We can look back now at all of the big red flags that we missed in the FTX saga, including the world views of Mummy Fried herself. Red flags were everywhere. We all failed to see these distress signals, even though some of them were as red as a slapped thigh. Our denial of the red mist in the bull run hype is something we can all learn from.
Red flags so far
A big red flapping flag in this whole sorry saga is the way Sam dressed, which some say was part of his con.
Another red flag was the over-involvement of SBF’s dad, Joseph Bankman, who was advising his son in financial matters from the inception of FTX. Joseph Bankman is currently lawyering up with the hottest white-collar-criminal attorney money can buy. Apparently, Mr Bankman’s advice sucked. Like really sucked.
These red flags were waving high and proud, but they aren’t the only ones. There’s another, SBF’s mum Barbara Fried.
Who is Barbara Fried?
Barbara Helen Fried is a lawyer who is currently a Professor at Stanford Law School. So where’s the red flag here? Some of her writings have aluded to the idea that criminals should not be blamed for their crimes.
Barbara Fried contributed to the Boston Review, which is a quarterly political and literary magazine. In her long and oftentimes rambling article, she argues that assigning “personal blame” has had negative effects on criminal justice and economic policy.
She writes, “The fact that we have gotten so little in return for our blame mongering at least opens up the possibility that people would be receptive to a new approach.”
Fried says, “our worldviews, aspirations, temperaments, conduct, and achievements — everything we conventionally think of as ‘us’ — are in significant part determined by accidents of biology and circumstance. The study of the brain is in its infancy; as it advances, the evidence for determinism will surely grow. One might have expected those developments to temper enthusiasm for blame mongering. Instead, the same four decades have been boom years for blame.”
Apparently, we shouldn’t blame anyone for their actions now
Fried also says that enthusiasm for blame is not confined to punishment. “Changes in public policy more broadly — the slow dismantling of the social safety net, the push to privatise social security, the deregulation of banking, the health care wars, the refusal to bail out homeowners in the wake of the 2008 housing meltdown — have all been fuelled by our collective sense that if things go badly for you, you’ve got no one to blame but yourself. Mortgage under water? You should have thought harder about whether you could really afford that house before you bought it. Trouble paying back your college loans? You should have looked more carefully at job prospects for sociology majors before you took out the loans.”
In Fried’s world, it seems that nothing is anyone’s fault. Overspend? Not your fault. Get into so much college debt you can’t pay it back because you chose to study something that pays badly? Not your fault. Buy a house beyond your means? Not your fault. No one can be held accountable for anything in Fried’s world.
Having sympathy for someone from rough circumstances who ends up engaging in criminal activity is one thing but excusing them from responsibility entirely is another.
SBF, blame and parenting
Hauntingly, there is a quote in the article about the parenting of criminals.
“Parental income and education are the best predictors of whether a three-year-old will end up in the boardroom or in prison.”
SBF had a privileged upbringing. There’s no other way to describe it. His family had buckets of money, he went to camps for gifted kids, he attended one of America’s most prestigious universities, MIT. He had opportunities in the world that billions of other kids could only dream of.
How will Barbara Fried say that he should not be blamed for his outright fraud and the stealing of people’s money from FTX? How will she argue that he cannot be blamed?
Barbara Fried and ties to effective altruism
It was Barbara Fried who got Sam into the effective altruism movement. In a rough nutshell, the theory is that instead of giving your time to volunteer or simply work for a charity, you should strive to make as much money as you can and make huge donations. But that’s only if the money is yours to give away, Sam. Which it wasn’t.
Even after the negligence and criminality at the core of the FTX collapse became readily apparent, Sam Bankman-Fried did not feel he was to blame. He still managed to go on a publicity tour and make it seem as though nothing bad had really happened.
So what can we learn from all of this? When people say do your own research, this really is something we could have all done. When the next hype cycle kicks off, let’s stay calm and acknowledge the red flags smacking us the face.