We are taking many of the brightest young people. We are telling them to orient themselves as utility maximizers with scope sensitivity, willing to deploy instrumental convergence. Taught by modern overprotective society to look for rules they can follow so that they can be blameless good people, they are offered a set of rules that tells them to plan their whole lives around sacrifices on an alter, with no limit to the demand for such sacrifices. And then, in addition to telling them to in turn recruit more people to and raise more money for the cause, we point them into the places they can earn the best ‘career capital’ or money or ‘do the most good,’ which more often than not have structures that systematically destroy these people’s souls.
See, I don’t think that’s the problem. Or at least not the only one. And maybe not the important one. I think the issue was more of a failure-to-be-suspicious-of-too-good-to-be-true type of error, which seems common in these kinds of cases.
When Madoff blew up, my dad told me that what was going on was that lots of the people investing with Madoff knew the returns he was promising weren’t possible legitimately. So they assumed he must be screwing somebody, and this must be somebody else other than them. Unfortunately it turned out he was also screwing them. Whoops!
When Sam came along, people could have looked and said this seems like an unreasonably positive windfall. Therefore, I should be suspicious. The more unreasonably generous his donations, the more I should want to know more, to double-check everything. But they didn’t. Plenty of other people have made this mistake before, so I’m not being too critical here, but that’s what it takes. You have to think: this man wouldn’t offer me free candy just to get in his unmarked van, that doesn’t make sense. I wouldn’t give anyone candy for that. What’s going on here?
I’ve seen several reports of people saying that they in fact believed at the time that Sam must have been doing something slightly sketchy, and that maybe that was not such a good thing, but ultimately concluded that it wasn’t worth worrying about. The lesson we should have taken from Madoff is that it’s always worth worrying about. It could always be worse than your initial guess. People must not have seriously asked themselves “What’s the worst thing that could happen?” because the obvious answer would be “He’s another Madoff.”
Personally, if you had asked me what was going to happen with FTX in early 2022, I’d have said the same thing as Madoff. But I’m super-suspicious of everything to do with crypto so maybe this doesn’t count as extraordinary prescience. I’d probably have said the same thing in early 2021 too.
See, I don’t think that’s the problem. Or at least not the only one. And maybe not the important one. I think the issue was more of a failure-to-be-suspicious-of-too-good-to-be-true type of error, which seems common in these kinds of cases.
When Madoff blew up, my dad told me that what was going on was that lots of the people investing with Madoff knew the returns he was promising weren’t possible legitimately. So they assumed he must be screwing somebody, and this must be somebody else other than them. Unfortunately it turned out he was also screwing them. Whoops!
When Sam came along, people could have looked and said this seems like an unreasonably positive windfall. Therefore, I should be suspicious. The more unreasonably generous his donations, the more I should want to know more, to double-check everything. But they didn’t. Plenty of other people have made this mistake before, so I’m not being too critical here, but that’s what it takes. You have to think: this man wouldn’t offer me free candy just to get in his unmarked van, that doesn’t make sense. I wouldn’t give anyone candy for that. What’s going on here?
I’ve seen several reports of people saying that they in fact believed at the time that Sam must have been doing something slightly sketchy, and that maybe that was not such a good thing, but ultimately concluded that it wasn’t worth worrying about. The lesson we should have taken from Madoff is that it’s always worth worrying about. It could always be worse than your initial guess. People must not have seriously asked themselves “What’s the worst thing that could happen?” because the obvious answer would be “He’s another Madoff.”
Personally, if you had asked me what was going to happen with FTX in early 2022, I’d have said the same thing as Madoff. But I’m super-suspicious of everything to do with crypto so maybe this doesn’t count as extraordinary prescience. I’d probably have said the same thing in early 2021 too.