Perhaps the most important twist in the downfall of Sam Bankman-Fried is that his parents were, until their son's crimes were exposed, respected scholars of corporate tax law and ethics at Stanford University. On an interpersonal level, the situation is Shakespearean: the legal scholar parents are likely to have both their livelihoods and their legacies destroyed by the sins of their child.
They had direct ethical exposure to the con: FTX purchased the parents a $16 million house in the Bahamas and paid them salaries, FTX CEO John Jay Ray III testified this week. Bankman-Fried's father, Joseph Bankman, has been removed from the Stanford teaching schedule for next year and said he foresees total financial ruin from the costs of their son's legal defense.
But the specifics of the parents' ideas, and how they might have influenced SBF's actions, are at least as fascinating as the interpersonal drama. Joseph Bankman and Barbara Fried's scholarly work on corporate ethics in some cases advocated for unorthodox attitudes towards right and wrong. Similar to the "effective altruism" their son espoused, the parent's writings covered rationalism (the idea that decisions can be made entirely on the basis of known facts and predictable outcomes) and utilitarianism (the idea that outcomes are more important than principles or intentions).
Barbara Fried's 2013 paper titled "Beyond Blame" argues the idea of personal responsibility has ruined criminal justice and economic policy. "It's time to move past blame," she wrote. There's some nuance to Fried's argument, but the core idea is that individuals should not face moral criticism for their mistakes because individual free will is an illusion.
Barbara Fried's disdain for the very basic principle of individual moral responsibility seemed to manifest in at least two recent moments of FTX fallout. First, there was the staggeringly evasive testimony SBF planned to give before the House Financial Services Committee – testimony forestalled by his arrest in the Bahamas – where he would likely have blamed his company's failure on everyone from Binance CEO Changpeng Zhao to, hilariously, the bankruptcy law firm and interim CEO who are currently cleaning up his massive mess. He seems to believe all actions are merely the product of circumstance, and we can't ever be blamed for anything.
The second episode that seems to connect to Barbara Fried's determinist anti-humanism is far sadder. She and Joseph Bankman were present for their son's arraignment in the Bahamas on Tuesday. Barbara reportedly laughed with audible disdain as the allegations against her son were read aloud – seemingly in disbelief but also in disrespect of the court.
After downplaying personal moral responsibility and the enforcement of ethical behavior as mere petty "retributivism," she was getting a harsh reminder that most humans believe there is a difference between right and wrong, and that violators of that norm deserve both punishment and condemnation. She was also realizing – perhaps at the exact moment her son was denied bail – that she and her family were about to pay a huge price for disregarding thousands of years of human morality.
In the face of that staggering realization, maybe all you can really do is laugh.
– David Z. Morris
