Balancing Trust

Economists have long discovered that trust is an important input to economic development. And institutions in the economy can promote or degrade trust in the society so the institutions that destroys trust ultimately can destroy long run value even if it creates some short term ones.

Focusing on the institutions that promotes and activate trust as a social capital opens our eyes to the various means in which trust is built. On one hand there are institutions that have trust created based on openness and allow broad participation. Then there are institutions that build trust through exclusiveness, tight security around who can do what.

In general, as western ideas permeate, the former is preferred more than the latter. But we ought to recognise there will still have to be gatekeepers, curators to help maintain quality of interactions, and uphold the rules. While a secretive benign dictatorship may not be so pleasant, anarchy is not a viable alternative. The idea of authority and hierarchy is logically part of creating order though it can be abused.

There has to eventually be a balance between maintaining gatekeeping and authority functions against closing it up so much there’s too much exclusivity. The issue with capitalism and markets is that we know they have a tendency towards unequal distribution, even when we equalise opportunity. So even in an open system, there can be accumulation of power and eventually abuse.

Educating the masses and getting people to appreciate the power of reason is not enough to ensure open systems will always maintain trust. More checks and balances to be considered.