'How to Lose $35 Billion with Philosophy'

"What are the odds that the clueless young bro who created the
biggest financial fiasco of the year is connected to the clueless
young bro who created the biggest financial fiasco of the decade?"

"In the last few days, you may have heard about Leopold Aschenbrenner—the wonder kid hedge fund manager who lost tens of billions over the course of a few days. It’s the biggest financial fiasco of the year.

"If you didn’t read about it in the news, don’t worry. Hollywood will certainly make it into a movie. This 25-year-old hot shot’s financial empire was literally collapsing while guests were showing up for his blowout wedding at a fake Tuscan villa in Carmel, California. The screenplay practically writes itself....

"This tyro’s investing strategy looks more like gambling addiction than high finance. Aschenbrenner borrowed to the hilt, using four time leverage to buy AI stocks by the truckload. Then he added to his risk by shorting companies he was sure AI would replace. In other words, instead of hedging his AI position—which is standard practice (and why they call them hedge funds), he doubled down, setting himself up for a failure of Biblical proportions.

"When you take chances like this, even a small downturn in AI stocks will wipe out your entire capital. That’s pretty much what happened last week.

"I wanted to learn more about the young man behind this collapse—so I went to his Wikipedia page. There I discovered his connection to fraudster Sam Bankman-Fried and the latter’s Effective Altruism philosophy.

"What are the odds that the clueless young bro who created the biggest financial fiasco of the year is connected to the clueless young bro who created the biggest financial fiasco of the decade?

"But there it is.

And—another coincidence!—the woman who assisted Bankman-Fried, and served 14 months in prison for fraud and money laundering, also helped run her college’s Effective Altruism club.

This is getting to be a trend.

"But, of course, none of this is coincidence...."

~ Ted Gioia from his post 'How to Lose $35 Billion with Philosophy'

"If Effective Altruism was a movement that simply called on charities to more rigorously measure their impact, they would be an unequivocal force for good in the world. But that is not all that it argues for. Effective Altruism is a crusading movement that argues you have a moral obligation to 'do the most good' in the world, and it defines 'the most good' in strictly utilitarian terms.

"'The most good' means promoting humanity’s well-being. Morally, you are to be indifferent between your own life and the lives of others. Since those others vastly outnumber you, this means in practice a demand for radical self-sacrifice.

"No, Effective Altruists don’t take this to its ultimate, consistent conclusion. You don’t have to literally turn yourself into a meal for others to feast on. But the closer you can strive to lower your own standard of living in order to raise the standard of living of those worse off than you, the better. (See “Peter Singer is Truly Awful.”)

"And it’s not just your wealth that you’re supposed to sacrifice. You’re supposed to sacrifice the irreplaceable moments of your life: instead of choosing a career that you love, Effective Altruists urge you to choose a career that will maximize your earnings so you’ll have more wealth to give away. You’re even supposed to give away your internal organs to strangers. (See “How Many Kidneys Does Sam Harris Have?”)

"In short, the basic moral premise Effective Altruists crusades for is that you don’t have a right to exist for the sake of your own happiness—you exist as a tool to serve others.

"But that raises a troubling question: why bother saving lives in the first place? So that there are more servants to serve servants to serve servants? If more people exist, but exist in the soul-crushing state of living death Rand describes in [her early novel] 'We the Living,' is that really a victory? If the happiness of a single individual is not sacrosanct, if we are all to throw away our lives to maximise some 'general good' that is good for no one in particular, then what the hell is the point?

"Effective Altruists may be reducing deaths—but they are enemies of life. And, actually, it’s not even clear they are reducing deaths...."

~ Don Watkins from his 2023 post 'Has Effective Altruism done anything good for the world?' [emphases in the original]

Crypto scammer Sam Bankman-Fried in his proper place

"Sam Bankman-Fried [CEO of the fraudulent FTX cryptocurrency exchange], was a leading advocate for and financial sponsor of the 'effective altruist' movement. ...

"Whatever the role of Bankman-Fried’s philosophy in FTX’s collapse, effective altruism is increasingly influential and warrants scrutiny. In essence, effective altruism stresses the importance of using a [long-term] rational, scientific approach to calculate the most efficient way to help the most people, especially through charitable giving, as opposed to giving your money away for sentimental reasons. It attracts an audience of highly intelligent, scientifically oriented, secular people.

"But the more we learn about the causes the effective altruist leadership has embraced, the more we should question the moral foundation of the movement. As we’ll see, this is something that even the movement’s fiercest critics have been unwilling to do. ...

"[Some] critics of longtermist altruism claim that its obsession with sci-fi hypotheticals is inexcusable when there are real people suffering and dying in our world today. ... Still others claim the problem isn’t amoralism, but excessive idealism ... None of these critics seriously consider the intellectual content of the ideal of altruism itself ... [especially] longtermism’s call for all of us to sacrifice to the distant future. ...

"Remember, 'the future is big.' If altruism is to be understood in the popular utilitarian way, by looking to consequences of one’s actions for the largest number of people, why wouldn’t one look to the very long-term future where most of the other people will be? ... [after all] a utilitarian concerned with the impersonal consequences of our actions should regard distance in time as no more morally significant than distance in space.

"Although they’re criticised for reaching absurd conclusions, longtermists like MacAskill and Bankman-Fried are just following the logic of the path that’s been laid down by eminent moral philosophers. To simplify that path: morality is really about caring more about others than about yourself, since there are so many more others than you who need your equal attention. And the best way to be concerned with the most others who are far away from your rather insignificant, fragmented self is to concern yourself with the vast future beyond your interests.

"If longtermism is absurd, but the longtermists are just following the logic of the altruist moral ideal, we should take seriously that this ideal is the real source of longtermist absurdities. ...

"In the wake of the FTX scandal, [Bankman-Fried's teacher] William MacAskill himself weighed in on Twitter to condemn Bankman-Fried, arguing that serious effective altruists do not use naked 'end justifies the means' reasoning, and instead value integrity and honesty. Yet, as one philosopher responding to MacAskill noted, utilitarians who see some utility in “common sense morality” can be reliably counted on to say we can suspend it when there are big enough stakes.

"Any philosophy is subject to cynical use and manipulation by insincere advocates. But a philosophy that gives a pass to anyone who is not acting for his own sake but only for the sake of others is uniquely subject to abuse. A philosophy that says give up what you love and work for others is a tool in the hands of anyone who is willing to speak on behalf of others to gain power over those willing to give up what they love. It’s an especially dangerous tool when those who gain the power convince themselves that it is noble to use it, not for their own sake, but for the sake of a nameless, faceless future [for which they claim to speak].

"How, indeed, would one apply such a philosophy without abusing the lives of the people who practice it? Ayn Rand put her finger on the essence of the altruist morality long before advocates of altruism began to make their meaning as explicit as the effective altruists now have. In her novel 'Atlas Shrugged,' she puts these words in the mouth of one character whose workplace has adopted a similar philosophy: 'Do you care to imagine what it would be like, if you had to live and to work, when you’re tied to all the disasters and all the malingering of the globe? . . . To work — on a blank check held by every creature born, by men whom you’ll never see, whose needs you’ll never know, whose ability or laziness or sloppiness or fraud you have no way to learn and no right to question — just to work and work and work — and leave it up to the [altruists] of the world to decide whose stomach will consume the effort, the dreams and the days of your life. And this is the moral law to accept? This — a moral ideal?'"

~ Ben Bayer in his 2023 explanatory post 'Effective Altruism’s Faith-Based Sacrifice for the Future'

"It stands to reason that where there's sacrifice, there's someone collecting sacrificial offerings. Where there's service, there's someone being served. The man who speaks to you of sacrifice, speaks of slaves and masters. And intends to be the master."

~ Ayn Rand from her chapter '"The Soul of a Collectivist,' in her 1963 book For the New Intellectual