Sam Bankman-Fried, the FTX collapse, and the limits of effective altruism

As it turns out, effective altruism in practice is not all that straightforward. Inconsistencies, both moral and intellectual, abound

November 24, 2022 02:11 pm | Updated 07:15 pm IST

Volunteers at a pandemic donation drive

Volunteers at a pandemic donation drive | Photo Credit: Getty Image

The crypto exchange FTX recently collapsed following revelations of serious financial mismanagement. A company that was not-so-long-ago valued at $32 billion filed for bankruptcy last week. The man who founded the company is Sam Bankman-Fried (SBF), a 30-year-old MIT physics graduate and billionaire philanthropist. He was a revered figure within the effective altruism movement and claimed that he was making money only to give it all away.

Also read: A 30-year-old billionaire who crashed his $32 billion crypto empire

The Oxford philosopher William MacAskill’s 2015 book,  Doing Good Better, expounds the central idea of effective altruism. Should you donate to an NGO tackling suicide or a research lab that works on pandemic aversion? MacAskill would advise that you donate to the lab for the simple reason that you can save many more lives by preventing a pandemic. In effective altruism, charity does not begin at home, it begins ‘where we can help the most’. After all, what is better than more bang for one’s buck?

The right shibboleths

As it turns out, effective altruism in practice is not all that straightforward. Inconsistencies, both moral and intellectual, abound. We now know that the generous SBF, in fact, defrauded FTX customers to the tune of billions of dollars. SBF has, of late, declared that his public proclamations on charity were merely a facade. ‘Dumb game we woke westerners play where we say all the right shibboleths so people will like us,’ he wrote in a direct Twitter message to a journalist. There is an evident self-serving pattern to SBF’s donations. In the lead up to the senate elections this year, SBF spent around $40 million. Most of this money went to Democrats who form subcommittees on crypto currencies, digital assets, and commercial law. He also curated a sage-like image in the press by funding key media outlets. While much was made of SBF’s Toyota Corolla, less was said of his $40 million apartment in the Bahamas.

Sam Bankman­-Fried of FTX

Sam Bankman­-Fried of FTX | Photo Credit: Getty Images

SBF’s Future Fund donated $36.5 million to Effective Ventures, a charity chaired by friend and mentor MacAskill. It is unclear what the basis of this donation was. Was there a randomised, controlled trial (RCT) to decide if this was the best use of the money? More to the point, can any scientific study speak to the means through which the money was earned in the first place? Things get messier still. MacAskill was an ‘unpaid’ adviser to Future Fund, a post from which he claims to have resigned. But most would insist that $36.5 million was, in fact, paid. In the wake of the collapse, MacAskill has distanced himself from SBF. In a series of tweets, the philosopher declared that effective altruism is not above common sense moral constraints. Avoiding conflicts of interest, it would appear, is not one of them.

In any case, the fact that MacAskill failed to spot SBF’s conceit despite a 10-year long association, is deeply damaging to him. Why should we take his views on existential threats facing humanity that he calls to our attention in his latest book  What We Owe The Future with any seriousness? If MacAskill cannot predict threats to his own near-term future, namely, the threat associating with SBF posed to his own reputation and the effective altruism movement, how well can he estimate, much less affect, the million-year prospects of humanity?

Couched in scientific vocabulary and probability estimates, effective altruism provides a utilitarian moral basis for variants of ‘telescopic philanthropy’ that Charles Dickens denounced in his novel  Bleak House. Indeed, there is little that separates MacAskill’s effective altruism evangelisation efforts from Mrs. Pardiggle’s overzealousness. SBF, in his perfidy towards FTX investors, follows Mrs. Jellyby’s neglect of her children even as she pursues philanthropy in Africa.

Shaping medical care

What, then, is the alternative to effective altruism?

Ida Sophia Scudder (holding a file folder, founder of Christian Medical College, Vellore, at the hospital in the 1950s

Ida Sophia Scudder (holding a file folder, founder of Christian Medical College, Vellore, at the hospital in the 1950s | Photo Credit: THE HINDU ARCHIVES

On a fateful night in 1894, in the small town of Tindivanam under the Madras Province, a 24-year-old American girl named Ida Sophia Scudder encountered three local men. Miss Scudder’s visitors’ young wives were at risk of dying in childbirth. The men sought medical assistance from the girl although the only doctor in her family was, in fact, her father. The men refused when Miss Scudder offered to call her father: they would rather their wives died than be attended to by a male doctor. This night transformed not just the life of the girl but also shaped the history of medical care in India. Shattered by her inability to help the young women, Miss Scudder decided to train as one.

In the next hundred years, Dr. Scudder’s work, as a healer and a teacher, would touch the lives of millions of Indians. She set up the world class Christian Medical College, Vellore (CMC). This venerable institution, among others, pioneered India’s polio elimination drive, introduced novel leprosy reconstructive surgery techniques to the world, and does cutting-edge research in multiple clinical medicine specialties. What would MacAskillian calculations make of CMC’s modest beginning as a single-bed clinic?

Altruism, whether effective or otherwise, ultimately distorts community. Altruism is unidirectional  giving and  receiving that treats people as a problem to be fixed or a metric to be improved upon. But communities are fostered through sharing as equals. If malaria eradication in Bangladesh is one’s greatest passion, the least that can be done is to live and work amongst the people of Chittagong’s hill tract districts. It is crucial for community building that we are local to the subjects of our charity.

Shanti Bhavan, a below K-12 boarding school in Baliganapalli, admits 30 students from poor backgrounds every year and supports their learning up to university. At the end of their 17-year engagement with the school, a remarkable 97% of these kids find full-time employment. A year-long sponsorship of a child here costs $2,000. The alternative to effective altruism is a techie from, say, Chennai sponsoring a child in this school over delivering 4,000 deworming treatments in Kenya for the same cost. Not based on notions of effectiveness but because the techie’s own son and the child she sponsors might become friends.

The writer is an engineer interested in Tamil politics and culture, on either side of the Palk Strait.

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