Speaker 1: Pushkin.
Speaker 2: In a penthouse apartment in the Bahamas, a billionaire is
Speaker 2: hosting a meeting. It's the kind of place you might
Speaker 2: expect to find a billionaire, marble floors, a grand piano,
Speaker 2: a balcony with a hot tub, and views of the marina.
Speaker 2: As the billionaire and his colleagues debate what to do
Speaker 2: with his money, they look to one man in particular
Speaker 2: for wise advice. A business analyst, a financial expert, no
Speaker 2: a moral philosopher who's devoted his career to thinking about altruism.
Speaker 2: This is the second of two cautionary tales about altruism.
Speaker 2: In the first, we heard about a scientist called George Price,
Speaker 2: who helped to unravel the mystery of how evolution produced
Speaker 2: altruistic behavior, and who then became the most extreme altruist
Speaker 2: you could imagine, giving away his last penny and the
Speaker 2: coat on his back. But Wade, perhaps the billionaire in
Speaker 2: the Bahamas is an even more extreme altruist. The only
Speaker 2: reason he ever wanted to make money was to give
Speaker 2: it away. He looks more like a student than a billionaire,
Speaker 2: with his baggy cargo shorts, crumpled T shirt, and disheveled hair.
Speaker 2: He's turned his penthouse into a dorm room. There are
Speaker 2: bean bags for napping on, monitor wires trailing haphazardly across
Speaker 2: the marble floor, a cheap bookcase full of board games,
Speaker 2: a freezer stuffed with three dollar vegetable beryani from Trader Joe's.
Speaker 2: Over the next year, he wants to give away a
Speaker 2: billion dollars, and he wants to do it as effectively
Speaker 2: as possible, hence the moral philosopher. The year is twenty
Speaker 2: twenty two. The billionaire's name is Sam Bankman Freed, and
Speaker 2: his altruistic activities are about to be interrupted by arrest
Speaker 2: and imprisonment. I'm Tim Harford, and you're listening to cautionary tales.
Speaker 2: It's nineteen seventy two. In London. George Price is spiraling,
Speaker 2: convinced that Jesus wants him to give all his possessions
Speaker 2: to homeless people. Fifty miles up the road, in Oxford,
Speaker 2: a philosopher called Peter Singer publishes an essay titled Famine,
Speaker 2: Affluence and Morality. Singer asks us to imagine that we're
Speaker 2: walking along past a muddy pond, going about our day,
Speaker 2: when we see that in the pond a small child
Speaker 2: is drowning upon this shallow we could easily wade in
Speaker 2: and save the child. That that would ruin the nice
Speaker 2: new clothes we're wearing.
Speaker 1: What do we do?
Speaker 2: Of course, of course we wade in and saved the child.
Speaker 1: If we didn't, we'd never be able to live with ourselves.
Speaker 2: But think about this, says s across the world, a
Speaker 2: small child is dying from hunger. We could save that
Speaker 2: child's life by giving money to charity less than the
Speaker 2: cost of the nice new clothes we were willing to ruin.
Speaker 2: Surely our obligation to give to the charity is just
Speaker 2: as strong as our obligation to wade into the pond.
Speaker 2: Morally speaking, it doesn't matter if the child we can
Speaker 2: save is right there in front of us or ten
Speaker 2: thousand miles away. If you follow Singer's logic, spending money
Speaker 2: on nice clothes instead of donating it to starving children
Speaker 2: is just as immoral as walking past the drowning child
Speaker 2: in the pond. Follow the logic further, and as long
Speaker 2: as there's one starving child in the world, it's immoral
Speaker 2: to own anything we don't really need. We should keep
Speaker 2: on giving until we're only just better off than the
Speaker 2: starving child ourselves. Nobody lives like this, of course, well
Speaker 2: nobody except George Price. Peter Singer's essay became a fixture
Speaker 2: in undergraduate philosophy classes, including the one I took. Students
Speaker 2: tended to have one of two reactions. Either they tried
Speaker 2: to find some flaw in Singer's logic, or they conceded
Speaker 2: that Singer might be right, but shoved that thought firmly
Speaker 2: to the back of their minds so they could resume
Speaker 2: their normal lives without constantly thinking about all the starving
Speaker 2: children they were thereby condemning to death. Will mccaskell was different.
Speaker 2: In two thousand and five, aged eighteen, mccaskell read Peter
Speaker 2: Singer's essay. He thought Singer was clearly right and decided
Speaker 2: he should walk the walk by giving what he could
Speaker 2: as a student. That wasn't easy. Students never have much money,
Speaker 2: and mccaskell did also want to make friends. He tried
Speaker 2: to compromise. When his friends went to the pub for
Speaker 2: a drink, mccaskell ordered tat water, then quietly refilled the
Speaker 2: glass with cheap lager he'd brought from the store. Mccaskell
Speaker 2: got his degree in philosophy and a job in academia.
Speaker 2: He decided that the first twenty six thousand pounds a
Speaker 2: year of his salary would be enough to live on
Speaker 2: about thirty three thousand dollars. Anything he earned above that
Speaker 2: he give away. He researched the most effective ways to
Speaker 2: donate some charitable causes. It turns out give you far
Speaker 2: more bang for your buck than others. Bednets, for example,
Speaker 2: save lives in countries with hilaria by stopping mosquitoes from
Speaker 2: biting you while you sleep. By one estimate, around three
Speaker 2: thousand dollars spent on bednets would save one life. Mccaskell
Speaker 2: met others who shared his ideas. A movement emerged. Mccaskell
Speaker 2: and his colleagues asked themselves what it should be called,
Speaker 2: and came up with the name effective altruism. They became
Speaker 2: the effective altruists, committed to giving away a significant chunk
Speaker 2: of their income. In a modest basement office in Oxford,
Speaker 2: McCaskill and his colleagues set up the Center for Effective Altruism.
Speaker 2: They ate cheap vegetarian food, supermarket baguettes and hummers, and
Speaker 2: debated the most effective ways to be altruistic. For instance,
Speaker 2: might deworming pills do even more good than bednets per
Speaker 2: day dollar spent? The numbers said they might. People with
Speaker 2: money started to ask mccaskell's advice on where to donate.
Speaker 2: That gave him a dilemma, because mccaskell was aware of
Speaker 2: studies that show classically handsome people are more persuasive at
Speaker 2: getting donations for charities, and mccaskell had always been conscious
Speaker 2: of the gap between his two front teeth. Should he
Speaker 2: invest in braces to make himself more handsome? On the
Speaker 2: one hand, the money he spent on braces couldn't then
Speaker 2: be spent on bednets or deworming pills. On the other hand,
Speaker 2: it might make him a more effective advocate for those causes.
Speaker 2: Mccaskell asked his old friends about this moral dilemma will
Speaker 2: They said, if you want to get your teeth fixed,
Speaker 2: get your teeth fixed. In a profile of McCaskill for
Speaker 2: The New Yorker, one friend recalls it felt like it
Speaker 2: subsumed his own humanity to become a vehicle for the
Speaker 2: saving of humanity. Mccaskeal was getting asked for another kind
Speaker 2: of advice too, career advice. Students at Oxford University wanted
Speaker 2: to know what line of work they should go into
Speaker 2: if they wanted to do the most good. Should they
Speaker 2: become a doctor in a poor country, for example, or
Speaker 2: a medical researcher to try to cure cancer. Mccaskell came
Speaker 2: up with a surprising answer, none of the above.
Speaker 1: You are at a top university.
Speaker 2: He told them, you have a chance at careers that
Speaker 2: could make you lots of money.
Speaker 1: Why not make money and give it away?
Speaker 2: If you become a high flying banker, for example, you
Speaker 2: could easily fund a dozen doctors in poor countries, far
Speaker 2: more effective than becoming a doctor in a poor country yourself.
Speaker 2: The logic was impeccable. Mccaskal called the idea earning to give.
Speaker 2: In twenty twelve, McCaskill visited Cambridge, Massachusetts, to spread his
Speaker 2: ideas at other top universities. He heard about a student
Speaker 2: at MIT who might be receptive. A physics major in
Speaker 2: his junior year unkempt a bit odd, but clearly brilliant.
Speaker 2: McCaskill sent the student an email, Let's have lunch. Sam
Speaker 2: Bankman Freed was surprised to get an email from a
Speaker 2: philosopher at Oxford University Who is this guy? Why is
Speaker 2: he inviting me to lunch? Sam was bored of his
Speaker 2: physics degree, just as had been bored at school throughout
Speaker 2: his childhood. He was good at maths and a card
Speaker 2: game called Magic the Gathering, but bad at social interaction.
Speaker 2: He remembers having to teach him when it's considered appropriate
Speaker 2: to smile. His classmates, he thought, saw him as smart
Speaker 2: and maybe not all that human. He didn't feel close
Speaker 2: to anyone except for one kid who also liked the
Speaker 2: card game Magic Gathering. That kid remembers Sam as a
Speaker 2: rare combination of hyper rational and extremely kind. Sam rationalized
Speaker 2: his way to a belief system. I guess I should
Speaker 2: care the same amount about everyone, which is pretty much
Speaker 2: what Peter Singer said all those years ago. When someone
Speaker 2: made the case to Sam that his beliefs were inconsistent
Speaker 2: with eating meat, Sam thought about it and concluded, this
Speaker 2: sucks because I love fried chicken. But they're right. He
Speaker 2: became a vegan. In his cargo shorts, crumpled T shirt,
Speaker 2: and battered sneakers, Sam met Will McCaskill for lunch. He
Speaker 2: wasn't really sure what he wanted to do with his life.
Speaker 2: He told Will Before he came to MIT, he'd thought
Speaker 2: maybe he'd become an academic, but he now realized that
Speaker 2: he'd find academia far too boring. Will pitched Sam on
Speaker 2: his earn to give idea. If you want to make
Speaker 2: the world a better place, he told Sam, you should
Speaker 2: set out to make lots and lots of money. Cautionary
Speaker 2: tales will be back after the break. Sam bankmin Freed
Speaker 2: finished his degree at MIT and got a job on
Speaker 2: Wall Street at a trading firm. The job involved spotting
Speaker 2: tiny inefficiencies in financial markets, patterns data that others had overlooked.
Speaker 2: It was all about making rational calculations and thinking and probabilities.
Speaker 2: It wasn't easy, but if you were good, you could
Speaker 2: make a fortune. Sam was a natural. In his first year,
Speaker 2: he was paid three hundred thousand dollars, in his second,
Speaker 2: six hundred thousand, in his third a million. He gave
Speaker 2: most of it away to good causes, including Will mccaskell's
Speaker 2: Center for Effective Altruism. How much might I be earning
Speaker 2: in ten years, he asked his bosses, if you keep
Speaker 2: doing as well as you are. They said, maybe as
Speaker 2: much as seventy five million dollars a year. But Sam
Speaker 2: wasn't happy. I don't feel anything, he confided to his journal,
Speaker 2: or at least anything good. I feel nothing but the
Speaker 2: aching hole in my brain where happiness should be. Sam
Speaker 2: began to get interested in crypto currency in twenty seventeen.
Speaker 2: Crypto was still a very new phenomenon. It was hard
Speaker 2: to know what to make of it, an important emerging
Speaker 2: asset class or just some complicated scam. New coins were
Speaker 2: being launched all the time, but unlike shares in say
Speaker 2: Apple or Amazon, they were often completely unrelated to anything
Speaker 2: in the real world economy. Sam's trading firm wouldn't let
Speaker 2: him touch crypto.
Speaker 1: It was far too risky to start with.
Speaker 2: Crypto was bought and sold on exchanges that aren't regulated
Speaker 2: in the same way as stock exchanges. Crypto was relatively
Speaker 2: easy to steal, what to misplace. If you lose the
Speaker 2: password to your bitcoin wallet, It's not like losing the
Speaker 2: password to your online banking. You can't call a help
Speaker 2: desk and get another one. Still, Sam saw an opportunity.
Speaker 2: The nascent crypto markets were far less efficient than the
Speaker 2: financial markets he was used to operating in. The same
Speaker 2: coins could trade on different exchanges for different prices. Sam
Speaker 2: decided to quit his job and set up his own firm.
Speaker 2: He'd use the techniques he had learned on Wall Street
Speaker 2: to trade in crypto, But what about the risk of theft.
Speaker 2: With a few furtive keystrokes, an employee might divert coins
Speaker 2: into their own personal account in a way that would
Speaker 2: never work for Apple shares. Sam had a genius solution
Speaker 2: to that problem. He would employ only effective altruists. If
Speaker 2: all his employees were just as committed as he was
Speaker 2: to giving their money away, they would feel no temptation
Speaker 2: to enrich themselves by stealing from the firm.
Speaker 1: It was perfect.
Speaker 2: By twenty eighteen, Sam's new company, alimede A Research, had
Speaker 2: employed a couple of dozen effective altruists and raised one
Speaker 2: hundred and seventy million dollars from investors. But things got
Speaker 2: off to a rocky start. The first problem was Sam's
Speaker 2: leadership style. One employee recalls he was expecting everyone to
Speaker 2: work eighteen hour days while he would not show up
Speaker 2: for meetings, not shower for weeks, have a mess all
Speaker 2: around him with old food everywhere, and fall asleep at
Speaker 2: his desk. Then there was Sam's new bot. He wanted
Speaker 2: to automate buying and selling coins on different exchanges. That
Speaker 2: was a tried and tested idea on stock markets, but
Speaker 2: stock markets worked more reliably than crypto exchanges. His management
Speaker 2: team were worried if this went wrong, it could go
Speaker 2: very wrong, very quickly. When you switch on this bot.
Speaker 2: They told Sam, you have to watch it like a
Speaker 2: hawk and be ready to switch it off straight away
Speaker 2: if it starts losing money. Sam agreed. He switched on
Speaker 2: the bot, then fell asleep. The biggest worry of all
Speaker 2: was that, well four million dollars worth of crypto had
Speaker 2: just disappeared.
Speaker 1: Where had it gone? Had somebody stolen it? No one knew.
Speaker 2: Sam's management team wanted to tell their investors. Let's not,
Speaker 2: said Sam. I reckon, there's an eighty percent probability that
Speaker 2: it turns up somewhere. In Sam's highper rational mind. That
Speaker 2: was basically the same as them still having eighty percent
Speaker 2: of the four million dollars, and it would be perfectly
Speaker 2: reasonable to put that in their accounts. We can't do that,
Speaker 2: said Sam's management team. That's not how the world works.
Speaker 2: The management team at Alameda Research lost patients. Sam was
Speaker 2: a brilliant trader, but hilariously ill suited to running a company.
Speaker 2: They walked out. Half the employees followed. The investors pulled
Speaker 2: out three quarters of the cash they'd put in. Still,
Speaker 2: that left Sam with forty million dollars to play with,
Speaker 2: and now there was no one to complain when he
Speaker 2: did things his way. Sam turned on his bot and
Speaker 2: let it run. In Oxford, Will McCaskill and his philosopher
Speaker 2: colleagues were thinking, remember what Peter Singer had said years
Speaker 2: ago about how distance wasn't morally important. We should care
Speaker 2: as much about a child starving ten thousand miles away
Speaker 2: as a child drowning in a pond right in front
Speaker 2: of us. McCaskill began to think we should treat time
Speaker 2: the same as distance. We should care as much about
Speaker 2: children who might be born in the future as children
Speaker 2: who exist right now. Following that logic leads to some
Speaker 2: strange conclusions. The future could last a long time. There
Speaker 2: might be trillions upon trillions of future humans, far more
Speaker 2: than the mere few billion alive today. But those future
Speaker 2: humans will never be born. If today's humans carelessly go
Speaker 2: extinct in the next few decades, what might cause that
Speaker 2: a genetically engineered pandemic perhaps or a rogue super intelligent AI.
Speaker 2: So perhaps the most effective thing altruists can do is
Speaker 2: fund academic research into how best to prevent those risks.
Speaker 2: Of course, most of that research won't lead anywhere, but
Speaker 2: a small probability of a huge payoff can still outweigh
Speaker 2: the certainty of a small payoff.
Speaker 1: Think of it like this.
Speaker 2: If you donate three thousand dollars to buy bednets, you
Speaker 2: can be fairly hopeful of saving one life. But what
Speaker 2: if instead you put your three thousand dollars towards holding
Speaker 2: an AI safety workshop. The chance that it will lead
Speaker 2: to an important breakthrough is minuscule, say one in a billion,
Speaker 2: But if it does, it might save lots of future lives,
Speaker 2: say a trillion. One in a billion times a trillion.
Speaker 2: If you think about it rationally, that is basically the
Speaker 2: same thing as saving a thousand lives. Far more effective
Speaker 2: then to fund AI workshops than bednets. This new school
Speaker 2: of thought became known as long termism. Will McCaskill got
Speaker 2: to work on a book to spread the ideas more widely.
Speaker 2: At Alameda Research, they finally found the missing four million
Speaker 2: dollars worth of crypto. It hadn't been stolen. After all,
Speaker 2: there had been a computer glitch. It had been sent
Speaker 2: to an exchange without an accompanying note about who owned it.
Speaker 2: When Sam finally realized which exchange might have it and
Speaker 2: called them up, they were astonished, How has it taken
Speaker 2: you this long to contact us. Sam's bot, meanwhile, was
Speaker 2: doing well. Alimeda Research was making money, but Sam wanted more.
Speaker 2: He'd realized that the real money making potential in crypto
Speaker 2: wasn't in trading on someone else's exchanges. It was running
Speaker 2: an exchange of your own. Sam came up with a
Speaker 2: clever design for a new kind of crypto exchange, one
Speaker 2: that would let its users gamble on the future price
Speaker 2: of various coins. Many of those people would end up losing.
Speaker 2: That's the nature of gambling, win or lose. Sam would
Speaker 2: take his cut, just like a casino. The exchange Sam
Speaker 2: had in mind wouldn't be legal to run in America,
Speaker 2: so he set it up in the harmas he called
Speaker 2: it FTX. It quickly became a huge success. It ran
Speaker 2: a Super Bowl commercial in which characters played by Larry
Speaker 2: David shown new inventions through the ages the wheel, the toilet,
Speaker 2: the light bulb. Larry mocks them all that's stupid. At
Speaker 2: the end, he's shown FTX and sneers dismissively.
Speaker 1: It's FTX. It's a safe, an easy way to get
Speaker 1: into rypto. I don't think so, and I'm never wrong
Speaker 1: about this stuff.
Speaker 2: Never the tagline don't be like Larry, don't miss out.
Speaker 2: The AD's message is clear. You might not understand crypto,
Speaker 2: just like Larry David's characters didn't understand the wheel or
Speaker 2: the light bulb, but it is going to be just
Speaker 2: as important. Don't miss out. Who cares if you don't
Speaker 2: understand it? Gamble on it now, earn to give. Will
Speaker 2: mccaskell had advised Sam Bankman freed. Did anyone care how
Speaker 2: Sam was making his money as long as he was
Speaker 2: giving it away? Cautionary tales will be back after the break.
Speaker 2: In twenty twenty two, Will McCaskill published his book What
Speaker 2: We Owe the Future. The organization he helped set up,
Speaker 2: the Center for Effective Altruism, moved into impressive new premises.
Speaker 2: It bought Whiteham Abbey, a grand fifteenth century estate just
Speaker 2: outside of Oxford, to host workshops on subjects like AI
Speaker 2: safety and pandemic risk. Some Effective Altruists felt queasy. Was
Speaker 2: this really a better use of money than bednets? Sure,
Speaker 2: said others. If we hold our workshops in a century's
Speaker 2: old building, that'll help to focus everyone's minds on a
Speaker 2: long term time frame. Sam Bankman Freed was fully on
Speaker 2: board with Will mccaskell's new long term is thinking. One
Speaker 2: rational way to donate his money, Sam decided might be
Speaker 2: to get politicians elected who knew something about AI and pandemics.
Speaker 2: Politicians like Carrick Flynn, an earnest, young, effective altruist who
Speaker 2: had worked on pandemic prevention, then decided to run for
Speaker 2: Congress in Oregon. Carrick Flynn didn't know that Sam Bankman
Speaker 2: Freed had decided to throw money at his campaign. Flynn
Speaker 2: was watching YouTube sipping diet mountain dew when YouTube cut
Speaker 2: to an ad.
Speaker 3: Carrick Flynn faced poverty and homelessness, but he pushed through
Speaker 3: to college on a scholarship and a career protecting the
Speaker 3: most vulnerable billion dollars.
Speaker 2: Flynn was so startled he covered himself in diet mountain dew,
Speaker 2: and that was just the start. Soon, the voters of
Speaker 2: Oregon's sixth Congressional district could hardly look at a screen
Speaker 2: without encountering an ad for Carrick Flynn.
Speaker 3: Carrick Flynn, the Democrat will create good jobs.
Speaker 2: Oregonians quickly got sick of hearing the name Carrick Flynn
Speaker 2: and suspicious these wall to wall ads must be costing
Speaker 2: a fortune. Who was paying? Reporters found out that it
Speaker 2: was a crypto billionaire who lived in the Bahamas, and
Speaker 2: demanded of Carrick Flynn, why is Sam Bankman Freed so
Speaker 2: very keen to get you elected? I don't know, Flynn protested.
Speaker 2: I've never met him. I've never talked to him. Flynn said.
Speaker 2: He assumed it must be because of his interest in
Speaker 2: pandemic risk. Of course, the reporters didn't believe that.
Speaker 1: They said, he.
Speaker 2: Must want you to do something involving crypto. Flynn became
Speaker 2: increasingly bewildered. I'm not a crypto person, he protested. I
Speaker 2: don't know much about it. I've tried to read about it.
Speaker 2: I didn't really care. Flynn finished a distant second in
Speaker 2: his election. For every vote he received, Sam had spent
Speaker 2: something like one thousand dollars on ads. To put that
Speaker 2: another way, for every three votes Carrick Flynn received, Sam
Speaker 2: could have bought enough bednets to save a life.
Speaker 1: But in the new long term mist.
Speaker 2: View of effective altruism, the money spent on Carrick Flynn
Speaker 2: hadn't been wasted. It had always been a long shot
Speaker 2: that Carrick Flynn's political career would end up preventing some
Speaker 2: future pandemic from wiping out humanity. But if it did,
Speaker 2: it could save trillions of future lives. If you thought
Speaker 2: rationally about altruism, funding Carrick flynn ads instead of bednets
Speaker 2: made perfect sense. In the last two episodes of Cautionary Tales,
Speaker 2: we've heard two wildly different stories about people who took
Speaker 2: altruism very seriously. Indeed, George Price's altruism was driven by revelation.
Speaker 2: A vision of Jesus told him to give away whatever
Speaker 2: he had to whoever asked him. He ended up as
Speaker 2: thin as a stick with rotting teeth, sleeping on a
Speaker 2: mattress on the floor of a squad. Sam Bankman Freed's
Speaker 2: altruism was driven by rationality. A moral philosopher told him
Speaker 2: to make lots of money and donate it effectively. He
Speaker 2: ended up encouraging people to gamble on crypto so that
Speaker 2: he could put more money into politics. Taking altruism very
Speaker 2: seriously indeed can take you to some strange places. Will
Speaker 2: mccaskell flew into the Bahamas for a penthouse discussion about
Speaker 2: the best ways to help future people. Sam had been
Speaker 2: trying out a new idea. He identified a hundred experts
Speaker 2: in AI and pandemic risk and sent each of them
Speaker 2: a million dollars out of the blue and nose strings attached.
Speaker 2: Use it well and I'll give you more. He planned
Speaker 2: to give away a billion dollars over the next year,
Speaker 2: but how more political campaigns, more workshops at Whiteham Abbey.
Speaker 2: As it turned out, the question was moot because when
Speaker 2: Sam's dark secret was about to be discovered, he hadn't
Speaker 2: just been earning to give, He'd also been defrauding to give.
Speaker 2: When Sam set up FTX, he couldn't get a US
Speaker 2: bank to open an account. Its activities were too legally murky.
Speaker 2: That meant FTX had no way of taking dollar deposits
Speaker 2: from its customers. But you know who did have a
Speaker 2: dollar account, Sam's company, Alameda Research. When customers opened an
Speaker 2: account at FTX, they wired their deposits to Alamader. Alamader
Speaker 2: could and should have kept that money safe for the
Speaker 2: FTX customers, but they didn't they used it to trade with.
Speaker 2: This wasn't legally murky, this was very illegal. Indeed, what
Speaker 2: was Sam thinking? Sam was thinking that nobody need ever
Speaker 2: find out Alamada's trading was making profits, and with this
Speaker 2: extra money to play with, it would make even more profits.
Speaker 2: And Alameda had plenty of assets to fall back on.
Speaker 2: It owned crypto worth many times more than those customer deposits,
Speaker 2: so whenever an FTX customer wanted their deposit back, he
Speaker 2: thought it wouldn't be a problem. As Sam told the
Speaker 2: author Michael Lewis, it felt to us that Alameda had
Speaker 2: infinity dollars. But then crypto prices fell, Alameda now had
Speaker 2: finite dollars. FTX experienced the equivalent of a run on
Speaker 2: the bank when all the customers rushed to withdraw their
Speaker 2: deposits at once. Alameda suddenly had to scramble to find
Speaker 2: the money to pay them back. Remember, when Alameda had
Speaker 2: lost sight of four men million dollars, it hadn't got
Speaker 2: any better at keeping track of what was where. In
Speaker 2: his book Going Infinite, Michael Lewis describes a comically frantic
Speaker 2: hunt for Alameda's assets.
Speaker 4: Its CEO would come on to the screen and announce
Speaker 4: that she found two hundred million dollars here or four
Speaker 4: hundred million dollars there, as if she just made an
Speaker 4: original scientific discovery. Some guy at Deltech they're bank in
Speaker 4: the Bahamas message ramnic to say, oh, by the way,
Speaker 4: you have three hundred million dollars with us, and it
Speaker 4: came as a total surprise to all of them.
Speaker 2: Alameda couldn't gather its money in time. FTX was declared bankrupt.
Speaker 2: Sam was arrested and extradited from the Bahamas to the US.
Speaker 2: Michael Lewis makes the case that Sam wasn't so much
Speaker 2: criminal mastermind as overgrown teenager, incredibly reckless, and incredibly disorganized.
Speaker 2: The bankruptcy lawyers eventually located enough assets in Alameda to
Speaker 2: give FTX depositors all their money back with interest, But
Speaker 2: reckless and disorganized is hardly a compelling defense. He took
Speaker 2: money that wasn't his and spent it according to whatever
Speaker 2: logic suited him. Sam was convicted of fraud and sentenced
Speaker 2: to twenty five years in prison. Sam Bankman freed, is
Speaker 2: now known for his crimes, but it's his altruism that
Speaker 2: interests me. And they have a surprising amount in common.
Speaker 2: Sam purloined his customer's deposits because he made a hyper
Speaker 2: rational calculation that he'd probably get away with it and
Speaker 2: didn't think much about the fallout if it all went wrong.
Speaker 2: Sam gave money to politicians, not the poor, because he
Speaker 2: made a hyper rational calculation to prioritize future people over
Speaker 2: people actually suffering today. Both these calculations remind me how
Speaker 2: Sam's teenage classmates described him smart and maybe not all
Speaker 2: that human. George Price was deeply depressed by what his
Speaker 2: own work said about what it means to be human.
Speaker 2: Our altruistic instincts evolved to serve our selfish genes. When
Speaker 2: we feel the urge to do something nice, tends to
Speaker 2: be the kind of thing that for our ancestors might
Speaker 2: have helped their relatives or forged a friendship. Remember the
Speaker 2: contrast drawn by Peter Singer. We wouldn't hesitate to wade
Speaker 2: into a shallow pond to save a drowning child, but
Speaker 2: we don't feel the same urge to give money to
Speaker 2: save a starving child on the other side of the world. Why,
Speaker 2: when you think from the g Deane's point of view,
Speaker 2: it's not hard to explain. The child who's drowning right
Speaker 2: in front of us might plausibly be a distant cousin
Speaker 2: or have parents who feel forever in our debt. The
Speaker 2: child who's starving half a world away, not so much.
Speaker 2: Our selfish genes can help to explain why we are
Speaker 2: the way we are, but they can't tell us what's
Speaker 2: the right thing to do. We need our rational minds
Speaker 2: for that. It is depressing that we ignore the starving child,
Speaker 2: because evolution simply didn't build us to care that much.
Speaker 2: The moral philosophers are right that we can use our
Speaker 2: rational minds to transcend our selfish genes. Then again, I'm
Speaker 2: not sure it's any less depressing to ignore the starving
Speaker 2: child because we've thought long and hard about it and
Speaker 2: decided to fund an AI workshop in stead. If we
Speaker 2: follow the logic of altruism far enough, it can take
Speaker 2: us to places that don't feel human at all. So
Speaker 2: perhaps we shouldn't beat ourselves up too much if we
Speaker 2: succeed in transcending our selfish genes only by a little bit,
Speaker 2: If we manage at least to do something good for
Speaker 2: people who aren't family or friends, and we don't give
Speaker 2: everything away like George Price, or feel angst about getting
Speaker 2: braces like Will mccaskell, or donate our cash to long
Speaker 2: shot chances of saving unborn trillions like Sam Bankman Freed.
Speaker 2: It may not be a rational approach to altruism, but
Speaker 2: it is a human one.
Speaker 1: There are worse things in the world than being human.
Speaker 2: A key source for this episode is Going Infinite, The
Speaker 2: Rise and Fall of a New Tycoon by Michael Lewis.
Speaker 2: I will be speaking to Michael Lewis next week about
Speaker 2: his time with Sam Bankmin Freed, and we're going to
Speaker 2: be answering your questions on altruism and kindness. This episode
Speaker 2: of Cautionary Tales also relied on Gideon Lewis Krause's profile
Speaker 2: of Will McCaskill in The New Yorker. For a fullnest
Speaker 2: of our sources, visit Timharford dot com. Cautionary Tales is
Speaker 2: written by me Tim Harford with Andrew Wright, Alice Fines,
Speaker 2: and Ryan Billy. It's produced by Georgia Mills and Marilyn Rust.
Speaker 2: The sound design and original music are the work of
Speaker 2: Pascal Wise. Additional sound design is by Carlos San Juan
Speaker 2: at Brain Audio. Bend a d Afhaffrey edited the scripts.
Speaker 2: The show also wouldn't have been possible without the work
Speaker 2: of Jacob Weisberg, Greta Cohene, Sarah Nix, Eric Sandler, Christina Sullivan,
Speaker 2: Kira Posey, and Owen Miller. Cautionary Tales is a production
Speaker 2: of Pushkin Industries. If you like the show, please remember
Speaker 2: to share, rate, and review. It really makes a difference
Speaker 2: to us and if you want to hear the show,
Speaker 2: add free sign up to Pushkin Plus on the show
Speaker 2: page on Apple Podcasts or at pushkin dot Fm, slash
Speaker 2: plus