to get interested in crypto currency in twenty seventeen.

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Speaker 2: Crypto was still a very new phenomenon. It was hard

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Speaker 2: to know what to make of it, an important emerging

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Speaker 2: asset class or just some complicated scam. New coins were

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Speaker 2: being launched all the time, but unlike shares in say

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Speaker 2: Apple or Amazon, they were often completely unrelated to anything

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Speaker 2: in the real world economy. Sam's trading firm wouldn't let

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Speaker 2: him touch crypto.

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Speaker 1: It was far too risky to start with.

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Speaker 2: Crypto was bought and sold on exchanges that aren't regulated

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Speaker 2: in the same way as stock exchanges. Crypto was relatively

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Speaker 2: easy to steal, what to misplace. If you lose the

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Speaker 2: password to your bitcoin wallet, It's not like losing the

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Speaker 2: password to your online banking. You can't call a help

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Speaker 2: desk and get another one. Still, Sam saw an opportunity.

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Speaker 2: The nascent crypto markets were far less efficient than the

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Speaker 2: financial markets he was used to operating in. The same

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Speaker 2: coins could trade on different exchanges for different prices. Sam

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Speaker 2: decided to quit his job and set up his own firm.

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Speaker 2: He'd use the techniques he had learned on Wall Street

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Speaker 2: to trade in crypto, But what about the risk of theft.

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Speaker 2: With a few furtive keystrokes, an employee might divert coins

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Speaker 2: into their own personal account in a way that would

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Speaker 2: never work for Apple shares. Sam had a genius solution

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Speaker 2: to that problem. He would employ only effective altruists. If

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Speaker 2: all his employees were just as committed as he was

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Speaker 2: to giving their money away, they would feel no temptation

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Speaker 2: to enrich themselves by stealing from the firm.

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Speaker 1: It was perfect.

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Speaker 2: By twenty eighteen, Sam's new company, alimede A Research, had

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Speaker 2: employed a couple of dozen effective altruists and raised one

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Speaker 2: hundred and seventy million dollars from investors. But things got

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Speaker 2: off to a rocky start. The first problem was Sam's

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Speaker 2: leadership style. One employee recalls he was expecting everyone to

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Speaker 2: work eighteen hour days while he would not show up

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Speaker 2: for meetings, not shower for weeks, have a mess all

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Speaker 2: around him with old food everywhere, and fall asleep at

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Speaker 2: his desk. Then there was Sam's new bot. He wanted

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Speaker 2: to automate buying and selling coins on different exchanges. That

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Speaker 2: was a tried and tested idea on stock markets, but

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Speaker 2: stock markets worked more reliably than crypto exchanges. His management

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Speaker 2: team were worried if this went wrong, it could go

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Speaker 2: very wrong, very quickly. When you switch on this bot.

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Speaker 2: They told Sam, you have to watch it like a

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Speaker 2: hawk and be ready to switch it off straight away

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Speaker 2: if it starts losing money. Sam agreed. He switched on

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Speaker 2: the bot, then fell asleep. The biggest worry of all

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Speaker 2: was that, well four million dollars worth of crypto had

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Speaker 2: just disappeared.

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Speaker 1: Where had it gone? Had somebody stolen it? No one knew.

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Speaker 2: Sam's management team wanted to tell their investors. Let's not,

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Speaker 2: said Sam. I reckon, there's an eighty percent probability that

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Speaker 2: it turns up somewhere. In Sam's highper rational mind. That

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Speaker 2: was basically the same as them still having eighty percent

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Speaker 2: of the four million dollars, and it would be perfectly

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Speaker 2: reasonable to put that in their accounts. We can't do that,

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Speaker 2: said Sam's management team. That's not how the world works.

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Speaker 2: The management team at Alameda Research lost patients. Sam was

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Speaker 2: a brilliant trader, but hilariously ill suited to running a company.

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Speaker 2: They walked out. Half the employees followed. The investors pulled

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Speaker 2: out three quarters of the cash they'd put in. Still,

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Speaker 2: that left Sam with forty million dollars to play with,

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Speaker 2: and now there was no one to complain when he

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Speaker 2: did things his way. Sam turned on his bot and

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Speaker 2: let it run. In Oxford, Will McCaskill and his philosopher

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Speaker 2: colleagues were thinking, remember what Peter Singer had said years

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Speaker 2: ago about how distance wasn't morally important. We should care

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Speaker 2: as much about a child starving ten thousand miles away

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Speaker 2: as a child drowning in a pond right in front

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Speaker 2: of us. McCaskill began to think we should treat time

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Speaker 2: the same as distance. We should care as much about

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Speaker 2: children who might be born in the future as children

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Speaker 2: who exist right now. Following that logic leads to some

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Speaker 2: strange conclusions. The future could last a long time. There

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Speaker 2: might be trillions upon trillions of future humans, far more

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Speaker 2: than the mere few billion alive today. But those future

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Speaker 2: humans will never be born. If today's humans carelessly go

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Speaker 2: extinct in the next few decades, what might cause that

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Speaker 2: a genetically engineered pandemic perhaps or a rogue super intelligent AI.

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Speaker 2: So perhaps the most effective thing altruists can do is

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Speaker 2: fund academic research into how best to prevent those risks.

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Speaker 2: Of course, most of that research won't lead anywhere, but

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Speaker 2: a small probability of a huge payoff can still outweigh

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Speaker 2: the certainty of a small payoff.

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Speaker 1: Think of it like this.

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Speaker 2: If you donate three thousand dollars to buy bednets, you

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Speaker 2: can be fairly hopeful of saving one life. But what

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Speaker 2: if instead you put your three thousand dollars towards holding

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Speaker 2: an AI safety workshop. The chance that it will lead

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Speaker 2: to an important breakthrough is minuscule, say one in a billion,

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Speaker 2: But if it does, it might save lots of future lives,

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Speaker 2: say a trillion. One in a billion times a trillion.

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Speaker 2: If you think about it rationally, that is basically the

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Speaker 2: same thing as saving a thousand lives. Far more effective

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Speaker 2: then to fund AI workshops than bednets. This new school

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Speaker 2: of thought became known as long termism. Will McCaskill got

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Speaker 2: to work on a book to spread the ideas more widely.

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Speaker 2: At Alameda Research, they finally found the missing four million

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Speaker 2: dollars worth of crypto. It hadn't been stolen. After all,

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Speaker 2: there had been a computer glitch. It had been sent

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Speaker 2: to an exchange without an accompanying note about who owned it.

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Speaker 2: When Sam finally realized which exchange might have it and

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Speaker 2: called them up, they were astonished, How has it taken

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Speaker 2: you this long to contact us. Sam's bot, meanwhile, was

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Speaker 2: doing well. Alimeda Research was making money, but Sam wanted more.

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Speaker 2: He'd realized that the real money making potential in crypto

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Speaker 2: wasn't in trading on someone else's exchanges. It was running

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Speaker 2: an exchange of your own. Sam came up with a

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Speaker 2: clever design for a new kind of crypto exchange, one

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Speaker 2: that would let its users gamble on the future price

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Speaker 2: of various coins. Many of those people would end up losing.

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Speaker 2: That's the nature of gambling, win or lose. Sam would

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Speaker 2: take his cut, just like a casino. The exchange Sam

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Speaker 2: had in mind wouldn't be legal to run in America,

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Speaker 2: so he set it up in the harmas he called

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Speaker 2: it FTX. It quickly became a huge success. It ran

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Speaker 2: a Super Bowl commercial in which characters played by Larry

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Speaker 2: David shown new inventions through the ages the wheel, the toilet,

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Speaker 2: the light bulb. Larry mocks them all that's stupid. At

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Speaker 2: the end, he's shown FTX and sneers dismissively.

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Speaker 1: It's FTX. It's a safe, an easy way to get

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Speaker 1: into rypto. I don't think so, and I'm never wrong

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Speaker 1: about this stuff.

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Speaker 2: Never the tagline don't be like Larry, don't miss out.

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Speaker 2: The AD's message is clear. You might not understand crypto,

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Speaker 2: just like Larry David's characters didn't understand the wheel or

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Speaker 2: the light bulb, but it is going to be just

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Speaker 2: as important. Don't miss out. Who cares if you don't

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Speaker 2: understand it? Gamble on it now, earn to give. Will

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Speaker 2: mccaskell had advised Sam Bankman freed. Did anyone care how

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Speaker 2: Sam was making his money as long as he was

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Speaker 2: giving it away? Cautionary tales will be back after the break.

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Speaker 2: In twenty twenty two, Will McCaskill published his book What

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Speaker 2: We Owe the Future. The organization he helped set up,

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00:24:37,570 --> 00:24:43,210
Speaker 2: the Center for Effective Altruism, moved into impressive new premises.

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Speaker 2: It bought Whiteham Abbey, a grand fifteenth century estate just

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Speaker 2: outside of Oxford, to host workshops on subjects like AI

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Speaker 2: safety and pandemic risk. Some Effective Altruists felt queasy. Was

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Speaker 2: this really a better use of money than bednets? Sure,

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00:25:04,970 --> 00:25:08,410
Speaker 2: said others. If we hold our workshops in a century's

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Speaker 2: old building, that'll help to focus everyone's minds on a

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Speaker 2: long term time frame. Sam Bankman Freed was fully on

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Speaker 2: board with Will mccaskell's new long term is thinking. One

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Speaker 2: rational way to donate his money, Sam decided might be

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Speaker 2: to get politicians elected who knew something about AI and pandemics.

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Speaker 2: Politicians like Carrick Flynn, an earnest, young, effective altruist who

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Speaker 2: had worked on pandemic prevention, then decided to run for

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Speaker 2: Congress in Oregon. Carrick Flynn didn't know that Sam Bankman

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Speaker 2: Freed had decided to throw money at his campaign. Flynn

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Speaker 2: was watching YouTube sipping diet mountain dew when YouTube cut

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Speaker 2: to an ad.

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00:25:57,130 --> 00:26:01,170
Speaker 3: Carrick Flynn faced poverty and homelessness, but he pushed through

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Speaker 3: to college on a scholarship and a career protecting the

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Speaker 3: most vulnerable billion dollars.

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Speaker 2: Flynn was so startled he covered himself in diet mountain dew,

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Speaker 2: and that was just the start. Soon, the voters of

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Speaker 2: Oregon's sixth Congressional district could hardly look at a screen

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Speaker 2: without encountering an ad for Carrick Flynn.

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Speaker 3: Carrick Flynn, the Democrat will create good jobs.

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Speaker 2: Oregonians quickly got sick of hearing the name Carrick Flynn

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Speaker 2: and suspicious these wall to wall ads must be costing

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Speaker 2: a fortune. Who was paying? Reporters found out that it

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Speaker 2: was a crypto billionaire who lived in the Bahamas, and

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Speaker 2: demanded of Carrick Flynn, why is Sam Bankman Freed so

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Speaker 2: very keen to get you elected? I don't know, Flynn protested.

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Speaker 2: I've never met him. I've never talked to him. Flynn said.

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00:27:01,370 --> 00:27:03,890
Speaker 2: He assumed it must be because of his interest in

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Speaker 2: pandemic risk. Of course, the reporters didn't believe that.

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00:27:09,490 --> 00:27:10,770
Speaker 1: They said, he.

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Speaker 2: Must want you to do something involving crypto. Flynn became

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Speaker 2: increasingly bewildered. I'm not a crypto person, he protested. I

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Speaker 2: don't know much about it. I've tried to read about it.

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00:27:24,690 --> 00:27:31,410
Speaker 2: I didn't really care. Flynn finished a distant second in

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Speaker 2: his election. For every vote he received, Sam had spent

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Speaker 2: something like one thousand dollars on ads. To put that

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Speaker 2: another way, for every three votes Carrick Flynn received, Sam

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00:27:47,610 --> 00:27:52,130
Speaker 2: could have bought enough bednets to save a life.

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Speaker 1: But in the new long term mist.

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Speaker 2: View of effective altruism, the money spent on Carrick Flynn

352
00:27:59,130 --> 00:28:03,090
Speaker 2: hadn't been wasted. It had always been a long shot

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Speaker 2: that Carrick Flynn's political career would end up preventing some

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Speaker 2: future pandemic from wiping out humanity. But if it did,

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00:28:11,930 --> 00:28:16,010
Speaker 2: it could save trillions of future lives. If you thought

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00:28:16,130 --> 00:28:22,370
Speaker 2: rationally about altruism, funding Carrick flynn ads instead of bednets

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00:28:22,410 --> 00:28:30,730
Speaker 2: made perfect sense. In the last two episodes of Cautionary Tales,

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00:28:30,970 --> 00:28:35,690
Speaker 2: we've heard two wildly different stories about people who took

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00:28:35,810 --> 00:28:43,570
Speaker 2: altruism very seriously. Indeed, George Price's altruism was driven by revelation.

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Speaker 2: A vision of Jesus told him to give away whatever

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Speaker 2: he had to whoever asked him. He ended up as

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Speaker 2: thin as a stick with rotting teeth, sleeping on a

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Speaker 2: mattress on the floor of a squad. Sam Bankman Freed's

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Speaker 2: altruism was driven by rationality. A moral philosopher told him

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Speaker 2: to make lots of money and donate it effectively. He

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00:29:09,370 --> 00:29:13,410
Speaker 2: ended up encouraging people to gamble on crypto so that

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00:29:13,490 --> 00:29:19,010
Speaker 2: he could put more money into politics. Taking altruism very

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00:29:19,050 --> 00:29:27,690
Speaker 2: seriously indeed can take you to some strange places. Will

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00:29:27,810 --> 00:29:32,410
Speaker 2: mccaskell flew into the Bahamas for a penthouse discussion about

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Speaker 2: the best ways to help future people. Sam had been

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Speaker 2: trying out a new idea. He identified a hundred experts

372
00:29:41,490 --> 00:29:44,970
Speaker 2: in AI and pandemic risk and sent each of them

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Speaker 2: a million dollars out of the blue and nose strings attached.

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Speaker 2: Use it well and I'll give you more. He planned

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Speaker 2: to give away a billion dollars over the next year,

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00:29:57,690 --> 00:30:04,570
Speaker 2: but how more political campaigns, more workshops at Whiteham Abbey.

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00:30:05,730 --> 00:30:09,210
Speaker 2: As it turned out, the question was moot because when

378
00:30:09,290 --> 00:30:14,050
Speaker 2: Sam's dark secret was about to be discovered, he hadn't

379
00:30:14,130 --> 00:30:19,090
Speaker 2: just been earning to give, He'd also been defrauding to give.

380
00:30:20,330 --> 00:30:24,290
Speaker 2: When Sam set up FTX, he couldn't get a US

381
00:30:24,450 --> 00:30:29,050
Speaker 2: bank to open an account. Its activities were too legally murky.

382
00:30:29,690 --> 00:30:33,930
Speaker 2: That meant FTX had no way of taking dollar deposits

383
00:30:33,970 --> 00:30:37,090
Speaker 2: from its customers. But you know who did have a

384
00:30:37,130 --> 00:30:43,490
Speaker 2: dollar account, Sam's company, Alameda Research. When customers opened an

385
00:30:43,490 --> 00:30:49,370
Speaker 2: account at FTX, they wired their deposits to Alamader. Alamader

386
00:30:49,490 --> 00:30:52,650
Speaker 2: could and should have kept that money safe for the

387
00:30:52,770 --> 00:30:57,810
Speaker 2: FTX customers, but they didn't they used it to trade with.

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00:30:59,210 --> 00:31:05,850
Speaker 2: This wasn't legally murky, this was very illegal. Indeed, what

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00:31:06,090 --> 00:31:10,730
Speaker 2: was Sam thinking? Sam was thinking that nobody need ever

390
00:31:10,850 --> 00:31:15,610
Speaker 2: find out Alamada's trading was making profits, and with this

391
00:31:15,770 --> 00:31:19,050
Speaker 2: extra money to play with, it would make even more profits.

392
00:31:19,650 --> 00:31:22,690
Speaker 2: And Alameda had plenty of assets to fall back on.

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00:31:23,250 --> 00:31:27,690
Speaker 2: It owned crypto worth many times more than those customer deposits,

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00:31:28,490 --> 00:31:32,090
Speaker 2: so whenever an FTX customer wanted their deposit back, he

395
00:31:32,170 --> 00:31:36,370
Speaker 2: thought it wouldn't be a problem. As Sam told the

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00:31:36,410 --> 00:31:40,890
Speaker 2: author Michael Lewis, it felt to us that Alameda had

397
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Speaker 2: infinity dollars. But then crypto prices fell, Alameda now had

398
00:31:49,010 --> 00:31:54,130
Speaker 2: finite dollars. FTX experienced the equivalent of a run on

399
00:31:54,210 --> 00:31:57,330
Speaker 2: the bank when all the customers rushed to withdraw their

400
00:31:57,330 --> 00:32:02,090
Speaker 2: deposits at once. Alameda suddenly had to scramble to find

401
00:32:02,130 --> 00:32:07,290
Speaker 2: the money to pay them back. Remember, when Alameda had

402
00:32:07,290 --> 00:32:11,570
Speaker 2: lost sight of four men million dollars, it hadn't got

403
00:32:11,610 --> 00:32:16,170
Speaker 2: any better at keeping track of what was where. In

404
00:32:16,210 --> 00:32:21,210
Speaker 2: his book Going Infinite, Michael Lewis describes a comically frantic

405
00:32:21,330 --> 00:32:22,970
Speaker 2: hunt for Alameda's assets.

406
00:32:24,010 --> 00:32:26,730
Speaker 4: Its CEO would come on to the screen and announce

407
00:32:26,770 --> 00:32:29,210
Speaker 4: that she found two hundred million dollars here or four

408
00:32:29,250 --> 00:32:31,250
Speaker 4: hundred million dollars there, as if she just made an

409
00:32:31,290 --> 00:32:34,970
Speaker 4: original scientific discovery. Some guy at Deltech they're bank in

410
00:32:35,010 --> 00:32:38,410
Speaker 4: the Bahamas message ramnic to say, oh, by the way,

411
00:32:38,450 --> 00:32:41,410
Speaker 4: you have three hundred million dollars with us, and it

412
00:32:41,450 --> 00:32:45,530
Speaker 4: came as a total surprise to all of them.

413
00:32:45,650 --> 00:32:51,890
Speaker 2: Alameda couldn't gather its money in time. FTX was declared bankrupt.

414
00:32:52,610 --> 00:32:56,770
Speaker 2: Sam was arrested and extradited from the Bahamas to the US.

415
00:32:58,690 --> 00:33:01,770
Speaker 2: Michael Lewis makes the case that Sam wasn't so much

416
00:33:02,010 --> 00:33:09,090
Speaker 2: criminal mastermind as overgrown teenager, incredibly reckless, and incredibly disorganized.

417
00:33:10,010 --> 00:33:14,690
Speaker 2: The bankruptcy lawyers eventually located enough assets in Alameda to

418
00:33:14,730 --> 00:33:19,810
Speaker 2: give FTX depositors all their money back with interest, But

419
00:33:19,970 --> 00:33:24,770
Speaker 2: reckless and disorganized is hardly a compelling defense. He took

420
00:33:24,850 --> 00:33:29,170
Speaker 2: money that wasn't his and spent it according to whatever

421
00:33:29,450 --> 00:33:34,290
Speaker 2: logic suited him. Sam was convicted of fraud and sentenced

422
00:33:34,370 --> 00:33:40,850
Speaker 2: to twenty five years in prison. Sam Bankman freed, is

423
00:33:40,930 --> 00:33:45,090
Speaker 2: now known for his crimes, but it's his altruism that

424
00:33:45,170 --> 00:33:48,850
Speaker 2: interests me. And they have a surprising amount in common.

425
00:33:49,810 --> 00:33:53,810
Speaker 2: Sam purloined his customer's deposits because he made a hyper

426
00:33:53,930 --> 00:33:57,690
Speaker 2: rational calculation that he'd probably get away with it and

427
00:33:57,770 --> 00:34:00,490
Speaker 2: didn't think much about the fallout if it all went wrong.

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Speaker 2: Sam gave money to politicians, not the poor, because he

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00:34:05,850 --> 00:34:10,730
Speaker 2: made a hyper rational calculation to prioritize future people over

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00:34:10,850 --> 00:34:16,530
Speaker 2: people actually suffering today. Both these calculations remind me how

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00:34:16,690 --> 00:34:22,930
Speaker 2: Sam's teenage classmates described him smart and maybe not all

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00:34:22,930 --> 00:34:29,130
Speaker 2: that human. George Price was deeply depressed by what his

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00:34:29,210 --> 00:34:32,130
Speaker 2: own work said about what it means to be human.

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00:34:33,410 --> 00:34:38,490
Speaker 2: Our altruistic instincts evolved to serve our selfish genes. When

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00:34:38,490 --> 00:34:41,610
Speaker 2: we feel the urge to do something nice, tends to

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00:34:41,650 --> 00:34:44,850
Speaker 2: be the kind of thing that for our ancestors might

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00:34:44,890 --> 00:34:50,210
Speaker 2: have helped their relatives or forged a friendship. Remember the

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00:34:50,330 --> 00:34:56,090
Speaker 2: contrast drawn by Peter Singer. We wouldn't hesitate to wade

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00:34:56,090 --> 00:34:59,730
Speaker 2: into a shallow pond to save a drowning child, but

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00:34:59,770 --> 00:35:02,570
Speaker 2: we don't feel the same urge to give money to

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00:35:02,650 --> 00:35:06,810
Speaker 2: save a starving child on the other side of the world. Why,

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00:35:07,850 --> 00:35:10,130
Speaker 2: when you think from the g Deane's point of view,

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00:35:10,250 --> 00:35:14,290
Speaker 2: it's not hard to explain. The child who's drowning right

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00:35:14,330 --> 00:35:17,530
Speaker 2: in front of us might plausibly be a distant cousin

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00:35:17,650 --> 00:35:21,490
Speaker 2: or have parents who feel forever in our debt. The

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00:35:21,610 --> 00:35:25,370
Speaker 2: child who's starving half a world away, not so much.

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00:35:26,690 --> 00:35:30,410
Speaker 2: Our selfish genes can help to explain why we are

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00:35:30,530 --> 00:35:33,850
Speaker 2: the way we are, but they can't tell us what's

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00:35:33,890 --> 00:35:37,610
Speaker 2: the right thing to do. We need our rational minds

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00:35:37,650 --> 00:35:43,530
Speaker 2: for that. It is depressing that we ignore the starving child,

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00:35:44,170 --> 00:35:47,970
Speaker 2: because evolution simply didn't build us to care that much.

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00:35:48,890 --> 00:35:51,970
Speaker 2: The moral philosophers are right that we can use our

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Speaker 2: rational minds to transcend our selfish genes. Then again, I'm

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00:35:58,890 --> 00:36:02,290
Speaker 2: not sure it's any less depressing to ignore the starving

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00:36:02,410 --> 00:36:06,250
Speaker 2: child because we've thought long and hard about it and

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00:36:06,330 --> 00:36:10,690
Speaker 2: decided to fund an AI workshop in stead. If we

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00:36:10,770 --> 00:36:14,490
Speaker 2: follow the logic of altruism far enough, it can take

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00:36:14,570 --> 00:36:19,170
Speaker 2: us to places that don't feel human at all. So

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00:36:19,250 --> 00:36:22,690
Speaker 2: perhaps we shouldn't beat ourselves up too much if we

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00:36:22,770 --> 00:36:27,370
Speaker 2: succeed in transcending our selfish genes only by a little bit,

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00:36:28,210 --> 00:36:31,690
Speaker 2: If we manage at least to do something good for

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00:36:31,770 --> 00:36:35,290
Speaker 2: people who aren't family or friends, and we don't give

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00:36:35,330 --> 00:36:39,970
Speaker 2: everything away like George Price, or feel angst about getting

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00:36:40,050 --> 00:36:44,730
Speaker 2: braces like Will mccaskell, or donate our cash to long

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00:36:44,810 --> 00:36:49,730
Speaker 2: shot chances of saving unborn trillions like Sam Bankman Freed.

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Speaker 2: It may not be a rational approach to altruism, but

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Speaker 2: it is a human one.

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Speaker 1: There are worse things in the world than being human.

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00:37:14,810 --> 00:37:19,010
Speaker 2: A key source for this episode is Going Infinite, The

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00:37:19,130 --> 00:37:22,730
Speaker 2: Rise and Fall of a New Tycoon by Michael Lewis.

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00:37:22,850 --> 00:37:25,970
Speaker 2: I will be speaking to Michael Lewis next week about

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00:37:26,010 --> 00:37:28,730
Speaker 2: his time with Sam Bankmin Freed, and we're going to

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00:37:28,730 --> 00:37:33,570
Speaker 2: be answering your questions on altruism and kindness. This episode

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00:37:33,570 --> 00:37:37,530
Speaker 2: of Cautionary Tales also relied on Gideon Lewis Krause's profile

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00:37:37,650 --> 00:37:41,090
Speaker 2: of Will McCaskill in The New Yorker. For a fullnest

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00:37:41,090 --> 00:37:46,890
Speaker 2: of our sources, visit Timharford dot com. Cautionary Tales is

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00:37:46,930 --> 00:37:50,330
Speaker 2: written by me Tim Harford with Andrew Wright, Alice Fines,

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00:37:50,530 --> 00:37:54,610
Speaker 2: and Ryan Billy. It's produced by Georgia Mills and Marilyn Rust.

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00:37:55,210 --> 00:37:57,930
Speaker 2: The sound design and original music are the work of

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00:37:58,010 --> 00:38:02,130
Speaker 2: Pascal Wise. Additional sound design is by Carlos San Juan

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00:38:02,370 --> 00:38:06,410
Speaker 2: at Brain Audio. Bend a d Afhaffrey edited the scripts.

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00:38:07,410 --> 00:38:10,250
Speaker 2: The show also wouldn't have been possible without the work

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00:38:10,290 --> 00:38:15,410
Speaker 2: of Jacob Weisberg, Greta Cohene, Sarah Nix, Eric Sandler, Christina Sullivan,

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00:38:15,730 --> 00:38:20,130
Speaker 2: Kira Posey, and Owen Miller. Cautionary Tales is a production

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00:38:20,290 --> 00:38:24,090
Speaker 2: of Pushkin Industries. If you like the show, please remember

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00:38:24,130 --> 00:38:26,970
Speaker 2: to share, rate, and review. It really makes a difference

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00:38:26,970 --> 00:38:28,530
Speaker 2: to us and if you want to hear the show,

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00:38:28,770 --> 00:38:31,890
Speaker 2: add free sign up to Pushkin Plus on the show

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00:38:31,970 --> 00:38:35,930
Speaker 2: page on Apple Podcasts or at pushkin dot Fm, slash

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00:38:36,130 --> 00:38:48,970
Speaker 2: plus