The Power of Shame to Fix Low Trust

Randy Schumann Pay Your BillLongtime friend of TrustMatters Shaula, together with hubby Neil, ran across the photo you see on the right here while on the road in Montana. (Click here to see the web version if you’re reading in text).

It seems that one Randy Schumann may have an account in arrears at the local Gas Mart.  And the retailer in question has resorted to a time-honored tradition to enforce some social justice.

Ouch.

Let me suggest, in all seriousness, that we need more Tiger-Town justice, and less Sarbanes-Oxley types of solutions. 

Shame–for lack of a better word–can be good social policy.

Positive Uses of Shame in Creating Public Trustworthiness

The Tiger Town in Montana is hardly alone. 

* Think about the “perp walk,” used by cops and prosecutors quite consciously.  As Wikipedia puts it, “Perp walks are often done to politicians or businesspeople accused of white-collar crimes (whose reputations may be susceptible to damage by public spectacle).”

Rat* The use of the giant inflatable rat as a shaming device is a long-time tool of unions.  But it goes further; the rat is protected legally (I’m not kidding, see here) as a form of free speech.

* Let’s not forget about the (used to be, anyway) power of investigative journalism.  The notion of muck-raking in the US http://en.wikipedia.org/wiki/Muckraker ; the power that the Washington Post put behind Watergate, or the New York Times behind the publication of the Pentagon Papers.

* Local TV news shows delight in consumer protection episodes that go by names like the Wall of Shame, our version of the Puritans’ placing people in the stocks in the middle of town. Cops know it’s more effective to post photos of Johns than of prostitutes (so do town governments, which is why that doesn’t often happen). 

Shame Works by Enforcing Social Standards

It may seem obvious, but let’s take a moment to see why shame works.

Most people intuitively agree with Justice Brandeis that “sunlight is the best disinfectant.”  Transparency is a valuable social vehicle for increasing trustworthiness in our institutions.  Disclosure is a bedrock of legislative regulation—in pharmaceuticals, financial services, and environmental policy.  The idea is that organizations will not put out to the public things that they would prefer not be seen by the public. 

The most powerful thing about shame is that it works by enforcing social standards.  If the behavior that is exposed runs strongly counter to public instinct, then the power of shame is large.

If you are ashamed by something, it means you fear the judgment of the public.  To be ashamed, on a very personal level, means to feel the rejection of our peers.  It is a powerful effect, and serious medicine when administered at scale.

Shame Should be Part of the Response to Financial Scandals

The popular press is all over Washington to do something to prevent further abuses in the financial sector.  The pressure is building, because so far very little has been done.

Part of the problem is that “what should be done” has come to rhyme with massive, heavy-handed governmental regulation.  Worse yet, most of that regulation has to do a combination of prohibition (Glass-Steagall)  and massive efforts at compliance and disclosure.

The problem with disclosure alone is it rapidly degenerates into mountains of fine-print, while accomplishing nothing in terms of felt social obligation on the part of those writing it.

The problem with structural change alone (think Sarbanes-Oxley) is that it’s expensive, and the opportunity costs are even higher than the outlays.  Just think of the massive price we pay every day in airports because we haven’t figured out a socially acceptable way to keep terrorists from planes other than forcing granny in Dubuque to dump her over-sized tube of toothpaste when she boards a plane.

I’m far from alone in this.  Read the devastating critique by famed Madoff whistle-blower Harry Markopolis.  He suggests that what we do not need is the routinized, predictable box-checking approach to compliance.  Instead, we need randomized, aggressive sampling, followed by publicity. 

Exactly. Unexpected audits, followed by the application of shame.  Bring on the judgment of the people who own the society, who are the ultimate source of the approval of whatever goes on in our society. 

Enough with laws and regs; up with enforcement and shame.

And Randy—about that account.  The Rat is next.