Trust
Trust
Over the last week we have experienced not just a massive hit on our financial wealth. More than that we have seen an even greater fracturing of trust.
It appears that it is not money that makes the world go round, but trust. Even with the most phenomenal injection of liquidity into the market by central banks in the US, the UK, Germany, and a host of other countries there has still been one primary problem: the banks don’t trust each others’ balance sheets and consequently won’t led to each other.
But it isn’t just a problem of banks.
The whole issue of trust, or the lack thereof, is something that is taking place society wide, and why not?
We are experiencing massive growth in Internet scams so we are starting to learn that we shouldn’t trust the Internet.
We see the continuing clamouring of engineers and intelligent people about the collapse of the buildings on 9/11. The message seems to be clear: jet fuel doesn’t burn at the temperature required to melt reinforced steel, so something other than the planes themselves caused the collapse. So we clearly shouldn’t trust the government inquiry into the collapse of the buildings.
Indeed the governments of Australia, the US, and UK are proven to have lied about WMD in Iraq as a rationale for going to war. Strike two for reasons to trust government.
On another front we are now seeing the decline of journalism in the media, replaced with news by press release as companies, government and bureaucracies all shape their messages with broadcast ready electronic press kits at a time when advertising revenues for traditional media are in sharp decline. So there is now little reason to trust established media in the way that we once used to.
On the other hand there is the Internet. There is no shortage of opinion out there, that’s for sure. There is also a plethora of crackpot and conspiracy theorists together with a large dollop of media counter espionage put out by the powerful to ensure that fringe views are treated with the contempt that conspiracy theorists have come to be treated with by the rational sane people in society. So how can we trust anything we find in that space either?
It’s a serious problem for our society and it can only get worse before it gets better.
It occurs to me that the primary reason that we have this massive depletion of our reserves of trust is precisely for the same reasons that we have had the massive increase in wealth and productivity – digital technology.
Digital technology has enabled some brilliant things to take place. But the problem is that it has also allowed those who seek profitability above all other things to introduce management systems and processes that ensure that people don’t make decisions based on their own judgement and their personal relationships.
Banks don’t allow the local bank manager to make a decision based on the relationship that he has with a customer any more. Now the decisions are made according to strict rules of engagement. The customer has to submit a statement of position to make sure that he or she has the capacity to repay a loan. And that is what led to the whole subprime mess. People will always tend to tell someone who is asking a question the answer that they think the questioner will want to hear to ensure that that there is a reward.
Banks have lost the art of understanding that they are only as good as their understanding of their communities.
Governments meanwhile have learned that if they move some of the key information that they put into economic data into the footnotes, they can make inflation look better than it is, even as the everyday punter finds that the weekly grocery bill is eating up more and more of the weekly budget. In doing this governments continue to drive a wedge between themselves and the people who vote them in and out of power and continue to erode trust.
It is not just the global economy that is in meltdown at the moment. It is society itself.
To change the picture we are going to have to rebuild relationships within our communities in a way that we haven’t had to address for two thousand years.
Back then there were few religions competing for our souls and the local priest’s role was pretty much as the centre of morality of the community. Of course that was substantially corrupted as soon as the money started rolling in to Rome and some of the priestly class realized that they were onto a good thing, promising eternal life, as long as the down payment was made prior to death. Somehow they managed to maintain trust – up until the last few years when the outing of paedophiles in the church became de rigeur.
So we can’t even rely on the church to act as an anchor of trust in the community any more.
The gold bugs have a view that the only currency that we can believe in is that which is backed by bullion reserves. It may get to that too.
This is going to be a time that in future years people will look back on and realize that they were shaped by.
The first thing that we have to do is to find ways to rebuild communities of trust.