One question keeps resurfacing whenever politics becomes a battle of increasingly strange slogans: do the people repeating them actually believe what they are saying?

A tempting answer is that ordinary believers often do, while people higher up the social hierarchy understand something different: political language can function not merely as a description of reality, but as a currency. Say the right things, display the right values, master the right vocabulary, and you demonstrate that you belong.

Call it an ideological Ponzi scheme: prestige flows downward in the form of ideas and moral instructions, while the social and sometimes material costs can flow in the opposite direction.

It is an intentionally provocative analogy, and obviously not a literal description of every left-wing movement or progressive belief. Nor does political hypocrisy belong exclusively to the left. But there is one extraordinary episode that illustrates the mechanism almost too perfectly: the collapse of FTX and the post-crash messages of its founder, Sam Bankman-Fried.

Because after years of carefully cultivated ethical branding, SBF said something remarkably close to the quiet part out loud.

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SBF said the quiet part out loud

Before FTX imploded in November 2022, Sam Bankman-Fried had built more than a cryptocurrency empire. He had built a persona.

The young billionaire was closely associated with effective altruism, the intellectual movement that attempts to use evidence and quantitative reasoning to determine how money and resources can do the most good. His public identity was therefore unusually entangled with ethics, philanthropy and the idea of earning vast sums partly in order to give wealth away.

Then FTX collapsed.

Shortly afterward, Bankman-Fried exchanged messages with Vox journalist Kelsey Piper. The resulting conversation became extraordinary precisely because SBF appeared to dismantle parts of his own carefully constructed public image.

Piper asked whether his ethical positioning had largely been a front. Bankman-Fried replied that it was a significant part of it. When she observed that he had been exceptionally good at discussing ethics for somebody who seemed to view things as a game of winners and losers, he answered that he had needed to be.

Then came the line that mattered.

He described reputation-building as a “dumb game we woke westerners play” in which people say the appropriate “shibboleths” so that others will like them.

The full exchange was originally published by Vox.

The statement should not be treated as proof that every position Bankman-Fried ever expressed was fraudulent, much less that every progressive or effective altruist secretly thinks the same way. It tells us something narrower but more interesting: SBF himself understood moral language as having reputational value.

And that brings us to the strangest word in his message.

What exactly is a shibboleth?

A shibboleth is a word, expression or linguistic convention that distinguishes members of one group from outsiders.

The term originates in the biblical Book of Judges, where pronunciation of the word shibboleth was used to identify members of a particular group. In modern usage, its meaning has expanded. A shibboleth can be a verbal badge of membership: knowing what to say, how to say it and which vocabulary is acceptable demonstrates that you understand the group’s codes.

That makes Bankman-Fried’s choice of vocabulary particularly revealing.

He did not merely accuse people of lying. He described a social authentication protocol.

In geek terms, the words function almost like credentials. Correct vocabulary tells the network: I am one of you.

Anyone who has spent enough time around highly politicized online communities will recognize the broader mechanism, regardless of ideology. Groups develop preferred terminology, taboos, references and rhetorical formulas. Fluency demonstrates membership. Getting the vocabulary wrong can reveal that somebody is an outsider almost instantly.

The important question is what happens when that linguistic system becomes connected to status.

Luxury beliefs and status signaling

This is where psychologist and writer Rob Henderson’s concept of “luxury beliefs” becomes useful.

Henderson defines luxury beliefs as ideas and opinions that confer status on affluent or credentialed people while potentially imposing costs on people lower down the socioeconomic hierarchy.

The concept deliberately updates an older idea.

In the late 19th century, economist and sociologist Thorstein Veblen famously analyzed conspicuous consumption: expensive goods and leisure activities could advertise wealth precisely because ordinary people could not easily afford them.

Henderson’s argument is that beliefs can perform a similar function.

A Rolex is an obvious status object. But in a society where material goods have become increasingly accessible, cultural distinction can also be generated through education, vocabulary, tastes and political positions. Knowing the latest terminology and adopting the fashionable moral position can signal membership in a highly educated social class.

Crucially, Henderson does not claim that everyone expressing a luxury belief is consciously lying.

In fact, he has explicitly argued that many holders of luxury beliefs are sincere. But he also notes that some people may express fashionable views cynically because doing so protects their reputation or advances their career.

That distinction matters enormously.

There are at least two different phenomena here: sincere ideological conviction and strategic ideological signaling.

SBF’s messages are fascinating because they appear to provide an unusually explicit example of the second.

The ideological Ponzi scheme

This is where the Ponzi metaphor starts to make sense.

A financial Ponzi scheme depends on asymmetry. People near the center understand something that participants further down the structure do not. New participants continue supplying resources because they believe the system works differently from how it actually works.

An ideological Ponzi scheme would operate with social capital rather than investment capital.

At the top, sophisticated participants learn which opinions, expressions and moral positions generate prestige. They understand the institutional incentives surrounding them. Saying the correct thing can produce professional connections, approval, invitations, media credibility or protection from criticism.

Further down the pyramid, however, those signals can be interpreted literally.

The distinction is between using a belief and believing a belief.

The elite participant understands the signaling function. The sincere follower receives the signal as doctrine.

This does not require a secret committee coordinating the entire process. No conspiracy is necessary. Incentives alone can produce it.

Imagine a prestigious institution rewarding a particular political vocabulary. Ambitious people quickly learn that vocabulary. Because prestigious people use it, others imitate them. Once the language spreads, refusing to use it becomes costly. Eventually, what began as a status marker can become an enforceable social norm.

Nobody needs to be running the machine.

The machine runs because everyone responds rationally to the person immediately above them.

Where the analogy breaks down

There is an obvious problem with taking the metaphor too literally.

“The left” is not a corporation, a single social class or a coordinated organization. It contains politicians, academics, activists, trade unionists, billionaires, students, workers and countless ideological factions that disagree with one another.

There is also no evidence that progressive elites as a category secretly disbelieve everything they advocate.

In many cases, the opposite is likely true. Highly educated activists may hold their political convictions extremely sincerely. Henderson himself has emphasized this point when discussing luxury beliefs.

And political signaling is hardly unique to progressives.

Conservative movements have their own shibboleths, purity tests, prestige hierarchies and symbolic vocabulary. Crypto communities have them. Tech companies have them. Gaming communities have them. Religious groups have them. Corporate management culture may have perfected an entire dialect of them.

The stronger argument, therefore, is not that the entire left is secretly fake.

It is that political environments can create markets for moral language, and those markets reward people independently of whether the underlying beliefs are true, useful or even sincerely held.

That is a much harder problem to dismiss.

When politics becomes social currency

The Bankman-Fried episode matters because it provides a remarkably clean illustration of something normally difficult to observe.

We can see public statements. We can see reputations. What we usually cannot see is the private calculation behind them.

SBF temporarily exposed that layer.

His comments suggested that, at least in his own case, mastering the language of ethics had reputational utility. The correct shibboleths helped construct an identity. And before FTX’s collapse, that identity was extraordinarily valuable.

This is the deeper connection between shibboleths and luxury beliefs.

Ideas do not circulate solely because people believe they are true. They can also circulate because expressing them is socially profitable.

Once prestige enters the equation, imitation follows. People copy high-status individuals. Institutions copy prestigious institutions. Employees learn the vocabulary of successful managers. Young professionals learn which positions generate applause and which create friction.

Eventually, the origin of a belief becomes almost irrelevant. It reproduces because the social network rewards its reproduction.

That is the strongest version of the ideological Ponzi metaphor: people at different levels of the system may be participating in fundamentally different games while appearing to speak the same language.

One person uses the language instrumentally. Another repeats it aspirationally. A third believes it literally.

From the outside, all three look identical.

The collapse of FTX did not prove that progressive politics is fraudulent. It did, however, produce one of the clearest demonstrations of how moral language can become reputational technology.

Bankman-Fried’s most revealing word may therefore not have been “woke.”

It was shibboleth.

Because a shibboleth does not have to explain reality.

Sometimes, it only has to tell everyone else that you belong.

Luxury beliefs and ideological signaling: key questions

What is a luxury belief?
The term, coined by Rob Henderson, describes an idea or opinion that can confer status on affluent or credentialed people while potentially imposing greater costs on less privileged groups.

What is a shibboleth?
A shibboleth is a word, expression or convention that identifies someone as belonging to a particular social, cultural, political or professional group.

What did Sam Bankman-Fried tell Vox?
After FTX collapsed, Bankman-Fried told journalist Kelsey Piper that reputation had required him to be good at talking about ethics and referred to saying the right shibboleths as part of a “dumb game we woke westerners play.”

Did SBF say all of his ethical beliefs were fake?
Not exactly. In the exchange, he indicated that his ethical persona was substantially performative, but he also qualified the admission rather than claiming that absolutely everything he had said was false.

Does the SBF exchange prove that progressive elites do not believe their own ideas?
No. One individual’s admission cannot establish the motives of an entire political class. It is better understood as a striking example of how moral and political language can function as status signaling.

Why compare ideology to a Ponzi scheme?
The metaphor describes a system in which people higher in a prestige hierarchy may understand the incentives surrounding certain beliefs while people further down adopt those beliefs more literally. It is an analogy, not a claim that political movements are literally financial frauds.