Sam Bankman-Fried is a very rich and increasingly famous man. At the age of 29 his presumed net worth is somewhere around $22-billion, which is equivalent to the combined GDP of Madagascar and Malawi (total population 50 million) or what experts estimate it will cost to reconstruct the Donbas region of Ukraine.

What has brought him renown, however, is not his wealth as such but his stated intention to give all of it away. It’s a fairly remarkable story – but the adulation seems somewhat overdone. 

In fairness, Bankman-Fried himself would probably agree with that judgement. More grateful than triumphant, more goofy quant than greedy titan, he has none of the crusader swagger of Elon Musk, or the oracular ease of Warren Buffett. Motives apart though, there are three reasons to question Bankman-Fried’s canonisation.

First, there’s how he made his fortune. Second, there’s the issue of status as distinct from wealth advancement. And third, there’s the econo-moral framework as such. The system, in other words, that determines how rewards are allocated across societies (and the world).

Adding value

Bankman-Fried did not invent any ingenious devices. He didn’t find a new way of producing this or that. And he isn’t any kind of artist or entertainer. Instead, what he did, essentially, was to spot an arbitrage opportunity and to play that opportunity out aggressively and (very) adroitly. He’s a finance whizz in other words and, on top of that, his medium is cryptocurrency. Which, notoriously, is not just a proverbial crap-shoot, but also terrible for the environment. 

I’m not saying that Bankman-Fried’s wealth is ill-gotten. He is brilliant by all accounts, he has broken no laws and there is a real chance that his endeavours will help presage a change in the way we transact in the future, perhaps for the better.

In evaluating his overall impact though, two additional considerations bear thinking about. The first is that crypto’s biggest known real-world application is still in the distinctly dodgy world of international arms and drug dealing. And the second is that he made his money without creating more than a handful of jobs. Indeed the net employment impact of the advent of FTX (his company) will probably be negative, as blockchain technology has no need for the likes of bank clerks and security guards.

Status and meaning

It is now widely recognised that there is not a strong correlation between wealth and happiness. Poverty is dreadful, but empirical research has shown that above a certain level of income, increments do little to advance the typical person’s sense of well-being. Yes, R1-billion will buy you lots of nice things, but that doesn’t include quality friendships, restful sleep, good health or, necessarily, respect. 

Bankman-Fried was born into comfort in the wealthiest country on Earth. More specifically, his parents are both eminent law professors at a prestigious American university – so he will have had the additional privilege of having been brought up to appreciate the non-material consolations of 21st century life. That’s the satisfaction to be had from intangibles like aesthetics, civic-mindedness, relationships and a good reputation. Subtle pleasures, that is, which make it easier to do renunciation (of more vulgar ones). 

Again, this is not an indictment. To the contrary, we’re talking about a man who, in the act of uber-extravagant giving, is doing something very unusual, and meritorious. It does bear noting though that by going down this particular path, in this particular, public way, he is also accessing two other kinds of highly nourishing reward. Bankman-Fried, already dizzyingly rich, is now buying both fame and purpose.

It really doesn’t get any better than that. Wealth, status, stimulation and meaning; that’s what everyone works for, though it’s only a handful of scientists and artists who, heretofore, have succeeded abundantly at all four.

The invisible handout

It is not hard to find a worthy, non-vain reason for Sam Bankman-Fried choosing to go public with his mega-charitable decision; namely to serve as an inspiration to others to follow suit. All things considered though, I reckon he’s got this wrong.

Implicit in the Bankman-Fried election is an assault on capitalism itself, or at least on its proxies – materialism and hedonism. Bugger the Bugatti (and the Beemer) is the not-too-subliminal message; the proper thing to do right now, the only thing to do, is to take care of the abiding scourges of hunger, illiteracy, environmental degradation, preventable diseases and the like. Bankman-Fried can afford a top-end Gulfstream, but he’s driving round in an ageing Corolla, effectively telling us all that we’ve got our priorities completely upside down.

He’s right, of course, in a way. As the philosopher Peter Singer has been pointing out for a long while, it’s morally wrong to buy a new suit when the money could be used to save the life of a starving child. I’m much persuaded by that line of thinking – and all in for cranked-up taxes and a truly universal basic income grant. My concern is just that we can push the point too hard. 

Giving away 10% of one’s income is a no-brainer, for people of means. Giving away 20% is creditable, and even twice that is understandable, according to circumstances and preferences. But the awkward fact is that every time any of us picks altruism over our baser urges it does have an adverse impact somewhere in the worldwide ecosystem. It seems and feels like an unequivocal good to send money to help feed refugees rather than to indulge yourself in a restaurant, or a shop – but that’s not how it appears to your local Spur or Seattle franchisee. Or her kitchen staff. Or the company that supplies the onion rings, or their driver. Not to mention the various company shareholders. Notably including union pension and provident funds. 

It’s an uncomfortable thought, but the way the world economy currently functions, it is distinctly possible that buying a new car will have a better aggregate effect on human well-being than donating an equivalent amount to Oxfam or some other comparably worthy cause. I’m not suggesting that you should actually make that choice – that you should choose things over thoughtfulness, or vain self-indulgence over charity – but there’s no getting away from the fact that old-fashioned ethics have for a long while been an unreliable guide to action.

Jesus’s dictum about rich men and heaven may still hold true, and likewise Marx’s analysis of the contradictions inherent in capitalism’s material base – but if either of these visionaries were reincarnated today they would be thoroughly discombobulated. They would recoil from the enduring inequality and poverty – and the environmental degradation, probably – but they would be astonished at the progress we’ve made in terms of general living standards. Of mass accommodations and creature comforts. Of healthcare and education. And of freedom from tyranny. Though maybe not from unhappiness. 

And so?

Sam Bankman-Fried is a very clever, enterprising, hard-working and good-hearted individual. There is no sensible frame of reference, however, according to which he deserves to control 0.005% of the entire wealth of the world. Or, put another way, there is no merit or dessert-based model in terms of which his talents or his endeavours entitle him to be more than 200,000 times richer than his average fellow human (approximations using data from Wikipedia).

It was concern about gross inequality that moved another American billionaire to go vocally public about a decade ago in a TED talk and in print. Nick Hanauer didn’t offer to give all his money away, and he didn’t say much on the rights and wrongs of capitalism per se, but he did warn, darkly, that if nothing gets done to improve the lot of the poor and to reduce the wealth gap, his country could soon be hit by a violent uprising. Better ramp up the minimum wage, he argued – to $15 an hour – or face the prospect of hordes of angry proletarians marauding down Main Street armed with pitchforks, bent on destruction. 

Hanauer’s numbers are hard to fathom from outside the US – what with masses of people in the Third World who would jump at the chance of earning $15 a day, or even a week – but it’s good to hear members of the off-the-charts elite reflecting in this way. They are the most privileged people in the world today, and thus the ones best placed to catalyse the recalibration and relegitimation of the global political economy. 

No, I’m not suggesting that we should look to Davos, or to the fabled “1%” for answers to all the pressing geopolitical challenges of our time. I know how badly that would go down with the other 1% at Harvard, Oxford and the like, and in any event I don’t think they (business types) have the requisite skills. Or appetite. Rather what I’m saying is that there are things that they can pledge, or do, that have the potential to profoundly change the global discourse. 

My own preferred device is cranked-up taxes on the plutocrat end of the distribution with a nod to the fact that the top rate in America during the high growth years of the Fifties and Sixties was 90%. I understand the scepticism, however, around this idea, given how badly governments tend to do when it comes to spending. And that is also an argument against socialism (which in any event seems a bridge too far for easily bored, freedom-craving primates). 

The nub of the matter though is that the status quo is monumentally favourable to the world’s 3,000 billionaires, and terribly unfavourable to between one and three billion others – and that is neither morally acceptable nor practically sustainable. 

Politicians might get in the way, as might overzealous academics and tax lawyers, but I reckon it would be a game-changer if a sizeable number of the ultrarich were to commit to the following:

• An end to tax dodges;
• An effective altruism pledge at a level somewhere between the traditional 10% and the all-I’ve-got of Mr Bankman-Fried;
• Prioritising an end to world hunger, and to poor-country debt;
• Cutting emissions in all their facilities, with due regard for the attendant loss of livelihoods; and
• Neighbourliness as a principle.

My hunch, for what it’s worth, is that most of them would sign up. Eagerly. DM

[hearken id=”daily-maverick/9472″]