What a worrying state our world is in. With an increasingly interdependent financial system that continues to sway, a turbulent North Africa and Middle East, a tense Europe, and an increasingly frustrated and unemployed youth, it's sometimes difficult to know which way to look. Every week we hear countless economists and politicians confidently tell us that they have identified the key problem and a solution - both of which are almost always more complex and confusing than their predecessors.
But perhaps the underlying problem and solution is simple: the former, a pandemic lack of trust in the global system, and the latter, its restoration.
A number of recent events have led me to believe that there has been a severe breakdown in the level of trust present in society today. The IMF, for example, is alleged to have manipulated data; while closer to home, we have witnessed the News of the World phone hacking scandal, allegations that officers from the UK's police force may have conspired and lied to force then Chief Whip Andrew Mitchell MP to resign, and most recently, the Tesco horse meat debacle.
Trust has always been highly valued by society, but as just evidenced, its deficiency has become especially salient in recent years. As our world becomes increasingly interdependent, as organisations and companies find themselves operating in numerous countries, and as political bodies and unions are increasingly making decisions which directly affect the fiscal policies of other sovereign states, the value of trust (or cost of distrust) is multiplied and aggregated by the people whose lives these decisions affect.
Historically, particularly in the formative years of the EU and since the establishment of the Bretton Woods institutions, the international community's main gripe has been with trust's close relative: legitimacy. At the time perhaps we implicitly assumed that an organisation's legitimacy roughly equated to its trustworthiness. Surely, however, there is a difference? I would argue that legitimacy relates more to an organisation's point of existence or raison d'être, whereas trust relates to its effectiveness--that is, its ability to do what it is supposed to do.
A number of studies have recently examined this "trust crisis". One particularly interesting study asked people in the UK whom exactly they trust. Predictably, 7 in 10 people do not trust their local MP, but surprisingly, 5 in 10 distrust senior police officers, 7 in 10 distrust journalists, and 8 in 10 distrust large company bosses. The world is facing a number of challenges and yet no one trusts the politicians who are meant to represent them, the businesses that are supposed to create wealth and jobs, and the journalists who are supposed to objectively inform us.
But is trust really that important though? Yes!
How much easier would it be to achieve peace in the Middle East if Palestine and Israel not only trusted each other more but also trusted the international community to fairly moderate peace negotiations? How much easier would it be to implement tough fiscal policies in Europe if citizens trusted that Germany, the ECB and the EU are acting in their best interests? How much more business could banks facilitate if governments could trust them enough to give them more flexibility? What if politicians in developing countries trusted the international criminal court, and believed that it would hold everyone accountable and give fair rulings?
I'm sure you can think of many more examples, but the point is that there used to be a time where deals were done on a hand shake, where a person's word was his or her worth. I'm not naïve enough to suggest that people should start replacing billion dollar contracts with handshakes, but I do believe that the value we place on honesty is slipping and we need to do something about it. Society seems to think that the onus is more on setting up a watertight contract than the other party simply keeping their word.
So how do we fix this crisis of trust? As you might know from your own experiences, trust is a tricky thing to get back once lost. Schweitzer et al. find that following untrustworthy behaviour, trust can effectively be restored when individuals observe a consistent series of trustworthy actions. However, if the untrustworthy actions included any degree of deception, it can then never be fully recovered.
The potential consequences of this- that deceptive organisations can never regain trust- are interesting. One perhaps radical implication would suggest that the only way to fully restore trust would be to either replace or significantly change the organisation.
Given that trust can be so hard to restore, perhaps it is time to not only start speaking about it but also start addressing it. With a changing financial system and its "too big to fail" companies, a turbulent EU, and increasing youth unemployment, can we really afford to continue ignoring this growing elephant in the room?