I think that on the specific legal questions around clawbacks, this seems super messy, and I expect the correct thing is to do nothing for now. Legal proceeding are not your friend! And I do not think that the standard norms of cooperation, clear communication and good faith clearly apply in a legal situation. Obviously, I think that people should fully obey the law and any results of legal proceedings, but I think that the ethical status of things here is unclear, and I am not comfortable deferring to a court to figure out the most equitable solution. There’s a lot of messiness on the part of a money recipient (income tax on the money, legal fees, potentially covering living expenses, etc). And there’s a lot of messiness around who would receive clawed back money—eg, I think that ethically a poor, uninformed creditor who invested in crypto because of FTX marketing and lost a lot of their net worth is far more deserving of renumeration than a hedge fund who deposited money on FTX, or a firm who loaned FTX money. But I expect that the legal status of who gets paid money back first/to what ratio is much less clear. And I expect that many of the larger orgs and actors who are owed money will be selling those claims to other financial firms (at a massive discount), and that any actually clawed back money will go to these other firms. Having the expectation that these claims are to be paid back more will give the creditors a higher price to sell the debt, but this is much fuzzier and more diffuse.
On the PR questions, this is unclear to me and I don’t have strong takes.
On the ethical questions, I think that “money spent vs unspent” feels like the wrong distinction. To me, the core argument of Yudkowsky’s post was that non-profits are not some fundamentally different category to standard capitalism. Either way, you are selling a service, just that in a non-profit situation the goal is for value to go to the world. Pretty much everyone who works for a non-profit could have worked in a standard role instead, and I don’t think that choosing to work for a non-profit should significantly change their rights to their labour here. (Similar arguments apply to academics, individuals, for-profits, etc who received FTX money).
If someone received money for work they have since done, but they had enough savings that they didn’t actually “spend” any of the money, it just went to savings. But I don’t think they have an obligation to return this, in the same way that an FTX caterer with significant runway and significant profit margins is obliged to return the money.
If you interpret unspent funds as payment for labour that has not yet been done, this is less clear to me. But I expect most people in this situation to continue to do the task they had been paid for, which makes it feel analogous to the above—if an academic lab received a grant to work on a research project, I think it is unreasonable to expect them to stop working on that project and to set aside all of the money.
To be clear, I agree that what FTX did was morally reprehensible! But I think this is a confusing and messy situation ethically, and want to push back on a framing that non-profit work is fundamentally different from people selling their labout.
(Disclosure: I was doing independent research on a FTX grant, though for the most part did not receive the money even for research I had already done)
I think when most people say unspent, they mean something like “payment for labor not yet performed or for expenses that can be avoided.”
I think the observation that non-profits are selling a service to the grantor and should be treated the same as for-profits actually leads to the conclusion that unspent/unearned funds should be returned. Let’s take the various stadium-naming and similar deals as an example, and let’s assume that FTX had transferred all the money for those deals upfront. Would it be reasonable and ethical for the stadium authorities, sports teams, etc. to keep all the money if they are ready and willing to perform the services for which they had been contracted (whether continued performance would be of any value to the bankruptcy estate / creditors or not?)
Although I feel bad for the grantees, I can’t find any way to distinguish them from any other vendor who was paid in advance.
I think that on the specific legal questions around clawbacks, this seems super messy, and I expect the correct thing is to do nothing for now. Legal proceeding are not your friend! And I do not think that the standard norms of cooperation, clear communication and good faith clearly apply in a legal situation. Obviously, I think that people should fully obey the law and any results of legal proceedings, but I think that the ethical status of things here is unclear, and I am not comfortable deferring to a court to figure out the most equitable solution. There’s a lot of messiness on the part of a money recipient (income tax on the money, legal fees, potentially covering living expenses, etc). And there’s a lot of messiness around who would receive clawed back money—eg, I think that ethically a poor, uninformed creditor who invested in crypto because of FTX marketing and lost a lot of their net worth is far more deserving of renumeration than a hedge fund who deposited money on FTX, or a firm who loaned FTX money. But I expect that the legal status of who gets paid money back first/to what ratio is much less clear. And I expect that many of the larger orgs and actors who are owed money will be selling those claims to other financial firms (at a massive discount), and that any actually clawed back money will go to these other firms. Having the expectation that these claims are to be paid back more will give the creditors a higher price to sell the debt, but this is much fuzzier and more diffuse.
On the PR questions, this is unclear to me and I don’t have strong takes.
On the ethical questions, I think that “money spent vs unspent” feels like the wrong distinction. To me, the core argument of Yudkowsky’s post was that non-profits are not some fundamentally different category to standard capitalism. Either way, you are selling a service, just that in a non-profit situation the goal is for value to go to the world. Pretty much everyone who works for a non-profit could have worked in a standard role instead, and I don’t think that choosing to work for a non-profit should significantly change their rights to their labour here. (Similar arguments apply to academics, individuals, for-profits, etc who received FTX money).
If someone received money for work they have since done, but they had enough savings that they didn’t actually “spend” any of the money, it just went to savings. But I don’t think they have an obligation to return this, in the same way that an FTX caterer with significant runway and significant profit margins is obliged to return the money.
If you interpret unspent funds as payment for labour that has not yet been done, this is less clear to me. But I expect most people in this situation to continue to do the task they had been paid for, which makes it feel analogous to the above—if an academic lab received a grant to work on a research project, I think it is unreasonable to expect them to stop working on that project and to set aside all of the money.
To be clear, I agree that what FTX did was morally reprehensible! But I think this is a confusing and messy situation ethically, and want to push back on a framing that non-profit work is fundamentally different from people selling their labout.
(Disclosure: I was doing independent research on a FTX grant, though for the most part did not receive the money even for research I had already done)
I think when most people say unspent, they mean something like “payment for labor not yet performed or for expenses that can be avoided.”
I think the observation that non-profits are selling a service to the grantor and should be treated the same as for-profits actually leads to the conclusion that unspent/unearned funds should be returned. Let’s take the various stadium-naming and similar deals as an example, and let’s assume that FTX had transferred all the money for those deals upfront. Would it be reasonable and ethical for the stadium authorities, sports teams, etc. to keep all the money if they are ready and willing to perform the services for which they had been contracted (whether continued performance would be of any value to the bankruptcy estate / creditors or not?)
Although I feel bad for the grantees, I can’t find any way to distinguish them from any other vendor who was paid in advance.