The world seems chock full of efforts and good intentions to improve life. It’s also full of people who try to hijack good ideas and efforts and turn them into something for their own purposes. Too often, “something” spoils and violates good intentions.
Student loans are an example; they started out as legitimate ways to help young people earn a higher education if they could not afford it on their own. Then the program was bastardized, and countless universities were complicit and guilty in order to increase their revenues. Now, many students who took out loans have tried to renege on their contracts to pay the money back.
Enter the concept of Effective Altruism (EA), a social and “intellectual” movement that bills itself as a high-return charity or charitability on steroids. These altruists try to identify issues that are large in scale, where they can seek greater impact by channeling their personal wealth. EA supporters claim they use “reason and evidence” to figure out how to benefit others as much as possible. This includes the effort to push students to choose careers based on the extent of good that the career can achieve and by donating to charities based on maximizing positive benefits. EA started out a decade ago as a loose, internet-enabled affiliation of like-minded academics in colleges in the West and has sought new adherents, especially in Silicon Valley. There was even an effort to extend the class of charity recipients to include non-human animals.
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But as with some noble causes, good intentions can go awry. This can happen when behavior designed to help harms well-meaning providers or the recipient of those intentions. In other words, when you seek to do the best for the most people, you must first make sure you do no harm.
This last admonition is most recently on glaring public display with the fall from grace and collapse of FTX, the cryptocurrency exchange, and its neo-wealthy young founder Sam Bankman-Fried (SBF). This modern tale of intrigue and guile brings together Effective Altruism and cryptocurrency tokens. SBF has been arrested and charged with corruption and for “engaging in a scheme to defraud customers of FTX.com by misappropriating those customers’ deposits.” SBF was a major headline proponent of EA, claiming he wanted to stop future pandemics and prevent nuclear war. Quite lofty comments from a man who said he was into cryptocurrencies not for money for himself but to give nearly all of it to charitable causes. Right.
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Bankman-Fried used his publicly announced commitments to EA to attract investments into his schemes. He persuaded investors to put their funds into his investment projects under the cloaked disguise of “scientifically rigorous concern for humanity.” To prosecutors and many industry insiders, SBF’s descriptions of his crypto projects sounded somewhat like a Ponzi scheme. His personal fortune of $16 billion was nearly all based on cryptocurrency values. This made SBF the poster boy in the EA movement. Under the hood and secretly, he was leveraging his clients’ money to pay for his own trades. His house of cards and personal wealth collapsed quickly when the scheme came to light.
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This scandal renders laughable the “effective” portion of Effective Altruism. It also calls into question whether this scheme was ever intended to be “altruistic”—– allegedly, SBF received personal loans, spent huge amounts of money to buy land and lavish real estate, and gave $40 million in political contributions during the 2022 elections, mostly to Democratic candidates. FTX’s new CEO is now trying to claw back the donations made to political groups and politicians.
Apparently, the gurus, priests, and thought leaders of EA were more than willing to allow such crypto billionaires to play a major role in their movement. In fact, some elitest EA leaders, in this case, chose to ally with a fund connected to a giant cryptocurrency exchange, a baffling move for people who call themselves ethicists; even minimal research on their part would have revealed the army of economists and analysts who believe crypto is a pure gambling venture.
In any event, it is now obvious that EA is a set of beliefs and outlooks that predatory bad-faith actors can manipulate and highjack with ease and use to raise money in unregulated, lucrative, shady financial deals. The proponents of EA hold themselves out as forecasters of long-term social problems yet cannot be trusted to identify and evaluate risk.
Sometimes what starts out as altruistic or mass movements can end up as a cult of belief systems or, worse, a racket, as Eric Hoffer once wrote.
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