Something I've noticed from EA/Rat circles is a revisit of "tradition" as a valid input into their thinking. I believe that SBF's biggest problem was assuming he already knew everything he needed to know in order to run a multi-billion dollar business. Looking at the particulars coming out after the collapse, it's clear that neither he nor anyone at FTX even had a basic understanding of how to run any kind of business, let alone a multi-billion dollar one. They didn't have a list of employees. Like, no one knew or could have readily found out how many people worked there, what they were paid, what they did at the organization, or whether they were paying their employment taxes properly. That's the kind of stuff that small business owners figure out about the time they hire their first employee. It's basic and obvious to any mid-sized and above company (meaning a few hundred employees, which FTX had, or a few million dollars in revenue/expenses). But SBF thought he knew everything he needed, so that got overlooked and nobody cared. They also apparently didn't keep a list of their bank accounts, used QuickBooks for accounting, had few to no safeguards on money being spent (like, lots of people could just spend company money on whatever they wanted) and spent lavishly on perks for their employees (including themselves, family members, and friends - all of whom may or may not have been employees as well). All really stupid things for any company to be doing, and often illegal in like a dozen different ways. The whole crew was laughably incompetent, and the non-EA/Rat employees were apparently screaming about it, despite only having small glimpses of the core rot.

So back to my point about tradition. There's something to be said for doing things similarly to how they've been done in the past, even if you don't know exactly why. EA/Rat have previously all been about thinking it through and only doing what makes sense - i.e. cutting out all the stupid crusty and unnecessary junk that builds up around an organization. It turns out that those things exist for reasons, sometimes really good reasons. It's nice to see Scott Alexander and some others take a look at tradition and try to incorporate more to their philosophy. I'm not sure EAs can make that transition, and if they do I'm not sure they will still exist as some kind of new or novel idea or just become a fairly standard set of charity organizations with a tech-oriented clientele.

More to the point of your article, I think EAs have a philosophy that makes them extremely likely (in a way that other types of organizations really aren't) to fall victim to missing important information in their decision-making. They actively reject thousands of years of collective experience on the assumption that a very smart person can figure out everything they really need by the time they are in their mid 20s, and surpass everyone else who use that collective knowledge. They also do this while bundled with a philosophy that says to take outsized risks when the expected payout is larger than the expected risk. I think you can see where I'm going with this. They don't know what the actual risks are, and likely not the rewards either! Then they overwrite their ignorance with a philosophy that absolutely requires that they understand what the risks are in order to make a reasoned judgement about whether the risk is worth it. SBF (by that I mean him as a stand-in for huge gains using Rat philosophy) could not have have existed at Goldman Sachs, because they would have judged him too risk-prone and either sharply limited his access or fired him. They would have been correct to do this, and they would have absolutely been sure to do this, because they had the knowledge and experience to judge these things much better than SBF.

Current, existing EA philosophy really is in many ways specifically to blame here. They empowered SBF's idiocy and disempowered any checks and balances. Those things are core to the philosophy, as it currently exists.

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Thanks for writing this. It's good and made me think:

1) What would you advise EAs do as a result?

2) What do you think is the moral responsibility of the median EA

3) If SBF was a 3 on some moral scale but EA made him a 2.5 that's bad right?

4) I do think the worst thing about SBF was that he was bad at math. This wasn't some galaxy brain deal with infinite upsite. It seems he was always gonna lose.

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I agree with your first point about accepting money. I'd be even more strident than you about it. The issue here isn't that SBF was taking undue risks - the aspect of EA philosophy being flogged by your interlocutor; it's that he took the risks and then lied about the outcome.

Demanding recipients anticipate such behavior before it occurs, or even after but while the fraudster is hiding it, is absurd and laughably unreasonable.

Your point about this being a result of EA philosophy, however, I find less strong, as addressed separately in a response to this comment for clarity.

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Really, giving a bunch of money to a guy whose last name is "Banking-Fraud" may not have been the best idea anyone ever had.

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...Well I learned some things about Gandhi today

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Chamath Palihapitiya described potentially investing in FTX a while ago: He asked for some very reasonable information, and the response was literally “Go Fuck Yourself”.

This is of course different than charity, but I feel we’re letting the recipients off just a little easy. It seems they did absolutely nothing at all. They didn’t ask around? No one had any clue? There wasn’t a single red flag? I dunno. These are supposed to be rationalists. If it’s too good to be true.... etc.

I guess it’s another example of crypto and crypto-adjacent communities slowly relearning the lessons of finance.

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Having called this ahead of time, kinda, I think there are two aspects to the SBF story that were majestic, flapping-like-Old-Glory-at-the-end-of-the-broadcast-day red flags.

One was that EA is a cult, and cults almost definitionally do not do conventional morality.

The other is that Sam himself was clearly such a tool that he was playing video games (badly, from what I hear) at board meetings and showing up to events in which everyone else was dressed formally in shorts and a grubby, ratty-ass tee shirt. While I am not such a fool as to say those are universal tells that someone is a bad actor (if you're sufficiently autistic, I can actually see the first being a near-necessity; some autists simply cannot screen out enough external stimuli without something like a game console to distract them), showing up to a formal event dressed like a slob is so disrespectful of both the other attendees and the audience that it just about *has* to betray disrespect in other areas, and SBF was a custodian of other people's money--not an area in which I would want to have a disrespectful actor as the figurehead of my company.

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Broken link: "I'm on record."

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EA is the same type of people and the same scam as SBF. They are doing it for the feels and virtue and will always cause more harm than good. I agree they can’t vet everyone but they are the same cloth of sociopath. Why did you feel the need to do this mental gymnastics exercise?

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