I think one of my main contrarian instincts is to see a flat direction and worry we've been creeping up it, to the point that I'm actually pretty receptive to arguments for going the other way.
I take it somewhat as a sign I have this well-calibrated that your more-sleep and less-sleep paragraphs sounded about equally reasonable to me.
I remember very early in the pandemic reading an interview with someone who justified their decision to continue going to bars by pointing that they had a high-contact job that they still had to do. I noticed that this in fact made their decision worse (in terms of total societal Covid risk).
(And as the number of cases was still quite low at the time, the 100% bound on risk was much less plausibly a factor)
If you're deciding whether or not to add the (n+1)th person, what matters is the marginal risk of that decision.
Another explanation for logarithmic thinking is Laplace's rule of succession.
If you have N exposures and have not yet had a bad outcome, the Laplacian estimate of a bad outcome from the next exposure goes as 1/N (the marginal cost under a logarithmic rule).
Applying this to "number of contacts" rather than "number of exposures" is admittedly more strained but I could still see it playing a part.
I think the idea is that Huemer's quote seems to itself be an effort to repair society without fully understanding it.
I don't think this is a facile objection, either*—I think it's very possible that "Voters, activists, and political leaders" are actually an essential part of the complex mechanism of society and if they all stopped trying to remedy problems things would get even worse.
On the other hand, you can recurse this reasoning and say that maybe bold counterintuitive philosophical prescriptions like Huemer's are also part of the complex mechanism.
*To the quote as a standalone argument, anyway—haven't read the essay.
Searching "real estate money laundering", it does sound like this is a real thing. But the few pages I just read generally don't emphasize the "overpaying in exchange for out-of-band services" mechanism—they seem to be thinking in terms of buying (with dirty money) and selling (for clean money) at market prices, and emphasize that real estate's status as "a good investment" is an important part of why criminals use it.
(They also bring up international tax avoidance strategies. Obviously using property to "park your wealth" also relies on prices not going down and hopefully going up at a reasonable rate).
So it sounds like OP's strategy of building more and more until the speculators stop paying would work almost equally well against these types of buyers.
I find this distinction useful as well. I suspect it's one that many people understand implicitly and many others totally lack. Evidence of the latter: I've seen intelligent people be far too upset by https://en.wikipedia.org/wiki/K_Foundation_Burn_a_Million_Quid.
One (admittedly idealistic) solution would be to spread awareness of this dynamic and its toxicity. You can't totally expunge it that way, but you could make it less prevalent (i.e. upper-middle managers probably can't be saved, but it might get hard to find enough somewhat-competent lower-middle managers who will play along).
What would it look like to achieve an actually-meaningful level of awareness? I would say "there is a widely-known and negative-affect-laden term for the behavior of making strictly-worse choices to prove loyalty".
Writing this, I realized that the central example of "negative-sum behavior to prove loyalty" is hazing. (I think some forms of hazing involve useful menial labor, but classic frat-style hazing is unpleasant for the pledges with no tangible benefit to anyone else). It seems conceivable to get the term self-hazing into circulation to describe cases like the one in OP, to the point that someone might notice when they're being expected to self-haze and question whether they really want to go down that road.
Had she been the sort to do that, Omega wouldn't have made her the offer in the first place.
I could use more clarity on what is and isn't level three.
Supposedly at level three, saying "There's a lion across the river" means "I’m with the popular kids who are too cool to go across the river." But there's more than one kind of motivation the speaker might have.
A) A felt sense that "There's a lion across the river" would be a good thing to say (based on subconscious desire to affiliate with the cool kids, and having heard the cool kids say this)
B) A conscious calculation that saying this will ingratiate you with the cool kids, based on explicit reasoning about other things the cool kids have said, but motivated by a felt sense that those kids are cool and you want to join them
C) A conscious calculation that saying this will ingratiate you with the cool kids, motivated by a conscious calculation that gaining status among the cool kids will yield tangible benefits.
Are all three of these contained by level three? Or does an element of conscious calculation take us into level four?
(I think C) has a tendency to turn into B) and B) likewise into A), but I don't think it's inevitable)