Commentary,  COVID,  Labour Standards,  Public Sector Work

Trust has Hard, Economic Value

The COVID-19 pandemic has proven, again, that society is not actually built around individuals all out to maximize their self-interest (as in the neoclassical fable). It works best with cooperation, reciprocity and trust. Valuing and investing in social trust is not a “feel-good” sentiment. It’s a proven, real source of economic and social advantage.

Jim Stanford explores the economic value of trust, in this commentary which was originally published by the Toronto Star.

The Economic Importance of Social Trust

It was like a scene from a zombie movie: crowds of screaming protestors charged the doors of state legislatures in several U.S. states, opposing physical distancing restrictions. Many of them believe coronavirus is a hoax and physical distancing is an authoritarian conspiracy. Epidemiologists now fret those protests, attracting hundreds of unmasked Americans in close quarters, will spark new surges of infection.

America’s chaotic response to the pandemic has accentuated the contrasts between our two countries. Canada’s leaders have generally struck a non-partisan tone: ceding the spotlight to public health officials, and distributing public resources universally. President Trump follows a different playbook: first downplaying COVID’s severity, then trumpeting his own wisdom, and tailoring every policy intervention for maximum partisan effect – even diverting necessary medical supplies away from ‘blue’ (Democratic) states. Other U.S. leaders mimic Trump’s approach.

These differing approaches have produced very different health outcomes. Official U.S. infection and death rates are about 2.5 times higher, relative to population, than Canada’s. The true difference is probably wider, due to underreporting and less extensive testing in the U.S.

Canadians can be proud of our stronger response. Many factors have been important: universal public health care (paid for by our higher taxes), less extreme inequality and poverty (which accelerates contagion), and a more effective division of responsibility between elected politicians and professional public servants.

But we have another important advantage that is simultaneously intangible and fragile: social trust. Canadians more readily accepted restrictions on normal activity, and followed them more fulsomely. And there are thankfully few signs of the libertarian backlash against government-guided collective action that has undermined America’s response.

Physical distancing is an act of social responsibility. Sure, there is some self-interest at play: no-one wants to become ill themselves. But the main goal is to collectively close off opportunities for the virus to spread, and thus drive it to extinction. That strategy becomes dramatically more effective, the closer society approaches full compliance. With a 90% reduction in human contact, the virus dies out quickly. But even at 70%, let alone 50%, it still erupts in frightening, exponential contagion. So Canadian leaders emphasize the altruistic rationale of distancing: you must stay home, not for yourself, but for everyone else.

What cultural environment produces that kind of collective solidarity? There are various ways to achieve strong buy-in. Authoritarianism is one option; that partly helps explain China’s fast response. Even in a democratic context, reinforcing social responsibility with legal sanctions (like fines for gatherings) impels people to take the rules seriously.

But any police officer knows punishment alone cannot produce strong compliance. Voluntary, collective adherence to norms of mutual responsibility are the backbone of social cohesion. And that, in turn, depends on trust. Trust in leaders and experts; trust that the rules are fair, and will be applied fairly; trust that everyone will be looked after; trust that those around you will do the right thing, too.

When trust breaks down, people stop believing their leaders. They fear they will not be protected: neither by the government, nor by others in society. They invest in self-protection rather than collective action (that’s why U.S. gun stores quickly ran out of ammunition). And the capacity of society to act coherently and effectively crumbles.

The ideology of capitalism is supposedly rooted in individual pursuit of self-interest. That’s a historically inaccurate parody of human nature: in fact, an innate social intelligence and ability to cooperate is what allowed early humans to survive and thrive, in a hostile environment. And simple greed is not actually what makes our economy work, either. Societies which embed trust, reciprocity, and mutuality are richer, healthier, and more peaceful. And they are the ones surviving this pandemic the best.

Strong bonds of trust are helping Canada navigate this crisis; they are even more evident in other countries beating COVID-19 (like New Zealand or South Korea). But those bonds aren’t natural, or permanent; they must be nurtured and maintained. Some Canadian politicians are using Trump-like tactics (stoking division and sowing distrust) for short-term advantage. More deeply, the social cohesion of our communities has been damaged by decades of austerity and polarization. That also destroys trust, and undermines our collective ability to achieve things like defeating a terrible disease.

This pandemic has confirmed the real value of social trust and cohesion. Hopefully, as the restrictions are gradually lifted, we recommit to maintaining and strengthening those bonds, and build something even better once the pandemic ends.

Jim Stanford is Economist and Director of the Centre for Future Work. He divides his time between Sydney, Australia and Vancouver, Canada. Jim is one of Canada’s best-known economic commentators. He served for over 20 years as Economist and Director of Policy with Unifor, Canada’s largest private-sector trade union.