The Death of Trust

Disclaimer: the title of this post isn't original - I lifted it from a very interesting article by Sin-ming Shaw reproduced at the Project Syndicate website last week.

I've long thought of economics as little more than herd psychology, and the behavior of individuals and markets in the recent meltdown of the world economy has pretty much reinforced that opinion. But Mr Shaw points out something I've heard other commentators say, if not quite so well: that much of the problem with the economy is based on the death of trust - between individuals, and in our governmental and financial institutions.

Trust is something that's harder to come by all the time, in every part of our lives. Internet scams, crooked and greedy financial firms, deceitful and hyper-partisan politicians, and the simple anonymity of the Internet have fueled a gradual decline in simple trust between people. Zipcode, in her recent blog interview with OCGirl, said that, "...I trust no one. Everyone starts with 0 trust from me and works their way up. Yeah, I know its not fair, but I constantly get burned or used."

When you think of it, trust is really what makes the world go round. We trust our spouses to be faithful to us. We trust our employers to pay us fairly and live up to the promises made when we were hired. We (grudgingly) trust our government to tax us fairly and spend the money thus collected wisely to, as the Constitution mandates, "...establish justice, ensure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity." We trust that our money is worth something because, as Mr Shaw writes, "...we collectively decide to trust the government when it says that 100 is 100, not 10 or 50. Money, therefore, is about trust, without which no society can function."

Agnes and I have different approaches to trust. I have always been a fairly trusting soul, taking people at face value...and it's gotten me burned more than once. Agnes is more or less suspicious of everybody. Sadly, I'm coming around to her way of thinking more every day. Where has my trust gone?

I don't trust anyone in the financial industry, particularly those who profess to be financial advisors. It was bad enough when I objected to the simple fact that they are the only industry that gets away with charging you money for a service they make a point in writing of not guaranteeing...now when I look at the IRA and 401k that have lost half their aggregate value in a year, I have less trust than ever.

I don't trust Republicans who whine that the Democrats are not being bipartisan...after they spent eight years treating Democrats exactly the same way when they were in power.

I don't trust Democrats who, like Republicans, are too ready to let their party's agenda be hijacked by its most extreme elements.

I wish I could be more trusting again, but it's going to be a long time before I can have the level of trust that our elected leaders need to make the country work again. And it'll be even longer before I can trust anyone in the financial industry.

And you can take that to the bank.

Have a good day. More thoughts tomorrow.

Bilbo