WEBVTT - Grand Theft Automated: How to Save a Trillion Lives 0:00:15.410 --> 0:00:15.890 Pushkin. 0:00:24.930 --> 0:00:29.450 In a penthouse apartment in the Bahamas, a billionaire is 0:00:29.530 --> 0:00:33.970 hosting a meeting. It's the kind of place you might 0:00:34.050 --> 0:00:38.810 expect to find a billionaire, marble floors, a grand piano, 0:00:39.530 --> 0:00:43.450 a balcony with a hot tub, and views of the marina. 0:00:44.890 --> 0:00:47.930 As the billionaire and his colleagues debate what to do 0:00:47.970 --> 0:00:51.730 with his money, they look to one man in particular 0:00:52.210 --> 0:00:59.090 for wise advice. A business analyst, a financial expert, no 0:00:59.610 --> 0:01:06.650 a moral philosopher who's devoted his career to thinking about altruism. 0:01:07.810 --> 0:01:12.050 This is the second of two cautionary tales about altruism. 0:01:12.650 --> 0:01:16.530 In the first, we heard about a scientist called George Price, 0:01:17.050 --> 0:01:20.970 who helped to unravel the mystery of how evolution produced 0:01:21.090 --> 0:01:27.170 altruistic behavior, and who then became the most extreme altruist 0:01:27.370 --> 0:01:31.490 you could imagine, giving away his last penny and the 0:01:31.570 --> 0:01:37.450 coat on his back. But Wade, perhaps the billionaire in 0:01:37.490 --> 0:01:42.810 the Bahamas is an even more extreme altruist. The only 0:01:42.850 --> 0:01:45.370 reason he ever wanted to make money was to give 0:01:45.410 --> 0:01:49.210 it away. He looks more like a student than a billionaire, 0:01:49.570 --> 0:01:54.130 with his baggy cargo shorts, crumpled T shirt, and disheveled hair. 0:01:55.050 --> 0:01:58.570 He's turned his penthouse into a dorm room. There are 0:01:58.650 --> 0:02:03.050 bean bags for napping on, monitor wires trailing haphazardly across 0:02:03.090 --> 0:02:06.810 the marble floor, a cheap bookcase full of board games, 0:02:07.250 --> 0:02:12.810 a freezer stuffed with three dollar vegetable beryani from Trader Joe's. 0:02:13.610 --> 0:02:17.490 Over the next year, he wants to give away a 0:02:17.650 --> 0:02:21.050 billion dollars, and he wants to do it as effectively 0:02:21.290 --> 0:02:27.090 as possible, hence the moral philosopher. The year is twenty 0:02:27.370 --> 0:02:33.690 twenty two. The billionaire's name is Sam Bankman Freed, and 0:02:33.850 --> 0:02:38.250 his altruistic activities are about to be interrupted by arrest 0:02:38.970 --> 0:02:53.050 and imprisonment. I'm Tim Harford, and you're listening to cautionary tales. 0:03:11.290 --> 0:03:17.330 It's nineteen seventy two. In London. George Price is spiraling, 0:03:18.290 --> 0:03:21.650 convinced that Jesus wants him to give all his possessions 0:03:21.690 --> 0:03:25.810 to homeless people. Fifty miles up the road, in Oxford, 0:03:26.290 --> 0:03:32.490 a philosopher called Peter Singer publishes an essay titled Famine, 0:03:32.530 --> 0:03:38.050 Affluence and Morality. Singer asks us to imagine that we're 0:03:38.170 --> 0:03:41.810 walking along past a muddy pond, going about our day, 0:03:42.490 --> 0:03:45.730 when we see that in the pond a small child 0:03:45.850 --> 0:03:50.810 is drowning upon this shallow we could easily wade in 0:03:50.890 --> 0:03:54.930 and save the child. That that would ruin the nice 0:03:55.010 --> 0:03:56.170 new clothes we're wearing. 0:03:57.170 --> 0:03:57.890 What do we do? 0:03:58.890 --> 0:04:02.650 Of course, of course we wade in and saved the child. 0:04:02.930 --> 0:04:05.890 If we didn't, we'd never be able to live with ourselves. 0:04:07.170 --> 0:04:11.770 But think about this, says s across the world, a 0:04:11.810 --> 0:04:16.250 small child is dying from hunger. We could save that 0:04:16.490 --> 0:04:21.090 child's life by giving money to charity less than the 0:04:21.130 --> 0:04:23.690 cost of the nice new clothes we were willing to ruin. 0:04:24.850 --> 0:04:28.290 Surely our obligation to give to the charity is just 0:04:28.370 --> 0:04:31.250 as strong as our obligation to wade into the pond. 0:04:32.330 --> 0:04:35.850 Morally speaking, it doesn't matter if the child we can 0:04:35.970 --> 0:04:38.930 save is right there in front of us or ten 0:04:39.010 --> 0:04:44.970 thousand miles away. If you follow Singer's logic, spending money 0:04:45.010 --> 0:04:48.810 on nice clothes instead of donating it to starving children 0:04:49.370 --> 0:04:53.850 is just as immoral as walking past the drowning child 0:04:53.890 --> 0:04:58.970 in the pond. Follow the logic further, and as long 0:04:59.010 --> 0:05:03.250 as there's one starving child in the world, it's immoral 0:05:03.370 --> 0:05:06.970 to own anything we don't really need. We should keep 0:05:07.050 --> 0:05:10.050 on giving until we're only just better off than the 0:05:10.090 --> 0:05:16.050 starving child ourselves. Nobody lives like this, of course, well 0:05:16.850 --> 0:05:22.010 nobody except George Price. Peter Singer's essay became a fixture 0:05:22.210 --> 0:05:28.090 in undergraduate philosophy classes, including the one I took. Students 0:05:28.210 --> 0:05:32.930 tended to have one of two reactions. Either they tried 0:05:32.970 --> 0:05:37.450 to find some flaw in Singer's logic, or they conceded 0:05:37.490 --> 0:05:41.610 that Singer might be right, but shoved that thought firmly 0:05:41.650 --> 0:05:44.090 to the back of their minds so they could resume 0:05:44.210 --> 0:05:48.410 their normal lives without constantly thinking about all the starving 0:05:48.610 --> 0:05:56.810 children they were thereby condemning to death. Will mccaskell was different. 0:05:57.770 --> 0:06:02.690 In two thousand and five, aged eighteen, mccaskell read Peter 0:06:02.850 --> 0:06:09.050 Singer's essay. He thought Singer was clearly right and decided 0:06:09.170 --> 0:06:12.410 he should walk the walk by giving what he could 0:06:13.370 --> 0:06:17.530 as a student. That wasn't easy. Students never have much money, 0:06:17.930 --> 0:06:21.930 and mccaskell did also want to make friends. He tried 0:06:21.970 --> 0:06:24.970 to compromise. When his friends went to the pub for 0:06:25.050 --> 0:06:30.530 a drink, mccaskell ordered tat water, then quietly refilled the 0:06:30.610 --> 0:06:36.210 glass with cheap lager he'd brought from the store. Mccaskell 0:06:36.330 --> 0:06:39.890 got his degree in philosophy and a job in academia. 0:06:41.210 --> 0:06:44.730 He decided that the first twenty six thousand pounds a 0:06:44.810 --> 0:06:47.130 year of his salary would be enough to live on 0:06:47.850 --> 0:06:52.170 about thirty three thousand dollars. Anything he earned above that 0:06:53.050 --> 0:06:57.250 he give away. He researched the most effective ways to 0:06:57.330 --> 0:07:01.930 donate some charitable causes. It turns out give you far 0:07:02.010 --> 0:07:06.770 more bang for your buck than others. Bednets, for example, 0:07:07.490 --> 0:07:11.370 save lives in countries with hilaria by stopping mosquitoes from 0:07:11.450 --> 0:07:15.890 biting you while you sleep. By one estimate, around three 0:07:16.090 --> 0:07:23.170 thousand dollars spent on bednets would save one life. Mccaskell 0:07:23.290 --> 0:07:29.330 met others who shared his ideas. A movement emerged. Mccaskell 0:07:29.370 --> 0:07:32.410 and his colleagues asked themselves what it should be called, 0:07:32.770 --> 0:07:37.690 and came up with the name effective altruism. They became 0:07:37.970 --> 0:07:42.690 the effective altruists, committed to giving away a significant chunk 0:07:42.730 --> 0:07:46.890 of their income. In a modest basement office in Oxford, 0:07:47.370 --> 0:07:52.330 McCaskill and his colleagues set up the Center for Effective Altruism. 0:07:52.650 --> 0:07:57.850 They ate cheap vegetarian food, supermarket baguettes and hummers, and 0:07:58.090 --> 0:08:04.090 debated the most effective ways to be altruistic. For instance, 0:08:04.450 --> 0:08:08.850 might deworming pills do even more good than bednets per 0:08:08.930 --> 0:08:13.850 day dollar spent? The numbers said they might. People with 0:08:13.970 --> 0:08:18.050 money started to ask mccaskell's advice on where to donate. 0:08:19.130 --> 0:08:22.450 That gave him a dilemma, because mccaskell was aware of 0:08:22.490 --> 0:08:27.370 studies that show classically handsome people are more persuasive at 0:08:27.410 --> 0:08:32.130 getting donations for charities, and mccaskell had always been conscious 0:08:32.170 --> 0:08:35.890 of the gap between his two front teeth. Should he 0:08:35.930 --> 0:08:40.010 invest in braces to make himself more handsome? On the 0:08:40.050 --> 0:08:43.410 one hand, the money he spent on braces couldn't then 0:08:43.490 --> 0:08:47.890 be spent on bednets or deworming pills. On the other hand, 0:08:48.290 --> 0:08:51.850 it might make him a more effective advocate for those causes. 0:08:53.410 --> 0:08:58.330 Mccaskell asked his old friends about this moral dilemma will 0:08:58.770 --> 0:09:01.370 They said, if you want to get your teeth fixed, 0:09:01.810 --> 0:09:06.690 get your teeth fixed. In a profile of McCaskill for 0:09:06.730 --> 0:09:10.250 The New Yorker, one friend recalls it felt like it 0:09:10.410 --> 0:09:13.890 subsumed his own humanity to become a vehicle for the 0:09:13.930 --> 0:09:19.170 saving of humanity. Mccaskeal was getting asked for another kind 0:09:19.170 --> 0:09:24.930 of advice too, career advice. Students at Oxford University wanted 0:09:24.970 --> 0:09:27.330 to know what line of work they should go into 0:09:27.610 --> 0:09:30.690 if they wanted to do the most good. Should they 0:09:30.730 --> 0:09:34.370 become a doctor in a poor country, for example, or 0:09:34.410 --> 0:09:38.850 a medical researcher to try to cure cancer. Mccaskell came 0:09:38.930 --> 0:09:42.730 up with a surprising answer, none of the above. 0:09:43.890 --> 0:09:45.410 You are at a top university. 0:09:45.530 --> 0:09:48.050 He told them, you have a chance at careers that 0:09:48.090 --> 0:09:49.410 could make you lots of money. 0:09:50.090 --> 0:09:52.410 Why not make money and give it away? 0:09:53.290 --> 0:09:56.650 If you become a high flying banker, for example, you 0:09:56.650 --> 0:10:00.850 could easily fund a dozen doctors in poor countries, far 0:10:00.890 --> 0:10:04.210 more effective than becoming a doctor in a poor country yourself. 0:10:05.650 --> 0:10:11.410 The logic was impeccable. Mccaskal called the idea earning to give. 0:10:13.650 --> 0:10:19.130 In twenty twelve, McCaskill visited Cambridge, Massachusetts, to spread his 0:10:19.250 --> 0:10:23.810 ideas at other top universities. He heard about a student 0:10:23.890 --> 0:10:28.810 at MIT who might be receptive. A physics major in 0:10:28.890 --> 0:10:35.050 his junior year unkempt a bit odd, but clearly brilliant. 0:10:36.010 --> 0:10:43.930 McCaskill sent the student an email, Let's have lunch. Sam 0:10:43.970 --> 0:10:47.250 Bankman Freed was surprised to get an email from a 0:10:47.250 --> 0:10:51.570 philosopher at Oxford University Who is this guy? Why is 0:10:51.610 --> 0:10:55.810 he inviting me to lunch? Sam was bored of his 0:10:55.850 --> 0:10:59.010 physics degree, just as had been bored at school throughout 0:10:59.050 --> 0:11:02.610 his childhood. He was good at maths and a card 0:11:02.690 --> 0:11:06.970 game called Magic the Gathering, but bad at social interaction. 0:11:07.890 --> 0:11:11.490 He remembers having to teach him when it's considered appropriate 0:11:11.570 --> 0:11:16.970 to smile. His classmates, he thought, saw him as smart 0:11:17.090 --> 0:11:21.170 and maybe not all that human. He didn't feel close 0:11:21.210 --> 0:11:24.850 to anyone except for one kid who also liked the 0:11:24.890 --> 0:11:30.050 card game Magic Gathering. That kid remembers Sam as a 0:11:30.210 --> 0:11:38.730 rare combination of hyper rational and extremely kind. Sam rationalized 0:11:38.730 --> 0:11:41.850 his way to a belief system. I guess I should 0:11:41.890 --> 0:11:45.530 care the same amount about everyone, which is pretty much 0:11:45.570 --> 0:11:49.570 what Peter Singer said all those years ago. When someone 0:11:49.610 --> 0:11:53.010 made the case to Sam that his beliefs were inconsistent 0:11:53.090 --> 0:11:57.650 with eating meat, Sam thought about it and concluded, this 0:11:57.810 --> 0:12:02.530 sucks because I love fried chicken. But they're right. He 0:12:02.610 --> 0:12:07.690 became a vegan. In his cargo shorts, crumpled T shirt, 0:12:07.770 --> 0:12:12.970 and battered sneakers, Sam met Will McCaskill for lunch. He 0:12:13.090 --> 0:12:15.570 wasn't really sure what he wanted to do with his life. 0:12:15.930 --> 0:12:20.370 He told Will Before he came to MIT, he'd thought 0:12:20.970 --> 0:12:24.570 maybe he'd become an academic, but he now realized that 0:12:24.650 --> 0:12:30.810 he'd find academia far too boring. Will pitched Sam on 0:12:30.970 --> 0:12:34.290 his earn to give idea. If you want to make 0:12:34.290 --> 0:12:37.890 the world a better place, he told Sam, you should 0:12:37.930 --> 0:12:43.090 set out to make lots and lots of money. Cautionary 0:12:43.170 --> 0:12:57.010 tales will be back after the break. Sam bankmin Freed 0:12:57.250 --> 0:13:00.130 finished his degree at MIT and got a job on 0:13:00.210 --> 0:13:04.690 Wall Street at a trading firm. The job involved spotting 0:13:04.890 --> 0:13:11.370 tiny inefficiencies in financial markets, patterns data that others had overlooked. 0:13:12.290 --> 0:13:17.090 It was all about making rational calculations and thinking and probabilities. 0:13:17.770 --> 0:13:21.890 It wasn't easy, but if you were good, you could 0:13:21.890 --> 0:13:27.490 make a fortune. Sam was a natural. In his first year, 0:13:27.930 --> 0:13:32.050 he was paid three hundred thousand dollars, in his second, 0:13:32.610 --> 0:13:38.290 six hundred thousand, in his third a million. He gave 0:13:38.330 --> 0:13:42.250 most of it away to good causes, including Will mccaskell's 0:13:42.410 --> 0:13:47.330 Center for Effective Altruism. How much might I be earning 0:13:47.410 --> 0:13:51.290 in ten years, he asked his bosses, if you keep 0:13:51.330 --> 0:13:54.170 doing as well as you are. They said, maybe as 0:13:54.250 --> 0:14:01.130 much as seventy five million dollars a year. But Sam 0:14:01.450 --> 0:14:06.570 wasn't happy. I don't feel anything, he confided to his journal, 0:14:07.130 --> 0:14:10.610 or at least anything good. I feel nothing but the 0:14:10.770 --> 0:14:17.090 aching hole in my brain where happiness should be. Sam 0:14:17.130 --> 0:14:21.810 began to get interested in crypto currency in twenty seventeen. 0:14:22.090 --> 0:14:25.490 Crypto was still a very new phenomenon. It was hard 0:14:25.490 --> 0:14:28.450 to know what to make of it, an important emerging 0:14:28.570 --> 0:14:34.210 asset class or just some complicated scam. New coins were 0:14:34.250 --> 0:14:38.530 being launched all the time, but unlike shares in say 0:14:38.810 --> 0:14:43.810 Apple or Amazon, they were often completely unrelated to anything 0:14:43.850 --> 0:14:48.250 in the real world economy. Sam's trading firm wouldn't let 0:14:48.330 --> 0:14:49.330 him touch crypto. 0:14:49.770 --> 0:14:54.250 It was far too risky to start with. 0:14:54.530 --> 0:14:58.690 Crypto was bought and sold on exchanges that aren't regulated 0:14:58.690 --> 0:15:03.210 in the same way as stock exchanges. Crypto was relatively 0:15:03.250 --> 0:15:07.210 easy to steal, what to misplace. If you lose the 0:15:07.290 --> 0:15:10.570 password to your bitcoin wallet, It's not like losing the 0:15:10.650 --> 0:15:14.410 password to your online banking. You can't call a help 0:15:14.450 --> 0:15:19.450 desk and get another one. Still, Sam saw an opportunity. 0:15:20.330 --> 0:15:23.570 The nascent crypto markets were far less efficient than the 0:15:23.610 --> 0:15:27.050 financial markets he was used to operating in. The same 0:15:27.130 --> 0:15:32.210 coins could trade on different exchanges for different prices. Sam 0:15:32.250 --> 0:15:35.330 decided to quit his job and set up his own firm. 0:15:36.170 --> 0:15:38.490 He'd use the techniques he had learned on Wall Street 0:15:38.730 --> 0:15:43.570 to trade in crypto, But what about the risk of theft. 0:15:44.410 --> 0:15:49.770 With a few furtive keystrokes, an employee might divert coins 0:15:49.850 --> 0:15:53.250 into their own personal account in a way that would 0:15:53.250 --> 0:15:58.930 never work for Apple shares. Sam had a genius solution 0:15:59.050 --> 0:16:04.850 to that problem. He would employ only effective altruists. If 0:16:04.970 --> 0:16:07.850 all his employees were just as committed as he was 0:16:07.930 --> 0:16:11.050 to giving their money away, they would feel no temptation 0:16:11.170 --> 0:16:13.650 to enrich themselves by stealing from the firm. 0:16:14.410 --> 0:16:16.050 It was perfect. 0:16:19.370 --> 0:16:24.130 By twenty eighteen, Sam's new company, alimede A Research, had 0:16:24.170 --> 0:16:27.410 employed a couple of dozen effective altruists and raised one 0:16:27.490 --> 0:16:32.250 hundred and seventy million dollars from investors. But things got 0:16:32.290 --> 0:16:36.450 off to a rocky start. The first problem was Sam's 0:16:36.530 --> 0:16:41.730 leadership style. One employee recalls he was expecting everyone to 0:16:41.810 --> 0:16:45.050 work eighteen hour days while he would not show up 0:16:45.050 --> 0:16:48.850 for meetings, not shower for weeks, have a mess all 0:16:48.890 --> 0:16:52.050 around him with old food everywhere, and fall asleep at 0:16:52.090 --> 0:16:58.410 his desk. Then there was Sam's new bot. He wanted 0:16:58.450 --> 0:17:02.970 to automate buying and selling coins on different exchanges. That 0:17:03.130 --> 0:17:06.090 was a tried and tested idea on stock markets, but 0:17:06.690 --> 0:17:11.930 stock markets worked more reliably than crypto exchanges. His management 0:17:11.930 --> 0:17:15.370 team were worried if this went wrong, it could go 0:17:15.610 --> 0:17:19.970 very wrong, very quickly. When you switch on this bot. 0:17:20.490 --> 0:17:23.330 They told Sam, you have to watch it like a 0:17:23.410 --> 0:17:26.330 hawk and be ready to switch it off straight away 0:17:26.490 --> 0:17:32.370 if it starts losing money. Sam agreed. He switched on 0:17:32.410 --> 0:17:39.090 the bot, then fell asleep. The biggest worry of all 0:17:39.210 --> 0:17:43.450 was that, well four million dollars worth of crypto had 0:17:43.610 --> 0:17:44.610 just disappeared. 0:17:45.890 --> 0:17:50.650 Where had it gone? Had somebody stolen it? No one knew. 0:17:51.650 --> 0:17:55.850 Sam's management team wanted to tell their investors. Let's not, 0:17:56.530 --> 0:18:00.050 said Sam. I reckon, there's an eighty percent probability that 0:18:00.130 --> 0:18:06.970 it turns up somewhere. In Sam's highper rational mind. That 0:18:07.170 --> 0:18:10.810 was basically the same as them still having eighty percent 0:18:10.890 --> 0:18:13.810 of the four million dollars, and it would be perfectly 0:18:13.810 --> 0:18:17.770 reasonable to put that in their accounts. We can't do that, 0:18:18.730 --> 0:18:22.730 said Sam's management team. That's not how the world works. 0:18:23.610 --> 0:18:28.490 The management team at Alameda Research lost patients. Sam was 0:18:28.530 --> 0:18:32.770 a brilliant trader, but hilariously ill suited to running a company. 0:18:33.570 --> 0:18:37.970 They walked out. Half the employees followed. The investors pulled 0:18:37.970 --> 0:18:41.810 out three quarters of the cash they'd put in. Still, 0:18:42.650 --> 0:18:45.970 that left Sam with forty million dollars to play with, 0:18:46.810 --> 0:18:49.370 and now there was no one to complain when he 0:18:49.490 --> 0:18:53.850 did things his way. Sam turned on his bot and 0:18:54.010 --> 0:19:04.690 let it run. In Oxford, Will McCaskill and his philosopher 0:19:04.730 --> 0:19:09.770 colleagues were thinking, remember what Peter Singer had said years 0:19:09.810 --> 0:19:15.410 ago about how distance wasn't morally important. We should care 0:19:15.450 --> 0:19:19.090 as much about a child starving ten thousand miles away 0:19:19.450 --> 0:19:22.090 as a child drowning in a pond right in front 0:19:22.130 --> 0:19:26.650 of us. McCaskill began to think we should treat time 0:19:27.210 --> 0:19:30.570 the same as distance. We should care as much about 0:19:30.690 --> 0:19:34.170 children who might be born in the future as children 0:19:34.210 --> 0:19:38.930 who exist right now. Following that logic leads to some 0:19:39.050 --> 0:19:44.170 strange conclusions. The future could last a long time. There 0:19:44.250 --> 0:19:48.570 might be trillions upon trillions of future humans, far more 0:19:48.610 --> 0:19:52.730 than the mere few billion alive today. But those future 0:19:52.810 --> 0:19:56.530 humans will never be born. If today's humans carelessly go 0:19:56.690 --> 0:20:01.370 extinct in the next few decades, what might cause that 0:20:02.250 --> 0:20:09.050 a genetically engineered pandemic perhaps or a rogue super intelligent AI. 0:20:11.010 --> 0:20:15.210 So perhaps the most effective thing altruists can do is 0:20:15.410 --> 0:20:19.850 fund academic research into how best to prevent those risks. 0:20:21.210 --> 0:20:25.410 Of course, most of that research won't lead anywhere, but 0:20:25.490 --> 0:20:29.770 a small probability of a huge payoff can still outweigh 0:20:29.770 --> 0:20:31.450 the certainty of a small payoff. 0:20:35.330 --> 0:20:36.050 Think of it like this. 0:20:37.610 --> 0:20:41.730 If you donate three thousand dollars to buy bednets, you 0:20:41.810 --> 0:20:45.810 can be fairly hopeful of saving one life. But what 0:20:46.010 --> 0:20:51.850 if instead you put your three thousand dollars towards holding 0:20:51.890 --> 0:20:55.810 an AI safety workshop. The chance that it will lead 0:20:55.810 --> 0:21:00.050 to an important breakthrough is minuscule, say one in a billion, 0:21:01.210 --> 0:21:05.250 But if it does, it might save lots of future lives, 0:21:05.610 --> 0:21:09.930 say a trillion. One in a billion times a trillion. 0:21:10.050 --> 0:21:13.050 If you think about it rationally, that is basically the 0:21:13.090 --> 0:21:17.570 same thing as saving a thousand lives. Far more effective 0:21:17.610 --> 0:21:23.730 then to fund AI workshops than bednets. This new school 0:21:23.730 --> 0:21:28.730 of thought became known as long termism. Will McCaskill got 0:21:28.810 --> 0:21:31.970 to work on a book to spread the ideas more widely. 0:21:35.850 --> 0:21:40.650 At Alameda Research, they finally found the missing four million 0:21:40.730 --> 0:21:44.530 dollars worth of crypto. It hadn't been stolen. After all, 0:21:44.930 --> 0:21:47.370 there had been a computer glitch. It had been sent 0:21:47.450 --> 0:21:51.610 to an exchange without an accompanying note about who owned it. 0:21:52.330 --> 0:21:56.570 When Sam finally realized which exchange might have it and 0:21:56.650 --> 0:22:01.370 called them up, they were astonished, How has it taken 0:22:01.450 --> 0:22:07.730 you this long to contact us. Sam's bot, meanwhile, was 0:22:07.770 --> 0:22:14.890 doing well. Alimeda Research was making money, but Sam wanted more. 0:22:15.770 --> 0:22:19.810 He'd realized that the real money making potential in crypto 0:22:20.170 --> 0:22:24.890 wasn't in trading on someone else's exchanges. It was running 0:22:25.010 --> 0:22:28.810 an exchange of your own. Sam came up with a 0:22:28.890 --> 0:22:32.930 clever design for a new kind of crypto exchange, one 0:22:33.010 --> 0:22:36.130 that would let its users gamble on the future price 0:22:36.250 --> 0:22:39.930 of various coins. Many of those people would end up losing. 0:22:40.210 --> 0:22:44.970 That's the nature of gambling, win or lose. Sam would 0:22:45.050 --> 0:22:51.970 take his cut, just like a casino. The exchange Sam 0:22:52.050 --> 0:22:55.250 had in mind wouldn't be legal to run in America, 0:22:55.610 --> 0:22:58.530 so he set it up in the harmas he called 0:22:58.570 --> 0:23:04.650 it FTX. It quickly became a huge success. It ran 0:23:04.730 --> 0:23:08.570 a Super Bowl commercial in which characters played by Larry 0:23:08.690 --> 0:23:14.970 David shown new inventions through the ages the wheel, the toilet, 0:23:15.690 --> 0:23:21.730 the light bulb. Larry mocks them all that's stupid. At 0:23:21.770 --> 0:23:26.530 the end, he's shown FTX and sneers dismissively. 0:23:27.290 --> 0:23:29.530 It's FTX. It's a safe, an easy way to get 0:23:29.530 --> 0:23:34.010 into rypto. I don't think so, and I'm never wrong 0:23:34.050 --> 0:23:34.850 about this stuff. 0:23:35.210 --> 0:23:41.010 Never the tagline don't be like Larry, don't miss out. 0:23:41.970 --> 0:23:46.730 The AD's message is clear. You might not understand crypto, 0:23:47.170 --> 0:23:50.370 just like Larry David's characters didn't understand the wheel or 0:23:50.410 --> 0:23:53.010 the light bulb, but it is going to be just 0:23:53.290 --> 0:23:56.770 as important. Don't miss out. Who cares if you don't 0:23:56.850 --> 0:24:04.610 understand it? Gamble on it now, earn to give. Will 0:24:04.690 --> 0:24:09.810 mccaskell had advised Sam Bankman freed. Did anyone care how 0:24:09.970 --> 0:24:12.530 Sam was making his money as long as he was 0:24:12.530 --> 0:24:19.170 giving it away? Cautionary tales will be back after the break. 0:24:28.210 --> 0:24:32.890 In twenty twenty two, Will McCaskill published his book What 0:24:33.090 --> 0:24:37.170 We Owe the Future. The organization he helped set up, 0:24:37.570 --> 0:24:43.210 the Center for Effective Altruism, moved into impressive new premises. 0:24:43.810 --> 0:24:48.570 It bought Whiteham Abbey, a grand fifteenth century estate just 0:24:48.650 --> 0:24:52.970 outside of Oxford, to host workshops on subjects like AI 0:24:53.170 --> 0:24:59.690 safety and pandemic risk. Some Effective Altruists felt queasy. Was 0:24:59.730 --> 0:25:04.450 this really a better use of money than bednets? Sure, 0:25:04.970 --> 0:25:08.410 said others. If we hold our workshops in a century's 0:25:08.410 --> 0:25:11.730 old building, that'll help to focus everyone's minds on a 0:25:11.770 --> 0:25:16.490 long term time frame. Sam Bankman Freed was fully on 0:25:16.570 --> 0:25:21.130 board with Will mccaskell's new long term is thinking. One 0:25:21.530 --> 0:25:25.290 rational way to donate his money, Sam decided might be 0:25:25.370 --> 0:25:29.890 to get politicians elected who knew something about AI and pandemics. 0:25:30.650 --> 0:25:36.850 Politicians like Carrick Flynn, an earnest, young, effective altruist who 0:25:36.850 --> 0:25:40.570 had worked on pandemic prevention, then decided to run for 0:25:40.690 --> 0:25:46.250 Congress in Oregon. Carrick Flynn didn't know that Sam Bankman 0:25:46.370 --> 0:25:50.250 Freed had decided to throw money at his campaign. Flynn 0:25:50.370 --> 0:25:55.250 was watching YouTube sipping diet mountain dew when YouTube cut 0:25:55.330 --> 0:25:56.370 to an ad. 0:25:57.130 --> 0:26:01.170 Carrick Flynn faced poverty and homelessness, but he pushed through 0:26:01.410 --> 0:26:04.610 to college on a scholarship and a career protecting the 0:26:04.690 --> 0:26:07.410 most vulnerable billion dollars. 0:26:07.450 --> 0:26:11.570 Flynn was so startled he covered himself in diet mountain dew, 0:26:12.370 --> 0:26:15.490 and that was just the start. Soon, the voters of 0:26:15.570 --> 0:26:19.370 Oregon's sixth Congressional district could hardly look at a screen 0:26:19.450 --> 0:26:22.370 without encountering an ad for Carrick Flynn. 0:26:23.410 --> 0:26:26.370 Carrick Flynn, the Democrat will create good jobs. 0:26:27.810 --> 0:26:32.450 Oregonians quickly got sick of hearing the name Carrick Flynn 0:26:33.210 --> 0:26:37.850 and suspicious these wall to wall ads must be costing 0:26:37.890 --> 0:26:43.730 a fortune. Who was paying? Reporters found out that it 0:26:43.810 --> 0:26:47.650 was a crypto billionaire who lived in the Bahamas, and 0:26:47.690 --> 0:26:52.210 demanded of Carrick Flynn, why is Sam Bankman Freed so 0:26:52.610 --> 0:26:57.210 very keen to get you elected? I don't know, Flynn protested. 0:26:57.410 --> 0:27:01.330 I've never met him. I've never talked to him. Flynn said. 0:27:01.370 --> 0:27:03.890 He assumed it must be because of his interest in 0:27:04.050 --> 0:27:07.650 pandemic risk. Of course, the reporters didn't believe that. 0:27:09.490 --> 0:27:10.770 They said, he. 0:27:10.770 --> 0:27:15.490 Must want you to do something involving crypto. Flynn became 0:27:15.730 --> 0:27:21.450 increasingly bewildered. I'm not a crypto person, he protested. I 0:27:21.450 --> 0:27:24.410 don't know much about it. I've tried to read about it. 0:27:24.690 --> 0:27:31.410 I didn't really care. Flynn finished a distant second in 0:27:31.490 --> 0:27:36.890 his election. For every vote he received, Sam had spent 0:27:37.090 --> 0:27:41.930 something like one thousand dollars on ads. To put that 0:27:42.090 --> 0:27:47.570 another way, for every three votes Carrick Flynn received, Sam 0:27:47.610 --> 0:27:52.130 could have bought enough bednets to save a life. 0:27:52.290 --> 0:27:54.530 But in the new long term mist. 0:27:54.450 --> 0:27:58.650 View of effective altruism, the money spent on Carrick Flynn 0:27:59.130 --> 0:28:03.090 hadn't been wasted. It had always been a long shot 0:28:03.130 --> 0:28:06.770 that Carrick Flynn's political career would end up preventing some 0:28:07.090 --> 0:28:11.410 future pandemic from wiping out humanity. But if it did, 0:28:11.930 --> 0:28:16.010 it could save trillions of future lives. If you thought 0:28:16.130 --> 0:28:22.370 rationally about altruism, funding Carrick flynn ads instead of bednets 0:28:22.410 --> 0:28:30.730 made perfect sense. In the last two episodes of Cautionary Tales, 0:28:30.970 --> 0:28:35.690 we've heard two wildly different stories about people who took 0:28:35.810 --> 0:28:43.570 altruism very seriously. Indeed, George Price's altruism was driven by revelation. 0:28:44.410 --> 0:28:47.210 A vision of Jesus told him to give away whatever 0:28:47.250 --> 0:28:51.130 he had to whoever asked him. He ended up as 0:28:51.170 --> 0:28:55.010 thin as a stick with rotting teeth, sleeping on a 0:28:55.050 --> 0:28:59.810 mattress on the floor of a squad. Sam Bankman Freed's 0:28:59.850 --> 0:29:04.810 altruism was driven by rationality. A moral philosopher told him 0:29:04.850 --> 0:29:09.250 to make lots of money and donate it effectively. He 0:29:09.370 --> 0:29:13.410 ended up encouraging people to gamble on crypto so that 0:29:13.490 --> 0:29:19.010 he could put more money into politics. Taking altruism very 0:29:19.050 --> 0:29:27.690 seriously indeed can take you to some strange places. Will 0:29:27.810 --> 0:29:32.410 mccaskell flew into the Bahamas for a penthouse discussion about 0:29:32.450 --> 0:29:36.730 the best ways to help future people. Sam had been 0:29:36.770 --> 0:29:41.490 trying out a new idea. He identified a hundred experts 0:29:41.490 --> 0:29:44.970 in AI and pandemic risk and sent each of them 0:29:45.210 --> 0:29:49.010 a million dollars out of the blue and nose strings attached. 0:29:50.210 --> 0:29:53.850 Use it well and I'll give you more. He planned 0:29:53.890 --> 0:29:56.810 to give away a billion dollars over the next year, 0:29:57.690 --> 0:30:04.570 but how more political campaigns, more workshops at Whiteham Abbey. 0:30:05.730 --> 0:30:09.210 As it turned out, the question was moot because when 0:30:09.290 --> 0:30:14.050 Sam's dark secret was about to be discovered, he hadn't 0:30:14.130 --> 0:30:19.090 just been earning to give, He'd also been defrauding to give. 0:30:20.330 --> 0:30:24.290 When Sam set up FTX, he couldn't get a US 0:30:24.450 --> 0:30:29.050 bank to open an account. Its activities were too legally murky. 0:30:29.690 --> 0:30:33.930 That meant FTX had no way of taking dollar deposits 0:30:33.970 --> 0:30:37.090 from its customers. But you know who did have a 0:30:37.130 --> 0:30:43.490 dollar account, Sam's company, Alameda Research. When customers opened an 0:30:43.490 --> 0:30:49.370 account at FTX, they wired their deposits to Alamader. Alamader 0:30:49.490 --> 0:30:52.650 could and should have kept that money safe for the 0:30:52.770 --> 0:30:57.810 FTX customers, but they didn't they used it to trade with. 0:30:59.210 --> 0:31:05.850 This wasn't legally murky, this was very illegal. Indeed, what 0:31:06.090 --> 0:31:10.730 was Sam thinking? Sam was thinking that nobody need ever 0:31:10.850 --> 0:31:15.610 find out Alamada's trading was making profits, and with this 0:31:15.770 --> 0:31:19.050 extra money to play with, it would make even more profits. 0:31:19.650 --> 0:31:22.690 And Alameda had plenty of assets to fall back on. 0:31:23.250 --> 0:31:27.690 It owned crypto worth many times more than those customer deposits, 0:31:28.490 --> 0:31:32.090 so whenever an FTX customer wanted their deposit back, he 0:31:32.170 --> 0:31:36.370 thought it wouldn't be a problem. As Sam told the 0:31:36.410 --> 0:31:40.890 author Michael Lewis, it felt to us that Alameda had 0:31:41.210 --> 0:31:48.530 infinity dollars. But then crypto prices fell, Alameda now had 0:31:49.010 --> 0:31:54.130 finite dollars. FTX experienced the equivalent of a run on 0:31:54.210 --> 0:31:57.330 the bank when all the customers rushed to withdraw their 0:31:57.330 --> 0:32:02.090 deposits at once. Alameda suddenly had to scramble to find 0:32:02.130 --> 0:32:07.290