What is “Effective Altruism” and what does the future hold for this philosophy in the wake of the spectacular fall of a prominent champion and former Bitcoin billionaire? Sam Bankman-Fried? Elliot Dellys joins us.
On November 11, 2022, cryptocurrency exchange FTX filed for bankruptcy after CEO Sam Bankman-Fried (also known as SBF) submitted his resignation. This follows his biggest competitor, Binance, after he announced on November 6, 2022 that he would sell his stake in FTX (via FTT tokens) due to a then-unknown “recent revelation”. has unexpectedly pulled out of the deal.
What followed was a spectacular collapse, revealing a complete lack of oversight and corporate control in the company’s management. Equally shocking was the revelation that FTX diverted $4.1 billion of his client funds to Alameda Research. Alameda Research is a hedge fund run by SBF, nominally committed to the philosophy of ‘effective altruism’. Allegedly, Alameda Research donated half of its profits to effective altruism-related charities for a period of time.
Today, many wonder if one person can take down a $32 billion company in a matter of days.Some have speculated whether effective altruism itself is responsible for making the SBF believe it can justify its purpose in some way.SBF has done a lot of damage to the concept in recent weeks, but it’s important to distinguish between a good philosophy and the bad actors that represent it.
Effective altruism is a collection of ideas with the goal of using evidence and reason to determine how to help others as much as possible. As a proponent of a central philosophy, but not necessarily a movement, I believe it can be reduced to three simple concepts.
- Some methods of harm reduction are orders of magnitude more impactful than others
- We should aim to reduce harm as much as possible within our means
- Therefore, careful and data-informed choices about the causes to which we donate money and time can have a significant impact on how effective harm reduction efforts are.
Unraveling the disconnect between what feels good and what makes an impact is at the heart of our philosophy. However, you don’t have to be a Silicon Valley narcissist to apply this principle to your life or business.
For example, a senior representative of a charity recently told me about her frustration when a commercial partner offered to “paint the toilet block.” We talked about how someone would ask if they could spend the day doing something useful or useful. Their hearts were in the right place, but the members of the charity felt that their commercial partners could stay in the office. , knew full well that if he donated a small percentage of the day’s profits, it would more than cover the cost of painting. Enough money remains to provide substantial support for the actual program (performed by trained professionals).
This idea is called “earn to give”. The rationale stated by the SBF was to accumulate as much wealth as possible in order to tackle the greatest, existential risks of our time. But it was clear that he prioritized earning over giving. It is neither effective nor altruistic to amass great wealth with the distant promise of eventually giving up some or all of it. Likewise, we cannot allow dishonest and deceptive business practices in pursuit of lofty notions of the “greater good.” Rather, through the framework of holistic change and ethical business practices as a valuable differentiator, we can create incredible impact throughout our corporate sector.
Think of someone who wants to reduce the harm caused by factory farming. They may try to convince their friends not to eat caged eggs. But if that same person can convince a local cafe to switch to a free-range supplier, he could get hundreds of eggs a day from more ethical sources. Even better, individual consumers don’t have to care or even need to know that this change has happened. But if that same individual can change the procurement practices of large global corporations and franchises, that number will skyrocket to tens of thousands of eggs every day.
This is the discriminatory influence that makes it so compelling to choose carefully where to direct your time and money to influence change. Aiming to make things happen is called “action-resultism.” Effective altruism aims to reduce this pursuit to something akin to a mathematical formula. But to maximize our impact, we must never lose sight of the human drive behind our philanthropy and the importance of community.
This is intuitive when you consider why we love supporting local cafes, shops and community farms.we know full well that we may not best product as a result, But we are helping build community. Or maybe we do so because these businesses align with our vision of the future we want to live in. More simply, if we don’t support them, who will? toss. It’s important to consider the differences in the amount of money we donate and the amount of time we spend on causes, but our fixation on ranking charities and measuring their impact misses the humanity that lies at the heart of our desire to help others. There are risks.
Effective altruism is not a one-size-fits-all philosophy that addresses the challenges of wealth inequality and existential risk. Nor is it a scam done by Silicon Valley to mislead people into funding scammers. SBF’s arrogance lay in its failure to recognize that an obsession with “long-termism” or existential risk mitigation can lead to risky decision-making. Today’s real-world harm is offset against tangible long-term benefits of consequences that may never materialize. .
Tricking ourselves into believing that we can create through our professional lives and giving to charities relieves us of our responsibility to be decent human beings and helps us to become more supportive of our communities. It completely ignores the importance of being a member.
But it is right to accuse individuals of stealing from customers and deceiving investors, abandoning or misrepresenting a hope-based philosophy of making the world a better place for all of us. and do not throw the baby out with the bath water.