A Distrustful Society

September 29, 2009

When a deep hole is dug, it takes sustained confidence and courage to navigate a way out.  Accomplishing such a turnaround is doubly hard in an age of distrust.  Unfortunately, widespread mutual distrust is a sign of our times within countries and between them, and the longer problems fester, the more deeply layered the distrust becomes.  Catchy phrases like “yes we can” go only so far.  The perceived problems with possibly catastrophic consequences are numerous and numbing.  Call that fear, if you will, but it looms as a major distinct barrier to an improved world economy.

The earth is warming faster than anticipated, suggesting that less time remains for counter-measures to avert disastrous conditions that people already born will experience within their own lifetimes.

A way to safeguard people living in advanced economies from weapons of mass destruction has not been found that doesn’t risk squandering the very freedoms and principles that are being defended.  In war, like sport, home field bestows an advantage because the civilian population remains better focused.

Health care consumes an ever-rising share of GDP in the world’s only superpower.  Nothing tried thus far has stopped its rise.  Like a spreading cancer, unchecked growth in health care’s demand on scarce resources, which is the status quo, will rot out America’s foundation.

Might swine flu mutate into a much more lethal strain?  The effort to get healthcare workers vaccinated is distrusted by many, who believe testing of the drug was not sufficiently extensive.  If the professionals do not trust the vaccine’s safety, who will? 

We seem to have entered a Malthusian era where overall world population growth and economic development are outstripping the supply of resources.  Ironically, several key advanced economies, notably Japan and Germany, face declining populations, where social services for the elderly will be supported by a shrinking ratio of working-age people.  So two problems exist, one related to the growth of all people and the other to the distribution of that growth.

The communist experiment crumbled inwardly in the twentieth century, unable to solve the basic economic questions of allocation, production, and distribution.  Now, whereas strong economic growth and resiliency can be found in emerging capitalist societies, the advanced capitalist world is becoming more brittle, burdened with excessive debt and legal systems that struggle unsuccessfully to adapt to the light-speed changes in technology.

Objective, non-political news is a scarcer commodity.  Italy’s prime minister owns the nation’s major media — so much for having an objective watch dog.  In America, people choose their news depending on their ideology.  The media polarizes politics, breeding distrust of the other side.

The financial crisis that erupted in the summer of 2007 was not an isolated breakdown.  Like a big earthquake, it was preceded by warning tremors like the breakdown of fixed exchange rates in the 1970’s, the Latin American debt crisis of the 1980’s,  the Asian crisis in the 1990’s and the dot-com bust earlier this decade.  The world financial infrastructure is less stable, and people do not trust the system’s institutions and practitioners.  Bernie Madoff’s crime didn’t just rob people of unfathomable savings.  It also sapped the confidence of everybody in that system’s integrity.

When trust gets thin and unemployment is high, Governments hunker down and embrace protectionist commercial trade policies.  Without the succession of postwar multilateral trade agreements, the German and Japanese economic miracles would not have occurred, and China and other emerging market success stories would be far less developed.  And make no mistake, the U.S. standard of living would be lower now, too.

Whether people find a basis for greater trust in the future will factor significantly into how well the above conflicts can be resolved.  Doing nothing is not a proper answer, but political and business institutions do not seem well equipped to generate effective  and cooperative action.  Without a willingness to compromise, inaction will continue, and we’ll just have misdirected digging.  The hole will deepen, boosting distrust all the more.

Copyright Larry Greenberg 2009.  All rights reserved.  No secondary distribution without express permission.


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