A little less than a year ago I made some venture capitalists very angry when I made an offhand remark in an episode of Crypto Critics’ Corner: “I mean, I would probably argue that venture capitalists are not good for society regardless of what they’re investing in.” I am always surprised at how controversial a statement that is, and how much it attracts the kind of “not all venture capitalists!” sort of reaction that’s usually reserved for criticism of cops and landlords.

I am feeling particularly secure in my opinion on the investor class after the shitshow we just witnessed, where a relatively small group of venture capitalists and various other financiers did not, let’s say, cover themselves in glory.

When it became apparent to this small group of very powerful, very wealthy individuals that Silicon Valley Bank — the bank used by much of the Silicon Valley startup ecosystem — was on shaky footing, they had a choice to make. They could remain calm, urge the founders of companies they’d invested in to do the same, and hope the bank could weather the storm. Or, they could all pull their money out, urge their founders to do so also, and hope that they or their companies were not the ones left standing in the teller line when the liquidity dried up.

Faced with the choice between the more communal, cooperative choice and the self-serving, every-man-for-himself choice destined to end in a bank run, it should be no surprise which option they picked. As the Titanic sank, they were the ones pushing people out of the lifeboats.

For those unfamiliar, the prisoner’s dilemma in game theory refers to a scenario in which two prisoners arrested in connection to the same crime are each offered a bargain if they betray the other. Neither has any insight into which choice the other prisoner will make. The prisoners are usually referred to as “A” and “B” but to make things a little more personable, and for absolutely no other reason than that, we’ll go with the names “David” and “Jason”.

If David and Jason both remain silent, they will both serve a lighter sentence of two years, because the police don’t have the evidence to convict either of them on the more serious charge. If David betrays Jason and Jason remains silent, then David goes free and Jason serves the entire, greater sentence of ten years. Same if the roles are reversed. If each betrays the other, they split the greater sentence and serve five years apiece. We can represent this all as a simple chart:

If we now extend the analogy to the Silicon Valley Bank bank run, we have a similar-looking chart, although critically the scenario in which both David and Jason panic is actually likely to be a worse scenario than the one in which one of them stays calm and the other panics.

However, this is a somewhat flawed analogy when we look at what actually happened. In reality, the investor class panicked, they received their proverbial “sentence” (the bank run), and then they walked up to the cell door and shouted at the guards “you can’t do this to us! you’ll ruin everything!” and the guards — long-time allies of the prisoners — said “you know what, they’re right” and handed the keys right on over.

Now, don’t get me wrong, the Fed’s not-a-bailout of Silicon Valley Bank and Signature Bank seems ultimately to be the right choice in an objectively bad scenario. Depositors will be made whole, and companies are no longer facing fears that they won’t be able to make payroll or keep the lights on. But the circumstances that led up to this disaster, and the people we allowed at the helm of the ship steering full-steam towards the iceberg, ought to be questioned.

We have found ourselves in a scenario where the investor class has, yet again, managed to privatize profits and socialize losses. While many of these powerful, wealthy, and connected individuals have pushed for policies that would scale back government and regulators, promoted cryptocurrencies they believe to be outside control of the state, and pushed back against any action to break up tech monopolies, they quickly found themselves begging government officials for a rescue. “No atheists in a foxhole. No libertarians in a bank run,” tweeted Eric Newcomer, after right- and libertarian-leaning David Sacks tweeted at government officials demanding they “Stop this crisis NOW”.

During the SVB crisis, the investors who took to Twitter to beg that people pressure officials for a government rescue seemed uncharacteristically self-aware that their popularity has waned in recent years. Although some attempted to sing the praises of venture capital, and warn of the supposed consequences of it being hamstrung by such a severe banking crisis, most seemed to realize that this might not widely land, and instead tried to shift the conversation towards concern for the relatable “little guy”. They trotted out examples of small, mom-and-pop style businesses who banked with SVB and who might go under if their deposits became inaccessible. They pointed to biotech companies or life sciences companies who developed life-saving medications who banked with SVB. They warned of an “extinction level event for startups [that] will set startups and innovation back by 10 years or more”,

urging startup employees to send form letters to their representatives to say they feared for their jobs:

But this supposed concern for employees was difficult to swallow given the level of contempt for employees and “the little guy” that we have seen from the investor and executive class over the last several years. Those who once saw fit to demand workers risk their lives for the sake of their employers during a global pandemic, who rampantly union-bust, who ruthlessly slashed jobs when interest rates began to increase, and who alluded to ways they could circumvent severance payments now magically found within themselves a feeling of concern for the poor employees, those people just trying to put food on the table.

“On Monday, 100,000 Americans will be lined up at their regional bank demanding their money—most will not get it. This went from Silicon Valley investors on Thursday to the middle class on Saturday—Main Street finds out Monday”, tweeted angel investor J