trust

I loved this podcast between Ezra Klein and Alex Tabarrok for multiple reasons, not the least of which is my continuing obsession with the importance of trust in flourishing societies:

ALEX TABARROK: I mean, very similar to this, I think undermining trust in government. Andriei Shleifer has some work showing that trust, as you know, is down in the United States. And the kind of weird thing is, is that trust in government is down, but actually, this doesn’t lead you to kind of a libertarian paradise where people say, I don’t trust the government, let’s use the market.

Actually, what happens is trust goes down in all kinds of institutions. And if anything, people become more in favor of government. Not that they actually think it’s going to work, but they just think everything is unfair. And they think that nothing is going to work, and they become removed from the political process. But decline of trust doesn’t lead you to something which I want. And it’s unfortunate, in a way, because you would hope that people would sort of — well, if not the government, then the market. But that’s not the way it works.

Oddly enough, right, the societies in which people have the most trust, not only do they trust the government more, but they actually also trust markets more. These things work together. So if you have a lot of trust in government, then you’re actually willing to have free trade because you figure, well, the bottom half of people are still protected. You’re willing to have vaccines, which actually gets the economy going. So it turns out that trust in markets and trust in governments correlates actually pretty highly.

And later:

EZRA KLEIN: But that strikes me as somewhat to the side of the issue I’m bringing up here, which is that if you want to align the incentives of more groups to push for more overall growth, as opposed to pushing for just their slice of a stagnant pie, to mix my metaphors here, then you actually want lower levels of inequality. And I even see that in the housing example you turn to there. I’ve attended these meetings in S.F., and I try to watch what happens with them.

And something you cannot miss in a city like this, which has insane levels of internal inequality, just insane, like nothing I’ve ever seen, is that there’s no trust.

This certainly matches my intuition that trust in society is self reinforcing. But how to start moving towards trust to begin with? That I wish I had a better answer to.

One of the things that living in Switzerland caused me to appreciate is the impact of trust in society. Switzerland measures as an exceptionally high trust society.

When you live there, it’s something you can actually feel. The way I describe it to people is that in Switzerland, everywhere feels like high end American suburbs (holding aside for the moment that not everyone feels welcome in American suburbs). Things just work. You can leave your door unlocked.

I have a hypothesis that this trust is self reinforcing. Because people trust each other, additional things are possible. Because of these things, people trust the system. My example here is the Swiss Recycling system, although I’m sure someone could come up with something better.

Because of this experience, societal trust has become something I really want to better understand. Where does it come from? How can we make more of it? What destroys it?

With that background, I loved this interview between Phares Kariuki and Uri Bram. The whole thing is worth reading, but Phares offers two hypothesis about what creates trust and one about what destroys trust.

Trust creator #1: Violence

How you move from one equilibrium to another, from observation seems to be violence. It is cruel to think about but Europe went through countless wars in order to integrate.

Trust creator #2: Contract enforcement

The primary thing that can be done to increase trust in society is to have a level of justice for crime / breach of contract. This enforces good behaviour and dissuades bad behaviour; places with high trust have the highest rates of contract enforcement but also contracts aren't needed -- folks can shake on it.

Trust destroyer: Foreign interference

Phares Kariuki: Additionally, I've seen high trust societies get decimated by foreign interference (Korea, Somalia, Germany).

Uri Bram: I’d love to hear more about the Somalia example -- I think some people reading this might be surprised to hear it had a previous high-trust phase.

Phares Kariuki: The Somali were one people, largely Sunni. Their territory covered part of Eastern Ethiopia, North Eastern Kenya. They were split into multiple countries during the colonial era, with Kenya famously oppressing them during the Shifta wars of the 70s. They wanted to secede. The interference in their leadership due to the Cold War led to oppression and clan based mistrust; the fallout stands until today.