The Economic Benefits of Trust
On the airport bus in Helsinki, a Finnish woman asked my wife, “What is the biggest difference between Europe and the U.S.?” There are lots of possible answers, but the most striking to me is the tremendous diminution of mutual trust in the U.S. over the past few decades. Why does this matter economically? Because a number of economists have shown recently that income levels and real growth depend upon trust—trust greases the wheels of exchange.
Perhaps those who are responsible for this diminution (the media, which gives space to even the goofiest statements if they are sufficiently provocative—“birthers,” anyone?) are one culprit. But anybody who cares about growth and well-being might consider thinking a while before yapping some trust-destroying opinion with an at best dubious factual basis. The economy will thank you.