A Crisis of Trust
According to Gallup poll data, the amount of trust that people have in their fellow neighbor and in the institutions that oversee them have plummeted. It appears that this trend in plummeting levels of trust started in the 1960s, and has persisted ever since. Over the course of this article I am going to attempt to explain why this has happened, why these are concerning trends for our society, and what is the appropriate course of action we can take.
For those who are unfamiliar with history, the 1960s and early 1970s were a time of tumultuous change. Political figures Bobby Kennedy, and John F. Kennedy were killed under very questionable circumstances which led many to believe that the government had a part to play in their assassination. This was also a time where our government was most likely fighting an unwinnable war that was started on false pretenses, president Richard Nixon was found guilty of lying and spying on political adversaries in the Watergate Scandal, radical increases in the price of oil from the 1973 oil embargo made us aware for the first time that our government couldn’t protect us from resource shortages, and the end of the post-war economic golden age in the early 1970s reduced our faith that the government could be proper stewards of the economy. Furthermore, many people’s attitudes were changing when it came to the treatment of women and minorities which certainly didn’t help people have faith in the government or in each other.
All of this helps explain why there was a large drop in trust during the 1960s and early 1970s, but it doesn’t explain why trust has continued to follow a downward trend since then. The most likely catalyst of long-term decline in trust is technological and scientific advancement. This is because technological and scientific advancements lead to increases in productivity, which is the only way to grow the economy in the long-term. Starting in the 1970s however, economic growth slowed down since technology wasn’t boosting productivity in ways that it use to. Don’t believe me? Well think about it. By the time 1970 arrived, all of the key technologies of modern life were in place: sanitation, electricity, mechanized agriculture, the highway system, air travel, and telecommunication. According to economist Robert Gordon, this situation made any further economic growth more difficult to accomplish since the bar for improvement was set so high. This claim is backed by a research study from Stanford which showed that the U.S needs to double its research and development budget every 13 years just to maintain a constant state of economic growth. In other words, it appears that by 1970 most of the low hanging fruit for easy economic growth had been picked.
When America was confronted with slower economic growth at a time when trust in the government had plummeted thanks to the tumultuous 1960s, it was only natural that the intersection of these two forces would produce Neoliberalism. For those of you who don’t know what Neoliberalism is, it is a pro-free market economic ideology which seeks to balance the budget, cut taxes, reduce government spending, deregulate industry, promote free trade, and privatize government programs. To sum up this ideology, it claims that since the government can’t be trusted, we shouldn’t trust the government with the responsibility of creating an efficient and prosperous economy for everybody. As a result taxes were slashed on the top earners from 72% in 1970 to 37% by the 2020, the corporate tax rate was slashed from 48% to 21% by 2020, investment taxes were cut, banks became deregulated, the government got tougher on going after unions, and many other neoliberal reforms took place.
Not all of these reforms are bad since it is true that the government is inefficient. The cutting of taxes for example is justified to some degree as well since a reduction in the level of taxation makes it so that the U.S economy is more competitive on an international level. Nonetheless, an unfortunate side-effect of these neoliberal reforms was that it increased the rate at which wealth inequality was happening. This is because the top-performers in the economy tend to accumulate money at a quicker rate relative to the overall economy since most of their money is derived from capital (wealth-producing assets such as tools, machines, roads, etc). In other words if the government does nothing, the wealth gap between the top-performers and everybody else will continue to grow uninterrupted unless the economy grows quick enough for the wealth gap to maintain itself or shrink.
Okay so let’s go over what we covered so far and tie it all together. A slowdown in technological progress led to a slowdown in economic growth. In response to this slowdown, many people at the time believed that neoliberalism is what was necessary to return us to higher levels of economic growth thanks in large part to the post-1960s low trust environment we were in. While some neoliberal reforms were good, one of the negative consequences was that it increased the rate at which the wealth gap was expanding.
This was a bad thing for the state of trust in the country since many studies have shown that there is a strong-correlation between the level of trust in society and how much wealth inequality exists. Whats even more concerning is that increasing wealth-inequality created a destructive self-reinforcing loop. As wealth-inequality rose, corruption rose since the wealthy as a result of increasing wealth-inequality had increased levels of power relative to everybody else. With higher levels of corruption, this led to more inefficient institutions. In reaction to the increased levels of corruption and inefficiency, people’s level of trust in the institutions and in each other fell. This decrease in the level of trust helped further fuel even more inequality since it reinforced the publics dedication toward policies that only worked to expand the wealth gap.
While all of this was happening, two simultaneous demographic trends were also at play which played a role in the collapse of trust. The first was mass immigration. Thanks to the 1965 immigration act, there was no limit when it came to the number of immigrants who were allowed to move here. The result of this was that the nation saw a rapid increase in the level of ethnic diversity which was present. Increasing levels of ethnic diversity are unfortunately bad for trust since many studies have shown time and time again that as diversity rises, trust falls.
The second demographic trend was a collapse in the birth rate. Starting in 1972, the U.S birth rate fell below a level needed for a generation to replace itself. Ever since then, the birth rate for the most part has consistently been at a below-replacement level. This isn’t good for trust since having children allows people to see the good in others in a way that not having children can’t provide. As the number of Americans who had children fell, this led to a decrease in trust that people had in each other and by extension society. Furthermore, as the birth rate fell, the rate at which the labor force grew also fell. This decreased the level of economic growth and helped fuel wealth inequality which contributed to the erosion of trust.
The final piece to the puzzle is once again technology. Not only was technology not raising our living standards as much as it use to, but it was also creating technologies that were chipping away at our abilities to trust one another. The rise of photo-editing and video editing has started to make us question what we see since anybody in the world can now make edits to these once reliable mediums of truth communication. Social media in order to boost user engagement (and by extension their revenues) has resorted to bombarding us with content that we want to see, not content which is true regardless of if we want to see it. This has programmed us to be more close-minded and less trusting of institutions and individuals whose beliefs differ from our own since it is more difficult to trust other people’s opinions when your own is being constantly reinforced.
Finally, the mass proliferation of the internet, video games, and social media has resulted in a generation that is exposed to people less often than it use to be. When people interact with others less often, trust in one another falls as a result. Its harder to trust somebody when you are interacting with a caricature of somebody rather then the actual person.
So why is a lack of trust bad? Why should we care that we don’t trust institutions? Isn’t it a good thing to be skeptical so that we don’t get hurt or fooled? Trust is needed for many things and without trust, society begins to breakdown in many ways. Homicide rates go up, the efficiency of the system falls as non-compliance rises, wages and employment opportunities plummet, and our abilities to solve issues that need be solved is compromised since many solutions have cooperation as a prerequisite. Take political polarization as an example. If overall levels of trust fall, it becomes much more difficult to trust people from an opposing political party. This high level of a priori distrust sets you up for buying into narratives about the other side which aren’t necessarily rooted in truth, which further leads to the divide and breakdown of compromise needed to push the country forward.
What can we do to restore trust in one another and in the institutions that rule over us? Well in order to restore trust, our policy makers are going to need to pass laws which take into consideration the sources of where the breakdown of trust is coming from. On the immigration front, our policy makers need to put numerical limits on the number of immigrants that are allowed to come into the country every year. This would slow the rate of ethnic change in our society which would give our culture more of an ability to adapt to and integrate these newcomers. This in turn would help lower the level of distrust that was emanating from both native and non-native citizens alike toward one another. This would also increase the bargaining power of employees relative to employers since restricting the number of immigrants would by extension restrict the number of options that employers had when it came to who they could hire. This increased level of bargaining power would increase the rate at which wages would rise for the bottom earners, and help immensely when it came to shrinking the wealth gap.
In addition to this, governments and communities should work toward creating conditions that maximize the odds that ethnic groups interact with each other willingly on a regular and positive basis. It was discovered from an Oxford study that distrust falls when positive contact between ethnic groups on a regular basis rises.
When it comes to the issue of wealth inequality, policy makers need to be careful. They need to create a system that shrinks the wealth gap, but at the same time encourages people to work hard and is internationally competitive. The pathway toward doing this includes forbidding companies from purchasing their own stock, overturning the Citizens United ruling which allowed unlimited money in politics, limiting how large businesses and banks are able to become, reimplementing the Glass-Steagall act which separates investment banking from commercial banking, and introducing mandatory data-sharing schemes so that competition can more easily challenge the corporate powers of Silicon Valley. Term limits should also be introduced for congressmen and bureaucrats so that the odds of corruption (which play a part in the cycle of distrust) can be minimized.
The next part of the puzzle is demographic. What the government needs to do is implement policies that encourage the formation of families. These policies could include the creation of tax incentives for the movie and TV industry to create movies that glamorize families and having children, banning advertisement which demonizes family life and having children, and an education system which encourages people to have children one day. In order to raise birth rates, I suspect that we will have to pass policies which change the culture rather than policies which financially incentivize births. This is because low-fertility rates are the norm across the developed world regardless of the taxation level or how many services the government provides (with the interesting exception of Israel).
When it comes to the technological slowdown, the government needs to engage in policies which encourage innovation. The first of these policies needs to be deregulation. Regulation tends to discourages innovation since the more regulation is in place, the more it’ll cost the company to comply with the regulations. With higher legal compliance cost, this takes away money that could’ve gone into funding R&D. Furthermore, more regulation makes it more risky and cumbersome to experiment. If there are too many regulations, this can sometime prevent any innovation from happening at all since the burdens of regulatory compliance would make innovation too risky. In order to bring down the level of regulation we first need to continue the Trump administrations policy of repealing 2 regulations for every 1 new regulation.
The second thing we need to do on the regulatory front is to reform administrative law so that government agencies cannot make laws. Government agencies should only be allowed to propose laws and enforce laws. The decision to approve those laws should be vested to either the president or the legislature.
The final thing we need to do is repeal the Chevron Doctrine. This supreme court decision made it so that when administrative interpretations of their rules are challenged in court, the courts wouldn’t bother figuring out what the right interpretation is. The court under the Chevron doctrine is only suppose to look for clear answers in what the law means. If the law isn’t clear, then the court approves the agencies interpretation of their own laws just as long as the judge finds the decision reasonable. This is concerning since it gives the administrative state the power to interpret their rules in very broad ways which increases the level of uncertainty in the system and by extension lowers the willingness for companies to innovate. A company isn’t going to want to innovate if they are concerned that there innovation could possibly violate broadly interpreted and vague administrative law.
Going beyond regulations, the government needs to increase funding for R&D, forbid companies from buying their own stock so more of their private money will go into R&D, reform higher education so that it is affordable, and enforce laws against anti-competitive behavior more strictly so that excessive concentrations of corporate power won’t get in the way of innovation and competition. All of this would increase innovation, technological adoption, the rate at which people became more productive, and by extension the rate at which the economy grew. With faster economic growth, it is harder for the rich to become more wealthy relative to everybody else. Furthermore, good economic fortunes help increase people’s faith in the system and the institutions in which we all live under.
Finally, we must pass laws concerning the usage of technologies that seek to misconstrue or create a false version of reality. Digitally altered videos or photos that create false realities should be forbidden for use in the government, media, and for politicians campaigning for public office since it undermines the truth. Think about how much chaos would be unleashed if we allowed CNN or government agencies to distribute videos of people saying incriminating things that they never actually said? This reality is almost here.
If all of these proposals were passed in conjunction with one another, we’d see higher levels of trust exhibited toward one another and the institutions which govern over us. We would come together and solve problems in ways that we haven’t been able to in a very long time, and maybe just maybe, we’d be prepared to face the challenges that the 21st century will require for us to overcome.
