Yet about $86 million went to political and charitable donations (that might soon be clawed back), which brings us to a novel feature of what otherwise looks very much like a more-complex-than-usual Ponzi scheme: its founder’s ostensible interest in philanthropy. And not just in providing philanthropy but in redefining it.
Mr. Bankman-Fried was an outspoken supporter of effective altruism, a quasi-utilitarian philanthropic movement premised on maximizing the positive impact an individual might have on the world in their lifetime. More specifically, he told customers and the public at large that he was “earning to give” — that the vast sums he acquired were always destined for charity.
Clearly, this did not come to pass. And Mr. Bankman-Fried’s trial is a moment to reflect on where he — and the people who celebrated his version of philanthropy — should have asked more questions.
Mr. Bankman-Fried appears to have used effective altruism as a cover, running an allegedly fraudulent business in service of a goal that, in light of his alleged ethical corner-cutting, he was unlikely ever to meet. Philanthropy — or hints that it might occur at some point down the line — cannot be used as justification for dishonest or exploitative business practices.
Another lesson is to be on guard against the tendency to ascribe brilliance and insight to the rich when their wealth might simply be the outcome of luck, narrow expertise and compound interest. Mr. Bankman-Fried in particular seemed not gifted with either extraordinary business insight or extraordinary compassion. Rather, he almost compulsively looked at the world probabilistically — he would have been happy to decide the fate of everyone on Earth with a coin flip, according to associates — a mind-set antithetical to the humane rationales that underlie charity in the Western tradition.
Finally, there is the issue of where philanthropic focus should fall. Mr. Bankman-Fried was a supporter of the “longtermist” movement within the effective-altruism community. This group argues that existential risks to future humans — things such as superintelligent AI, pathogenic threat or nuclear catastrophe — are more important to counter than near-term risks such as global poverty or climate change. According to the numbers, longtermists say, it’s more valuable to prevent the loss of millions of lives in the future than to save one life today, so giving should be radically reoriented to counter the long-term threats they identify — with an undue sense of certainty — instead of helping people alive now. This is an arid conception of giving that flatters the fascinations of its adherents while excusing them from facing suffering in the here and now.
Yet the high visibility of one allegedly fraudulent operator, Mr. Bankman-Fried, does not discredit the entire effective-altruism movement — the majority of whose members were infuriated when the results of FTX’s wrongdoing became evident, moved quickly to repudiate his actions, and engaged in serious reflection about the flaws in their thinking that might have led to this outcome. There is still value in exploring fairer and more effective strategies for charitable giving, including ones that incorporate long-term goals and the well-being of future generations. But we already have excellent examples of people doing this differently and well — from Andrew Carnegie, in his time, to innovative modern givers such as Charles Feeney, who died last week. The latter dispensed with a nearly $8 billion fortune during his lifetime, mostly through anonymous donations to public health and humanitarian causes. Such philanthropists directly acknowledge their duty to give back — and their correct understanding that massive wealth cannot and should not remain with one person alone.
The world of philanthropy could still use some shaking up. But the disgrace of Sam Bankman-Fried suggests there are better and worse ways of doing it.
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