Review: Going Infinite, by Michael Lewis

[Russ Allbery]

Going Infinite
by Michael Lewis

Publisher: W.W. Norton & Company
Copyright: 2023
ISBN:      1-324-07434-5
Format:    Kindle
Pages:     255

My first reaction when I heard that Michael Lewis had been embedded
with Sam Bankman-Fried working on a book when Bankman-Fried's
cryptocurrency exchange FTX collapsed into bankruptcy after losing
billions of dollars of customer deposits was "holy shit, why would you
talk to Michael Lewis about your dodgy cryptocurrency company?"
Followed immediately by "I have to read this book."

This is that book.

I wasn't sure how Lewis would approach this topic. His normal (although
not exclusive) area of interest is financial systems and crises, and
there is lots of room for multiple books about cryptocurrency fiascoes
using someone like Bankman-Fried as a pivot. But Going Infinite is not
like The Big Short or Lewis's other financial industry books. It's a
nearly straight biography of Sam Bankman-Fried, with just enough
context for the reader to follow his life.

To understand what you're getting in Going Infinite, I think it's
important to understand what sort of book Lewis likes to write. Lewis
is not exactly a reporter, although he does explain complicated things
for a mass audience. He's primarily a storyteller who collects people
he finds fascinating. This book was therefore never going to be like,
say, Carreyrou's Bad Blood or Isaac's Super Pumped. Lewis's interest is
not in a forensic account of how FTX or Alameda Research were
structured. His interest is in what makes Sam Bankman-Fried tick,
what's going on inside his head.

That's not a question Lewis directly answers, though. Instead, he shows
you Bankman-Fried as Lewis saw him and was able to reconstruct from
interviews and sources and lets you draw your own conclusions. Boy did
I ever draw a lot of conclusions, most of which were highly
unflattering. However, one conclusion I didn't draw, and had been
dubious about even before reading this book, was that Sam Bankman-Fried
was some sort of criminal mastermind who intentionally plotted to steal
customer money. Lewis clearly doesn't believe this is the case, and
with the caveat that my study of the evidence outside of this book has
been spotty and intermittent, I think Lewis has the better of the
argument.

I am utterly fascinated by this, and I'm afraid this review is going to
turn into a long summary of my take on the argument, so here's the
capsule review before you get bored and wander off: This is a highly
entertaining book written by an excellent storyteller. I am also
inclined to believe most of it is true, but given that I'm not on the
jury, I'm not that invested in whether Lewis is too credulous towards
the explanations of the people involved. What I do know is that it's a
fantastic yarn with characters who are too wild to put in fiction, and
I thoroughly enjoyed it.

There are a few things that everyone involved appears to agree on, and
therefore I think we can take as settled. One is that Bankman-Fried,
and most of the rest of FTX and Alameda Research, never clearly
distinguished between customer money and all of the other money. It's
not obvious that their home-grown accounting software (written entirely
by one person! who never spoke to other people! in code that no one
else could understand!) was even capable of clearly delineating between
their piles of money. Another is that FTX and Alameda Research were
thoroughly intermingled. There was no official reporting structure and
possibly not even a coherent list of employees. The environment was so
chaotic that lots of people, including Bankman-Fried, could have stolen
millions of dollars without anyone noticing. But it was also so chaotic
that they could, and did, literally misplace millions of dollars by
accident, or because Bankman-Fried had problems with object permanence.

Something that was previously less obvious from news coverage but that
comes through very clearly in this book is that Bankman-Fried seriously
struggled with normal interpersonal and societal interactions. We know
from multiple sources that he was diagnosed with ADHD and depression
(Lewis describes it specifically as anhedonia, the inability to feel
pleasure). The ADHD in Lewis's account is quite severe and does not
sound controlled, despite medication; for example, Bankman-Fried
routinely played timed video games while he was having important
meetings, forgot things the moment he stopped dealing with them, was
constantly on his phone or seeking out some other distraction, and
often stimmed (by bouncing his leg) to a degree that other people found
it distracting.

Perhaps more tellingly, Bankman-Fried repeatedly describes himself in
diary entries and correspondence to other people (particularly Caroline
Ellison, his employee and on-and-off secret girlfriend) as being devoid
of empathy and unable to access his own emotions, which Lewis supports
with stories from former co-workers. I'm very hesitant to diagnose
someone via a book, but, at least in Lewis's account, Bankman-Fried
nearly walks down the symptom list of antisocial personality disorder
in his own description of himself to other people. (The one exception
is around physical violence; there is nothing in this book or in any of
the other reporting that I've seen to indicate that Bankman-Fried was
violent or physically abusive.) One of the recurrent themes of this
book is that Bankman-Fried never saw the point in following rules that
didn't make sense to him or worrying about things he thought weren't
important, and therefore simply didn't.

By about a third of the way into this book, before FTX is even properly
started, very little about its eventual downfall will seem that
surprising. There was no way that Sam Bankman-Fried was going to be
able to run a successful business over time. He was extremely good at
probabilistic trading and spotting exploitable market inefficiencies,
and extremely bad at essentially every other aspect of living in a
society with other people, other than a hit-or-miss ability to charm
that worked much better with large audiences than one-on-one. The real
question was why anyone would ever entrust this man with millions of
dollars or decide to work for him for longer than two weeks.

The answer to those questions changes over the course of this story.
Later on, it was timing. Sam Bankman-Fried took the techniques of high
frequency trading he learned at Jane Street Capital and applied them to
exploiting cryptocurrency markets at precisely the right time in the
cryptocurrency bubble. There was far more money than sense, the most
ruthless financial players were still too leery to get involved, and a
rising tide was lifting all boats, even the ones that were piles of
driftwood. When cryptocurrency inevitably collapsed, so did his
businesses. In retrospect, that seems inevitable.

The early answer, though, was effective altruism.

A full discussion of effective altruism is beyond the scope of this
review, although Lewis offers a decent introduction in the book. The
short version is that a sensible and defensible desire to use stronger
standards of evidence in evaluating charitable giving turned into a
bizarre navel-gazing exercise in making up statistical risks to
hypothetical future people and treating those made-up numbers as if
they should be the bedrock of one's personal ethics. One of the people
most responsible for this turn is an Oxford philosopher named Will
MacAskill. Sam Bankman-Fried was already obsessed with utilitarianism,
in part due to his parents' philosophical beliefs, and it was a
presentation by Will MacAskill that converted him to the effective
altruism variant of extreme utilitarianism.

In Lewis's presentation, this was like joining a cult. The impression I
came away with feels like something out of a science fiction novel:
Bankman-Fried knew there was some serious gap in his thought processes
where most people had empathy, was deeply troubled by this, and latched
on to effective altruism as the ethical framework to plug into that
hole. So much of effective altruism sounds like a con game that it's
easy to think the participants are lying, but Lewis clearly believes
Bankman-Fried is a true believer. He appeared to be sincerely trying to
make money in order to use it to solve existential threats to society,
he does not appear to be motivated by money apart from that goal, and
he was following through (in bizarre and mostly ineffective ways).

I find this particularly believable because effective altruism as a
belief system seems designed to fit Bankman-Fried's personality and
justify the things he wanted to do anyway. Effective altruism says that
empathy is meaningless, emotion is meaningless, and ethical decisions
should be made solely on the basis of expected value: how much return
(usually in safety) does society get for your investment. Effective
altruism says that all the things that Sam Bankman-Fried was bad at
were useless and unimportant, so he could stop feeling bad about his
apparent lack of normal human morality. The only thing that mattered
was the thing that he was exceptionally good at: probabilistic
reasoning under uncertainty. And, critically to the foundation of his
business career, effective altruism gave him access to investors and a
recruiting pool of employees, things he was entirely unsuited to
acquiring the normal way.

There's a ton more of this book that I haven't touched on, but this
review is already quite long, so I'll leave you with one more point.

I don't know how true Lewis's portrayal is in all the details. He took
the approach of getting very close to most of the major players in this
drama and largely believing what they said happened, supplemented by
startling access to sources like Bankman-Fried's personal diary and
Caroline Ellis's personal diary. (He also seems to have gotten
extensive information from the personal psychiatrist of most of the
people involved; I'm not sure if there's some reasonable explanation
for this, but based solely on the material in this book, it seems to be
a shocking breach of medical ethics.) But Lewis is a storyteller more
than he's a reporter, and his bias is for telling a great story. It's
entirely possible that the events related here are not entirely true,
or are skewed in favor of making a better story. It's certainly true
that they're not the complete story.

But, that said, I think a book like this is a useful counterweight to
the human tendency to believe in moral villains. This is,
frustratingly, a counterweight extended almost exclusively to
higher-class white people like Bankman-Fried. This is infuriating, but
that doesn't make it wrong. It means we should extend that analysis to
more people.

Once FTX collapsed, a lot of people became very invested in the idea
that Bankman-Fried was a straightforward embezzler. Either he intended
from the start to steal everyone's money or, more likely, he started
losing money, panicked, and stole customer money to cover the hole.
Lots of people in history have done exactly that, and lots of people
involved in cryptocurrency have tenuous attachments to ethics, so this
is a believable story. But people are complicated, and there's also
truth in the maxim that every villain is the hero of their own story.
Lewis is after a less boring story than "the crook stole everyone's
money," and that leads to some bias. But sometimes the less boring
story is also true.

Here's the thing: even if Sam Bankman-Fried never intended to take any
money, he clearly did intend to mix customer money with Alameda
Research funds. In Lewis's account, he never truly believed in them as
separate things. He didn't care about following accounting or reporting
rules; he thought they were boring nonsense that got in his way. There
is obvious criminal intent here in any reading of the story, so I don't
think Lewis's more complex story would let him escape prosecution. He
refused to follow the rules, and as a result a lot of people lost a lot
of money. I think it's a useful exercise to leave mental space for the
possibility that he had far less obvious reasons for those actions than
that he was a simple thief, while still enforcing the laws that he
quite obviously violated.

This book was great. If you like Lewis's style, this was some of the
best entertainment I've read in a while. Highly recommended; if you are
at all interested in this saga, I think this is a must-read.

Rating: 9 out of 10

Reviewed: 2023-10-24

URL: https://www.eyrie.org/~eagle/reviews/books/1-324-07434-5.html

-- 
Russ Allbery (eagle at eyrie.org)             <https://www.eyrie.org/~eagle/>