I've come across this problem a few times when running a hedge fund. To what degree does one care where the money came from, aside from following AML rules? I get the feeling you only write articles like that if you have more people wanting to invest than you have capacity for.
- A friend called, asking for a recommendation for a job he was applying for. And advice about whether it was worth taking. Turned out, it was the firm that managed Libya's (ie Gaddafi's) wealth. They were making a big push at the time and needed a software developer. Was I going to tell him not to take the job? How complicit are you if you write some exchange connectors for a dictator? He ended up taking it, and they ended up in the news.
- A gulf state sovereign fund called. We didn't even flinch to take it. I think we just assumed they had a lot of oil money and didn't think any further about it. If you read the news, there's some not nice things about the place. Treating manual laborers badly, lack of proper rule of law, that sort of thing. Took the money, didn't think about it much. Not sure I would act differently now, to be honest. Basically the business needed the investment, and there wasn't anything specific and horrible to tell us not to.
- And where do you draw the line? What if a benevolent, enlightened, prosperous but essentially a dictatorship state from the equator wants to invest? And they could well claim to be a democracy. You'd be in endless discussions about which investors to take, which presumably 99% of your competitors would not have a problem with.
- The family office of a guy who'd been in jail called. He was known to have made his money in a seedy way, and tended to have large guys standing around guarding him. I doubt if he actually was a gangster, just seemed to like having a certain tough-guy air about him. Were we going to turn him down? Again, business requirements prevailed. Basically, if it's legal to take his money, most people will do so.
If someone does something horrible like with this journalist, and you are an organisation that is large enough to have a PR footprint, you might care. If you're just a small fish, you are always going to have huge pressure to take the cash. I know what my partners would have done if I'd put up any resistance in these cases; they'd have just ground me down with endless rationalizations, and we'd have ended up doing exactly the same. People always find reasons to do what they have decided to do, and not in that order.
Good points but "where do you draw the line? It's not clear" is fair observation but not a conclusion. You DO have to draw the line and just because where to draw it isn't clear doesn't absolve you (or anyone!) from drawing it.
Yeah exactly - this isn't a minor inconvenience, it's a fundamental part of being in society.
I appreciate OP's point about lack of clarity, because yes, the capitalist game has nothing to say about anything except following whatever you can get away with. But that narrow game is being played in a much broader context of society that exists because of a broader social contract and set of values which keeps everything running.
The reasonable answer to where you draw the line is: when something is no longer compatible with your value system. And if that's not clear, the issue is that you haven't yet spent enough time defining your values. That's the thing to talk about, research, consider, ask advice on, etc. People having a solid, well-tested personal value system is critical to society's function, because that informs how groups of people like companies then operate, and so forth on up.
To make a bit of a broader (and possibly controversial) point on this, we're in a situation right now where software engineering and finance are two fields with the highest leverage in society, yet these fields are some of the least concerned with values/ethics, from the point of view of both the education and experiences people gain in these fields. Small parts of these fields may care a great deal about values/ethics, but broadly speaking the situation we're in is "with great power comes great unawareness of responsibility." It's weird and scary.
The result of this lack of concern is that many powerful people have under-developed and unsophisticated personal value systems, and consequently do not know what to do in ethically nuanced, important situations like what OP is bringing up. There's a whole lot of people in tech waking up to this realization nowadays. It'd be nice if we were able to fix this at the source and raise the next generation right, rather than flail around rediscovering this every few years when yet another societal crisis hits.
Well said. I’ve just started really thinking about this. Although I would venture that people naturally develop value systems as they get older, whatever field they are in. It’s just that many of our existing institutions set you up to create values based on self interest and wealth. I think it’s unfortunate. But then again, can I really say my values are superior?
Good point, we definitely develop value systems as we get older as we move away from self-oriented to other-oriented thinking.
As far as which value system is better, I think the nature of developing a sophisticated value system is to be able to make judgments about values and come to these conclusions based on research, careful consideration, and testing against issues. So if you're spending time considering your values, you're inherently going to be judging those of others in the process, and altering your values until you get to the point where you feel yours are better. But of course, its also incumbent on you to remain open-minded to the idea you are wrong and to be honest in the face of new information.
I agree with you on most points but would like to add another aspect to it. While I agree that we have somewhat of a personal responsibility to be moral and do the right thing, the pressures in a market do make it very hard to follow through on our values. If you are refusing someone else is taking the job. Thus, it is also a collective problem and not only an individual. In a perfect world, we would have an effecatious rule system which could help us enforce generally shared values more effectively than what we have right now.
I think you allude to this point when you write about “software engineering and finance” as important fields. Ideally, we would be able to create incentives in these whole professions/markets that are aligned with societies interests, however, I think that requires a shift in perspective. Away from anonymous (unregulated) markets towards treating these fields more like coherent self-governed entities with desired values and goals which are incentivized by the rules that are set in place. For that to work we would need a very flexible and efficient regulatory system though that is more akin to science than the politics we have right now. People who come up with new ideas would need to be able to propose and self-regulate new fields that may be able to improve societies well-being. Let people set targets for themselves and demonstrate their value to society as part of doing business. That’s how science has worked so well for the last couple of centuries.
Hope those rough thoughts make sense to someone :)
Definitely there's a massive misalignment of what has value in markets and what has value in society, because only some roles and industries are positioned to capture the value they create. Many roles, especially those very human roles of caregivers, teachers, etc, tend to be undervalued because their particular effects are either long term or simply unquantifiable.
I'm not sure what system or frameworks we need in politics to better align these, perhaps your ideas are a rough sketch for them.
I'd like to push back on one point you mentioned: that if an individual refuses to take a job, someone will take their place.
We know in startups and in any organization in general that talent is a key ingredient in success, we talk about it all the time and in many high leverage positions we're looking to get the best of the best, because we know how much of a multiplier effect they have on product, culture, etc. Yet this idea persists that to not participate with your talent means someone else - presumably with equal talent - will take the role instead. This contradicts what we know about hiring for positions that are very talent-driven.
An alternative take is that if talented people refuse to take a position, the available people remaining will be less talented and less able to execute the (negative to society) plan. If the firm hiring them has high standards, then the position may remain unfilled for a long time (another net positive for society). Market forces may increase the salary of that job, but that doesn't mean it will be filled by really talented folks, because if you know talented folks, they typically have their pick of what type of work they want to do and do not pursue solely the highest paying jobs.
Thanks for your comment! I didn’t notice the answer so my reply is unfortunately pretty late.
I agree with your last point, there is definetly a marginal value that is “lost” if highly talented people refuse a job. However, a general question is how large this effect is going to be. If we are talking about an “evil” company it might be pretty high because not too many people are interested in working there. If we talk about a company like Apple it’s probably pretty low... So, I agree that there is an individual lever that people can use. People leaving/deinstalling fb in masses is a great example of that.
Still, I think the collective component shouldn’t be neglected as this is the only thing which can solve this problem for good (i.e., everything else will be too slow and inefficient)
The problem I see is that there are literally zero incentives for a company to do that. A company is a "being" that only has one purpose: profits.
Even if your company does try to stick with a moral compass, because of how capitalism works, every other company will swallow you.
I'm not a finance expert, so I always had this question in my mind. Is there any way to avoid that?
I can't think of a way to do that without changing the fundamental purpose of a company.
It's only a recent notion that profit maximization is a company's sole purpose, and what that means differs a great deal based on whether you're trying to maximize short-term profits vs long-term. The longer term you get, the more you have to consider things that are beyond the scope of immediate profit maximization.
Historically there are many examples of companies that have considered their shareholders, employees, and communities as part of their duties. A famous example being Ford, but many companies consider a broader purpose beyond profits, and say so in their annual filings as to what types of investors they want and what to expect.
And to get technical, companies have a duty to their shareholders, not profits, because shareholders have the ability to fire the leadership of the company. It so happens that most shareholders primarily want profits, but this isn't universal.
You can also see examples of having legal responsibility be beyond just shareholders, such as in the bylaws added by B-corps which allow carve-outs for different bottom lines. There's a lot going on in the space.
I also wouldn't assume that if you fail to solely pursue profits, that you will therefore be signing your death sentence. That's both an assumption of efficient markets (they aren't), and that a given industry is always going to reward a business that seeks the most profit. Profit does help companies acquire or beat others, but the pursuit of profit is something that customers and shareholders may not always reward in a given industry.
I agree with pretty much all your points, however you are talking about exceptions.
The rule is still profits first.
I really wish our entire society would change to care about humans and not money but I can't see it ever happening.
People still prefer buying cheap things from China labour because it's convenient. The individuals don't care (or don't care enough) and the companies are a reflection of that. As you said, shareholders are the ones in control of the company but the consumers will determine their decisions.
It doesn't matter that children are sewing your shoe, as long as you buy them for a cheap price. What would happen if a company in that area were to double their price because they're changing suppliers to more humane companies? What would happen to a CEO that presents a graph showing the costs going up and profits going down?
The shareholders will surely fire the CEO and the consumers will be outraged with the price increase and will most likely be switching to a competitor.
My point is that it doesn't matter if a few exceptions do the right thing. The rule is still the same and it will never change. That's capitalism's entire foundation.
First of all, the idea that companies exist only to create profits does not mean that companies need to seek profits above all else. PEOPLE run and form companies and get to make decisions about how they run and form companies based on their own decision criteria. There's nothing about starting a company that excludes you from society and moral thinking.
Second of all, even thinking of the profit motive, people want to do work they feel good about. If you must make a profit argument, it's important for companies to draw lines about what they will and won't do and stick to them, to earn and keep the trust of their stakeholders (especially employees).
While I agree with you, it's not what I see day to day. It all goes out of the door as soon as profits are affected.
Even more so for publicly traded companies. They will do whatever it takes to make profits. Just look at Google, Microsoft and Apple. They all started out with good intentions, but at some point they all turned into what they are today.
I really want someone smarter than me to say: yeah we just have to do X. But I'm afraid the end-game of capitalism was not really something anyone predicted (or cared?).
Every single industry out there exploits human beings for profits first, and if it makes good PR, sometimes they help people for a change.
The food industry creating a culture of unhealthy people, now even cashing in the "healthy" fad. The tech industry viciously exploiting privacy for advertising. The media also moved by the number of clicks on headlines. The health industry profiting off the sick. The list goes on.
While people run all of this, I can bet that the majority of them will make the choice that benefits "the company" over the one that benefits human beings even if only to get that promotion. Very few will sacrifice their careers to refuse doing something shady. Even at the micro scale, if you don't do it, the next guy will.
> The reasonable answer to where you draw the line is: when something is no longer compatible with your value system. And if that's not clear, the issue is that you haven't yet spent enough time defining your values. That's the thing to talk about, research, consider, ask advice on, etc. People having a solid, well-tested personal value system is critical to society's function, because that informs how groups of people like companies then operate, and so forth on up.
This sounds nice, but nobody has a clearly defined value system. Can you tell us what yours is?
Nobody can do that. At most people can write do is essays about why they decided one thing or another. If you ask them enough questions, you find contradictions.
I'm not trivializing what you're saying, either. I think you're onto a real human desire for consistency.
But if you read a bit about how people have thought about moral decisions, you find it's an endless rabbit hole. The history of moral thought doesn't have any conclusions. It's not like we can pick utilitarians and say "yep, that's the right one", because there are plenty of reasonable objections to any principle.
That's a universal argument against having any morals. I wholly reject your apparent position. It is simply venal, wholly convenient for your own self-enrichment, damn the consequences - it's pretty much evil personified. You're a cog in a machine that runs on human suffering, and you're actively denying your culpability.
Yes indeed, we only find out where our line is when we consider problems in isolation. But just because you can only find out where the line is by poking out some other line and finding out where the two cross over, is no excuse not to define a line. It is absolutely not right.
> This sounds nice, but nobody has a clearly defined value system. Can you tell us what yours is?
Absolutes are generally horrific but without them it's impossible to codify any value system. With them you'll be driven to the edge of the line and asked how sure you are about it.
"Abortion is always wrong"
"what if doctors say the foetus has a 0% chance of being born alive and the mother has a 100% chance of dying without"
"Well, ok, maybe in that case"
"Ok, so the foetus is now 1% to survive and live for at most a year, and the mother 99% probability of death"
There are no perfect value systems, yes. They are still great tools to prevent tragedy of the commons / prisoner dilemmas. And that's something we as a society must archive to thrive. An alternative is regulation, created by again some kind of value system like your utilitarians. I'd prefer not ending with a shitload of highly detailed regulation just because otherwise we'd fuck up the fabric society for personal gain. If there are effective alternatives in the first place...
Why do you have to draw a line anywhere? For public companies, anyone can invest in them. I’m sure there is some Saudi money, and some money from all sorts of criminals, invested in every publicly traded company. As a society we seem happy with that, so what’s the difference between privately and publicly traded companies here?
I can understand why people would take blood money or seedy money (so long as it's legal from their end). I just don't understand why they can't admit to themselves that it's a little evil and go about their business like they'd do anyways. Nothing changes except you feel a little bad about yourself, probably, and the rest of us don't have to hear as many excuses.
I agree. I try to see the best in people so when I hear someone making excuses for doing something wrong [“piracy is not stealing’] I can take some comfort in knowing that they still have that little voice in their heads that tells them rught from wrong - even if they don’t listen to it.
I just want to mention that Gaddafi brought a lot of development to Libya and his death did nothing for his people. It's easy to say "oh he was a dictator and dictators are bad" but it's not so simple.
I've found that the west has a democracy bias. It assumes that democracy is intrinsic to people and it's only a matter of "liberating" them from tyranny.
But as history is proof, there is nothing intrinsic about democracy. Democratic revolutions were hardly organic in much of the world. Most countries have known nothing but monarchy and/or dictatorships. To impose democracy on them would perhaps be as cruel as letting them be ruled by dictators.
I know this isn't a popular opinion, but I'd say that people should be allowed to manage their own affairs. If a country is better off with a dictator, then so be it.
But when external forces try to impose democracy on a society not ready for it, typically all you get is a civil war netween local mini-dictators. E.g. Lybia, Egypt, Afghanistan, Iraq, countless African nations, etc.
Well-meaning Westerners like to imagine that all one has to do is put on a fair election, get the "good people" in power, and all will be well thereafter. This can be effected by Western occupiers when they want to wash their hands as they exit some troubled spot.
The occupiers don't want to hear that democracy is sustained by values and habits taught by parents to children who are still young enough to listen. Once the boys are old enough to hold a gun, that kind of learning is pretty much over.
Doesn't help that in any democratic setup, the people with the means to fight elections are usually the people who are already close to, or embedded in the previous dictatorial setup.
This is the post-colonial story across the world. The people who came into power after the colonizers left were direct beneficiaries of the colonial rule
Gaddafi's rise to power was a bloodless Coup [1], from the little understanding that I have, he was beloved by many Libyans, you should question where these "militias" that took him down came from, his dying words were 'What did I do to you?' [2], and you should question for what reasons should he be considered "tyrannical". Should you look at Libya today, it is ran by territorial gangs, which is antithetical to the idea that they rid themselves of a great evil. Finally I haven't fully educated myself on this, but it's very interesting, just reading the "Background" part of the Libyan Civil War wiki article makes you wonder: https://en.wikipedia.org/wiki/Libyan_Civil_War_(2011)#Backgr...
"Evidence gathered by Reuters in the provincial town of Khoms shows an organised system of repression with methods including delivering electric shocks to suspects' genitals, keeping them for weeks in baking heat with only a few sips of water a day, and whipping them with an electrical cable while their hands were bound with plastic ties."
Although he was never tried, the sheer number of witnesses detailing his systematic rape of young girls, murder of opponents and starvation of civilians for example, lends a lot of credibility to him being very much tyrannical.
A few summaries:
"Victims and witnesses state in the documentary that Gadhafi would choose his targets on visits to schools or colleges, patting on the head those who caught his eye.
His security officials would then take the victim to one of several specially designed suites of rooms, where they would be abused and raped by the dictator. In one such suite at Tripoli University, there is a fully-equipped gynecological examination room, where victims were tested for sexually transmitted diseases before being sexually abused.
"Some were only 14," recalled one teacher at a Tripoli school. "They would simply take the girl they wanted. They had no conscience, no morals, not an iota of mercy, even though she was a mere child."
Some of the girls were held for years, while others were dumped with appalling injuries."
"The women would first be raped by the dictator then passed on, like used objects, to one of his sons and eventually to high-ranking officials for more abuse," said Benghazi-based psychologist Seham Sergewa, who interviewed victims for the International Criminal Court.
"Gaddafi had a harem of women kept in the basement of his residence, in little rooms or apartments. These women, obligated to appear before him in their underwear, could be called at any time of day or night. They were raped, beaten, subjected to the worst kinds of sexual humiliation. For Gaddafi, rape was a weapon … a way of dominating others -- women, obviously, because it was easy, but also men, by possessing their wives and daughters."
Haaretz, France24 and the Guardian are hardly unbiased sources. Frankly, these tales seem fantastic and made up to me, much like the stories about Kuwaiti babies being ripped from incubators and left to die on hospital floors. Remember those ?
Obviously a functional democratic society will stomp a dictatorial one on pretty much any axis you care to think of.
Having acknowledged that central point, we can't just say "dictators are bad". We can say "democracy is better", but there are instances where democracy doesn't work.
For a realpolitic example, great powers have a long history of quietly corrupting and overthrowing democracies where their interests conflict with our interests. It might be that a country has their democratically elected government toppled by the CIA/Russian version of the CIA/Chinese version of the CIA and then ends up as a dictatorship.
It is far too simplistic to then say "well, the dictator is at fault". Maybe the dictator isn't very nice, but there are political realities to attend to.
“stomp” is a bit exaggerated... Democracies are usually more economically efficient, whinch in the long run means more productive power for tech progress or weapons/munitions manufacture. But the catch is “the long run” there is some history of tribal/ dictatorial states distabalizing democracies and “winning” if they do it quickly and ferociously enough. Or even just ferociously.
A very good source of info about a lot of the powers and incentives in something like this is the “rules for rules” youtube video from cgp grey https://youtu.be/rStL7niR7gs
That depends on how you reckon things. It sounds like an extremely unwarranted axiom routinely disproven by normal world events.
I don't see the semi-functional United States outcompeting dictatorial slave labor economies. If your metric is how much value you can offer to huge multinational companies, it's plain that democratic societies are completely rejected and not even in the running.
'your investors' may very well demand completely inhuman behavior, because there's a cost to humanity, ethics and decency. If you insist on being decent and the flow of capital is completely frictionless it will all bypass you without a second thought. You will be actively choosing to not be the lowest-cost, highest-return option.
This is so contrary to facts that I'm confused about where to even start rebutting.
I guess I would just encourage people to look at where multinational companies tend to be created, tend to be headquartered, and tend to get most of their revenue.
> Obviously a functional democratic society will stomp a dictatorial one on pretty much any axis you care to think of.
A lot of Singaporeans might disagree there. Enlightened dictatorship can be really good however the probability of a having a great dictator is extremely low.
> a functional democratic society will stomp a dictatorial one on pretty much any axis you care to think of
That's correlation, not causation. A lot of the "best" democracies were functioning well before democracy arrived. The main issues that make countries "bad" (bad blood between groups, mistrust of authority, warlords, force majeurs, etc) are not directly related to the form of government.
> We can say "democracy is better", but there are instances where democracy doesn't work.
Just a book recommendation, but for people interested in learning more about these kinds of situations, I'd really recommend Amy Chua's "World on Fire."
Sounds like your someone finding reasons and excuses? You definitely can draw the line somewhere, many people do. It's not a binary choice and it sounds like you helped and encouraged some bad people. At least you have tons of money now, presumably, which...makes you more happy?
It's weird to me you would treat this state of affairs as a static and universally-holding position. I think it's obvious (with several current examples coming to mind) that investors and business partners can be branded as "toxic" in a way that overwhelmingly devalues any money they could actually offer. In the same way the police will take a stolen watch from you after you buy it -- without much recourse on your part! -- you and your company can definitely be torpedoed by taking bad money if public opinion shifts that sharply.
These are the risks of working at the national and global scale; they have to be there, otherwise the rewards couldn't (sustainably) be so great. Even ignoring the moral arguments, the fact that anybody is making them changes the game theory perspective as well. The only way to truly stay on top is to make sure most people want you there.
> It's weird to me you would treat this state of affairs as a static and universally-holding position.
People are going to tend to do what everyone else does. If we were to start hearing that everyone in the fund community had decided not to take money from XYZ kind of investor, we'd probably have done the same. And the arguments would be no different. You'd decide what to do, and then all the reasons that weren't enough before would suddenly be damning and certainly enough.
As for moral arguments, I'm surprised (well not really) that people think it's so simple. Anyone who's read a bit of philosophy has come across moral dilemmas that are not clear. I mean fgs there's a guy up the thread who thinks Gaddafi is defensible, and then there are people who think a guy who hires heavies is untouchable.
The way I’ve come to define this issue is that Homo sapiens lives in a world built for homo economicus. And homo economicus is busy hacking Homo sapiens to see exactly how much it can be hacked.
There’s no “financially or economically” sound choice here.
If the marginal utility of taking money from a murderer is higher than not taking it, then you take it.
Morals are assumed to be held by people and there’s no adjustment for how weak they are as a slow amorphous force.
Our systems are actually designed to be objective and away from soft things like feelings.
> Was I going to tell him not to take the job? How complicit are you if you write some exchange connectors for a dictator? He ended up taking it, and they ended up in the news.
NO, but you should have told him what you knew and let him make the decision.
> I get the feeling you only write articles like that if you have more people wanting to invest than you have capacity for.
I get the opposite feeling. I suspect such virtue signalling is an attempt to attract investors who care about ethics, and perhaps more importantly accept your investment offers.
>And where do you draw the line? What if a benevolent, enlightened, prosperous but essentially a dictatorship state from the equator wants to invest? And they could well claim to be a democracy.
I assume you’re talking about Singapore. Its not inaccurate but I think its not really fair to paint them with the same brush as the others.
The commentator is specifically asking where you draw the line and is making that the point that this case seems very different but has some of the same characteristics of the ostensibly more clear-cut cases. OP is specifically saying this is not the same brush.
In your rush to condemnation, you've missed that I specifically mentioned that we followed anti money-laundering laws. Also none of the people we worked with had been convicted for drug dealing.
You are clearly uncomfortable with your own choices in the original post. It's laundering. Legal or not the choices you made were unethical.
“We believe there should be a huge area between everything you should do and everything you can do without getting into legal trouble. I don’t think you should come anywhere near that line.”
-Charlie Munger
Your choices, your life, don't expect me to celebrate or make excuses for it.
Seems like you'd fit right in. Money, business, and taking care to skate just within the line of the law doesn't absolve you from being evil and effectively using your position to help make the world a much worse place.
The same goes for taking Department of Defense (or your own country's equivalent) money. There is so much research and innovation that just wouldn't have been funded if their principals didn't take money from the military.
Sure, it's easy to rationalize decisions like these, and even find great arguments in favor of them. But, you still have to sleep with yourself a night.
I guess in the end it just boils down to how well you can cope with yourself.
Since you been involved in the financial world and run a hedge fund, you'll agree with me that if you go high enough, all money is morally tainted. No one ever made a billion dollars by being a boy scout.
- A friend called, asking for a recommendation for a job he was applying for. And advice about whether it was worth taking. Turned out, it was the firm that managed Libya's (ie Gaddafi's) wealth. They were making a big push at the time and needed a software developer. Was I going to tell him not to take the job? How complicit are you if you write some exchange connectors for a dictator? He ended up taking it, and they ended up in the news.
- A gulf state sovereign fund called. We didn't even flinch to take it. I think we just assumed they had a lot of oil money and didn't think any further about it. If you read the news, there's some not nice things about the place. Treating manual laborers badly, lack of proper rule of law, that sort of thing. Took the money, didn't think about it much. Not sure I would act differently now, to be honest. Basically the business needed the investment, and there wasn't anything specific and horrible to tell us not to.
- And where do you draw the line? What if a benevolent, enlightened, prosperous but essentially a dictatorship state from the equator wants to invest? And they could well claim to be a democracy. You'd be in endless discussions about which investors to take, which presumably 99% of your competitors would not have a problem with.
- The family office of a guy who'd been in jail called. He was known to have made his money in a seedy way, and tended to have large guys standing around guarding him. I doubt if he actually was a gangster, just seemed to like having a certain tough-guy air about him. Were we going to turn him down? Again, business requirements prevailed. Basically, if it's legal to take his money, most people will do so.
If someone does something horrible like with this journalist, and you are an organisation that is large enough to have a PR footprint, you might care. If you're just a small fish, you are always going to have huge pressure to take the cash. I know what my partners would have done if I'd put up any resistance in these cases; they'd have just ground me down with endless rationalizations, and we'd have ended up doing exactly the same. People always find reasons to do what they have decided to do, and not in that order.