Posts Tagged ‘trust’

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Chris Dillow’s latest post reminds me of a point I overlooked in my own post yesterday on the public’s declining trust in the expertise of mainstream economists: the effects of inequality.

The argument I made was that, because mainstream economists relegate issues like power and class to the margins, they literally don’t see (for themselves) or show (to others) the unequal distributions that are either presumed by capitalism or that follow from capitalist ways of organizing economic and social life. Therefore, many members of the public who are affected by and/or concerned with such issues have become more likely to ignore and even challenge the self-professed expertise of mainstream economists.

What Dillow adds to this is the idea that trust itself has declined with growing inequality (which, as it turns out, I wrote about back in 2014).

As a way of expanding my original argument, we may be witnessing a self-reinforcing vicious cycle: the policies promoted by mainstream economists have led to increasing inequality, which mainstream economists tend to overlook or ignore. That growing inequality has, in turn, decreased the level of trust in the wider society, including trust in so-called experts. Together, the falling level of trust and the fact that mainstream economists literally don’t see or show the distributional consequences of the policies they support have propelled the larger public to question the presumed expertise of mainstream economists.

And rightly so. As Bob Dylan once sang, “You don’t need a weather man/To know which way the wind blows.”

Trust this!

Posted: 15 July 2015 in Uncategorized
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Simon Wren-Lewis gives the lie to the idea that Europe’s lack of trust in Greece is responsible for the current crisis.

But does this help explain why other Eurozone countries keep going on about how Greece has lost their trust? I think the answer is a clear no. In fact I would go further: I think this talk of lost trust is largely spin. The issue of trust might have explained the total amount the Troika lent from 2010 to 2012. However, as I have said often, the mistake was not that the total sum lent to Greece was insufficient, but that far too much of it went to bail out Greece’s private sector creditors, and too little went to ease the transition to primary surplus. . .

The narrative about failing to deliver is just an attempt to disguise the fact that the Troika has largely run the Greek economy for the last five years and is therefore responsible for the results.

If anything, the Greek people are the ones who have learned they can’t trust the governments in power in the rest of Europe to do anything other than extract an enormous tribute—in the form of “extensive mental waterboarding” and continued austerity measures—in order to come up with the necessary funds to restore the banking system and give the country some breathing room.

So, who can they trust? They might be inclined to lend credence to the IMF, which has now acknowledged in an update (pdf) to its recent debt sustainability analysis (pdf) that Greece needs significant debt relief.

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Just two weeks ago, the IMF argued that the peak in debt (at 177 percent of GDP in 2014) was already behind us and that gross debt financing would remain below a safe (15-percent) threshold. Now, its estimates are much higher: debt would peak at close to 200 percent of GDP in the next two years and gross debt financing levels would exceed 15 percent and “continue rising in the long term.”

The problem is that the IMF blames the dramatically revised scenario on events in the past two weeks. No Greek should accept (nor should the rest of us) that two weeks of capital controls could alone raise the debt ratio by 28 percentage points of GDP a full seven years later. The IMF is simply unwilling to accept the fact that its own analyses and policies—alone and in conjunction with the other two members of the troika—have gotten it terribly wrong.

The result has been an economic depression and social crisis unseen in Europe since the 1930s.

That just leaves the Greeks themselves, who need to trust they can buy themselves some time to enact the anti-austerity structural reforms necessary to dig themselves out of the current crisis. That’s probably going to mean confronting not only the elites in Europe that are pushing the current bailout plan, but also eventually its own elite that has put the country in such dire straits in the first place.

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Yesterday in class, I was forced to discuss a violation of the university’s Honor Code (which students have to study and sign and which, like most such codes, explains to students they can’t steal one another’s work and they can’t plagiarize other sources, whether in print or from the internet). The students’ view was that the Code was there to protect the credibility of their education in the eyes of others and to serve as an incentive to do their own work.

My own view, which I discussed with them, is a bit different: the Code is a condition of their membership and participation in an intellectual community. Basically, it represents a kind of trust in their fellow students (they’ll discuss and debate issues with one another, inside and outside the classroom, and not violate their mutual trust by stealing from one another) and a trust in the ideas that have been developed and disseminated by others (which should serve as the basis of their own thinking, and be appropriately cited).

I was reminded of that discussion when someone [ht: sm] sent me the link to a new piece of research by Jean M. Twenge, W. Keith Campbell, and Nathan Carter, who found that Americans’ trust in others and confidence in social institutions are at their lowest point in over three decades.

“Compared to Americans in the 1970s-2000s, Americans in the last few years are less likely to say they can trust others, and are less likely to believe that institutions such as government, the press, religious organizations, schools, and large corporations are ‘doing a good job,'” explains psychological scientist and lead researcher Jean M. Twenge of San Diego State University.

Twenge and colleagues W. Keith Campbell and Nathan Carter, both of the University of Georgia, found that as income inequality and poverty rose, public trust declined, indicating that socioeconomic factors may play an important role in driving this downward trend in public trust:

“With the rich getting richer and the poor getting poorer, people trust each other less,” says Twenge. “There’s a growing perception that other people are cheating or taking advantage to get ahead, as evidenced, for example, by the ideas around ‘the 1%’ in the Occupy protests.”

Twenge and colleagues were interested in understanding how cultural change over the last 40 years has affected social capital — the cooperative relationships that are critical for maintaining a democratic society – in which public trust plays an important role.

To examine trust over time, the researchers looked at data from two large, nationally representative surveys of people in the US: the General Social Survey of adults (1972-2012) and the Monitoring the Future survey of 12th graders (1976-2012). Together, the surveys included data from nearly 140,000 participants. Both surveys included questions designed to measure trust in other people and questions intended to gauge confidence in large institutions.

The data showed, for example, that while 46% of adult Americans agreed that “most people can be trusted” in 1972-1974, only 33% agreed in 2010-2012. And this finding was mirrored by data from 12th graders – while 32% agreed that “most people can be trusted” in 1976-1978, only 18% did so in 2010-2012.

Confidence in institutions rose and fell in waves, with respondents in both surveys reporting high confidence in institutions in the late 1980s and again in the early 2000s, with confidence then declining to reach its lowest point in the early 2010s.

This decline in confidence applied across various institutions, including the press/news media, medicine, corporations, universities, and Congress. The notable exception was confidence in the military, which increased in both surveys.

After accounting for the year the survey data were collected, the researchers found that institutional confidence seemed to track rising rates of income inequality and poverty.

Clearly, adhering to an Honor Code in the university is pushing back against a trend of growing inequality and declining trust in the larger society.