ALL OF THIS SEEMS A HugE burdEn for one small word to shoulder. Eric M. Uslaner, professor of government and politics at the University of Maryland, gently mocked some of the more extreme claims when he wrote that it seemed trust was “the chicken soup of social life.”
Even if the definition of trust may become entangled with discussions of “social capital” and the benefits of civic engagement are infinitely debated in academic circles, it is clear that trust is an important lubricant for the effective functioning of societies.
So, what does it say about our current period in history that trust seems to be plummeting? By many available indicators, whether it is the Chicago Booth/Kellogg School Financial Trust Index, the US General Social Survey (GSS), Pew Research or the Edelman Trust Barometer, there appears to be a crisis of trust in many of our institutions.
According to the Edelman Trust Barometer, an unprecedented nine-point global decline in trust in governments was recorded at the beginning of 2012 after a period of political brinksmanship on the debt ceiling in the United States, dysfunction on bailouts in the European Union, corruption in Brazil, India and Ireland, and a natural disaster in Japan. Confidence in business, shattered by the financial crisis, is still low.
Such results have led some pundits and scholars to worry that we face a crisis of trust. Many think trust is in decline in a number of advanced democracies, including Canada, Sweden and the United Kingdom.
For example, in the United States, trust has been steadily declining for decades, as tracked by the General Social Survey. More recently, Democratic senator Michael Capuano was speaking for the vast majority of citizens when he told eight bank CEOs, “America doesn’t trust you anymore.” His comments could apply equally to the entire financial system (Chicago Booth/Kellogg School Financial Trust Index, January 2012) as well as government and political institutions.
What are the ramifications? If trust and trustworthiness are declining, that could imply less social cooperation, which means countries with falling trust levels may also lose economic benefits they previously enjoyed.
Certainly, as Emilio Galli Zugaro argues there is a decided lack of trust in institutions, corporations, media and governments. Particularly for businesses, a loss of trust can be a death sentence and many need to repair the damage inflicted upon their reputations.
Such an environment can have significant implications for long-term savings. Gold, a traditional barometer of falling trust in government’s and currencies, is back in fashion. For pension savings and investments, one of the ultimate statements of faith in the future, trust is absolutely critical. Yet, with many prospective retirees reeling from losses incurred during the financial crisis and governments, particularly in eastern Europe, pilfering funded pensions in an attempt to stave off short-term financial woes (A sorry state of pension affairs), trust in pensions is falling.
As an example, in a recent workplace survey
, the National Association of Pension Funds in the United Kingdom found public trust in pensions was at an all-time low. This is at a time when confidence in pensions needs to be bolstered if societies are to have any chance to pay for their old age.