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Yes Trust is Down – But Trust in What?

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New headlines daily grace the front pages (or screens) of our news outlets that make us question just how far our trust in (fill in the blank) has fallen. Whether it’s politicians or social empires like Facebook, it seems that as individuals we are now in a constant state of “well who shouldn’t I trust now?”

In many ways it’s very true, but it begs an even more important question – if trust is so far down today, what does that really mean?

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You can’t throw a brick into the Googlenets these days without hitting some survey that bemoans the current low state of trust in society. And while there’s a lot of truth to those surveys, there’s also a lot of uncritical thinking and sloppy theorizing.

There are also some powerful ways in which trust has actually increased in recent times, and even more in which trust has stayed broadly the same.

Some Basic Trust Definitions

Much writing on trust neglects to make two simple distinctions. The first is that between trusting and being trusted; both are required for trust, and they are quite distinct. Trust requires a trustor and a trustee – they are different, and asymmetrical. One requires taking a risk, the other requires, broadly speaking, a moral virtuousness. “Trust,” properly speaking, is neither one of those things: it is the result of an interaction between the two of them.

The second distinction is between personal and institutional trust. Personal trust is by far the stronger of the two. You may trust Google to find a babysitter to interview, but you don’t trust Google itself to babysit your infant. And you’re a lot more likely to put your life on the line for your children than for your Coke/Apple/favorite brand. (A notable exception is national patriotism).

Most of the surveys that decry the decline in trust are talking about institutional trust. And it’s true: our “trust” in many, perhaps most, of our political institutions has declined. Ditto for most professions, the police, banks, retail stores, and established religion.

And yet…

If Trust is So Far Down, How Come—

  • you entered your credit card number online last week – at least once – from your mobile;
  • some of you use auto-complete on your mobile to fill in forms, perhaps even including your credit card number;
  • you share so much private information on Facebook (even after all the recent news);
  • you use Lyft, Airbnb, or another sharing economy app;
  • you paid your property taxes online;
  • you may have paid for Amazon to deliver via FedEx a camera that shows your front door.

These are all small examples of how the world has become far more linked. Many of us wouldn’t have considered doing these things ten years ago. These are small counter-examples of increased institutional trust. And, they are examples of trusting, the propensity to trust; at the same time, they suggest that we assign some pretty high levels of trustworthiness to other actors.

At the same time, there are many examples of both personal and institutional trust that have remained largely the same, without much fanfare. For example, you probably still:

  • Ask your neighbor to hold your mail for a few days
  • Fly on planes
  • Don’t look right or left when the light turns green (though you should)
  • Drink the coffee / eat the food at nearly every restaurant in the world without thinking
  • Ask a stranger at the beach to watch your stuff for a minute while you go to the bathroom.

In fact, an enormous amount of daily life consists of little examples of trust: mostly social and personal, but also institutional. Don’t let the headlines make you forget it.

Where Trust Really Is Down

That said, trust really is down in a few areas, and it’s important to be clear about just where.

First, there are indeed some ways in which people are less inclined to trust institutions than we used to be. But even here, read with a grain of salt. When people say they don’t trust Target (for example), they often mean something like “I don’t trust Target’s IT systems to ensure that my credit card doesn’t get compromised.”

Note this is an issue that didn’t even exist a decade ago. Also, it’s an issue affecting pretty much any large organization involved in financing. Also, and most important, check how many people stopped shopping at Target because of concerns about credit cards.

Saying “trust is down” without specifying “trust to do what?” is akin to a non sequitur. You might as well say “love is down” without grounding the statement in divorce rates, dating sites or something else concrete.

The most important way in which trust really is down is in what Eric Uslaner calls generalized trust. As measured by the General Social Survey for 50-some years, it basically asks, “By and large, do you think people mean well, or can’t you be too careful?” In other words, it is a generalized propensity to trust strangers.

On this measure, there is indeed a very gradual, but nonetheless real, decline over the years. High levels of propensity to trust have been linked to education and optimism. Low levels of propensity to trust have been linked to pessimism and low exposure to out-groups.  It is a true, important, and sad, statement that trust in this sense has indeed declined in the US, and in most western world countries.

And that is indeed something to be concerned about, far more than whether “trust” in the financial industry is down x points on a survey last quarter.

8 Ways to Make People Believe What You Tell Them

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How do you get people to believe you?

It sounds like a simple enough problem. In business, most of us – implicitly, if not explicitly – have one answer (or at most, two). That answer is to prove it with data; and to look polished and confident while doing it.

Particularly in complex, B2B services businesses, this is the knee-jerk response. It gets applied to sales pitches, and to handling sales objections. Consultants who advise you on giving presentations will say the same thing: marshal the data, and present it convincingly. It is the approach taken to journalistic writing (at least in J-schools). It is the approach to writing legal briefs.

In consumer marketing, we can be more skeptical. Ah, those wacky consumers, they can be conned by slick TV ads and Instagram campaigns.

But in the ‘real,’ ‘hard’ world of B2B services – not so much. Surely you can’t con sophisticated audiences like the buyers of legal services, the clients of accounting firms, or the CXOs who buy from systems and strategy firms. Surely they abide by the iron-bound rules of logic and evidence. After all, they insist on the point themselves. Surely the only way to get them to believe what we tell them is to provide them with data, delivered with practiced panache.

Isn’t it?

No. And here’s why.

Credibility

Credibility is one piece of the bedrock of trust. If people doubt what you say, all else is called into doubt, including competence and good intentions. If others don’t believe what you tell them, they won’t take your advice, they won’t buy from you, they won’t speak well of you, they won’t refer you on to others, and they will generally make it harder for you to deal with them.

Being believed is pretty important stuff. The most obvious way to be believed, most people would say, is to be right about what you’re saying. Unfortunately, being right and a dollar will get you a  cup of coffee.  First, people have to be willing to hear you. And no one likes a wise guy show-off – if all you’ve got is a right answer, you’ve not got much.

While each of these may sound simple, there are eight distinct things you can do to improve the odds that people believe what you say.  Are you firing on all eight cylinders?

1. Tell the truth. This is the obvious first point, of course – but it’s amazing how the concept gets watered down. For starters, telling the truth is not the same as just not lying. It requires saying something; you can’t tell the truth if you don’t speak it. (A quick test: ask yourself if anyone believes the opposite of your claim. For example, “we are extremely high quality.” Does anyone advertise their so-so, or their low quality? If not, ditch the pitch).

2. Tell the whole truth. Don’t be cutesey and technical. Don’t allow people to draw erroneous conclusions based on what you left out. By telling the whole truth, you show people that you have nothing to hide. (Most politicians continually flunk this point).

3. Don’t over-context the truth. The most believable way to say something is to be direct about it. Don’t muddy the issue with adjectives, excuses, mitigating circumstances, your preferred spin, and the like. We believe people who state the facts, and let us uncover the context for ourselves.

4. Freely confess ignorance. If someone asks you a question you don’t know the answer to, say, “I don’t know.” It’s one of the most credible things you can say. After all, technical knowledge can always be looked up; personal courage and integrity are in far shorter supply.

5. First, listen. Nothing makes people pay attention to you more than your having paid attention to them first. They will also be more generous in their interpretation of what you say, because you have shown them the grace and respect of carefully listening to them first. Reciprocity is big with human beings.

6. It’s not the words, it’s the intent. You could say, in a monotone voice, “I really care about the work you folks are doing here.” And you would be doubted. Or, you could listen, animatedly, leaning in, raising your eyebrows and bestowing the gift of your attention, saying nothing more than, “wow.” And people would believe that you care.

7. Use commonsense anchors. Most of us in business rely on cognitive tools: data, deductive logic, and references. They are not nearly as persuasive as we think. Focus instead more on metaphors, analogies, shared experiences, stories, song lyrics, movies, famous quotations. People are more inclined to believe something if it’s familiar, if it fits, or makes sense, within their world view.

8. Use the language of the other person. If they say “customer,” don’t you say “client.” And vice versa. If they don’t swear, don’t you dare. If they speak quietly one on one, adopt their style. That way, when you say something, they will not be distracted by your out-of-ordinary approach, and they will intuitively respect that you hear and understand them.

What’s not on this list?  Several things, actually. Deductive logic. Powerpoint. Cool graphics. Spreadsheet backup. Testimonials and references. Qualifications and credentials.

It’s not that these factors aren’t important; they are. But they are frequently used as blunt instruments to qualify or reject. We’d all prefer to be rejected or disbelieved “for cause,” rather than for some feeling. And so we come up with rational reasons for saying no, and justifying yes.  But the decision itself to believe you is far more likely driven by the more emotive factors listed above.

Now – this blogpost was written about B2B services businesses. Just for kicks, try going back and reading it as being about congress and politicians. Does that shed any light on trust in government?

 

Interview with Trust Expert Eric Uslaner

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ericuslanerEric Uslaner is perhaps the world’s leading authority on social trust. He was recently much in the news, as he is every year, with the annual publication of the General Social Survey on trust.  Here are some headlines from our talk this past fall.

Charlie Green: Thanks very much for speaking with me. We last talked back in early 2010. Now, most of my readers are accustomed to talking about trust in the sense of trustworthiness, like can I trust banks, or how can I get people to see me as trustworthy. Your approach is different. Let’s clarify that first.

Eric Uslaner: That’s right, it is different. You’re talking about people’s perceptions of other people’s trustworthiness. There are two parts to that: part one is it’s a specific person or institution about which you’re having the opinion: the other is that we view trustworthiness as the active characteristic.

I focus differently. I focus not on the perceived trustworthiness of specific individuals (or companies), but on the propensity of individuals to trust strangers, or people in general. It’s more about a worldview than about direct experience. And the GSS, which has included these key trust questions since the  late 60s, consistently asks that kind of question: “Do people generally mean well,” that kind of thing.

CG: What are the differences in looking at trust that way, as opposed to trust in banking, or JPMorgan Chase, or international banking?

EU: There are two big differences, and they’re interrelated. First, social trust – what I’m talking – about  changes far more slowly, over a longer period of time. Nowadays a third of Americans say that people generally can be trusted; 20 years ago that number was half. And in many ways it’s not because of a decline in trustworthiness – crime is down, for example.  But what’s changed is people’s propensity to trust strangers.

The second difference is that social trust, as I’m talking about it, is what we need to drive political societies. You’re not going to get problem-solving done in a pluralistic society by sticking with your own kind. Generalized social trust is what drives our institutions – not whether trust in banking is up or down last month.  And on that measure, we’re in deep yogurt.

CG: And how does social trust play out against these other forms of trust?

EU:  Most of the time trust in institutions (except for the military) tends to go up or down somewhat together. Much of it’s driven by the economy; when things are good, we generally trust each other. An example: Trust in government rose under Reagan, because the economy was doing well.  But trust in people declined over that same time, largely because inequality drove people apart.

CG: So, institutional trust has a shorter time-span than generalized trust?

EU: Yes. Institutional trust is the response to Ed Koch’s old question, “How’m I doing?” You look at the economics of the moment; that’s why presidents always try to have the economy’s wind at their backs going into an election, because people’s political trust is short-term.

But social trust, that’s more a matter of long-term questions. Will life be better for my children?  That doesn’t depend on the Fed, or the stock market.

CG: Say more about that? Has social trust got to do with empathy?

EU: Yes, but it’s much more than just empathy.  You have to have a willingness to interact with people, and to see the world from different perspectives. It’s not that you have to change your mind, it’s just that you’ve got to concede that someone else’s reality may have as much validity as your own.  And in the US, the Congress has come to reflect the same sort of denial of legitimacy that has characterized the Arab-Israeli divide for so long – a denial that the other side has any claim to decency.

CG: Let’s get basic. Is social trust valuable? Do we want it? Do we care?

EU:  Absolutely. It’s what allows social cohesion, national identity, a sense of purpose and mission in a society. You only solve social problems if you feel you own them. Once people start thinking more in terms of their narrow group and less about those “others,” it’s an easy flip from “they’re different” to “they’re wrong.”

It’s not hard to trust my wife, the people in my church, or those I meet at my grocery store or my school. The question is, can I trust those who are different from me, and whose values I may not share?  And by the way, the less those people shop at my supermarket or go to my kids’ schools, the less likely I am to trust them.

CG: I was going to ask – what drives this kind of social trust? Or is that too vague a question?

EU: It’s not too vague, but the answer requires two levels.   First, people who have a high propensity toward social trust are a) optimistic about the future, and b) feel they have control over their lives. And people who have a low propensity toward social trust are the reverse – they believe the world is getting worse, and that it’s largely beyond their control (if not controlled by those “others”).

CG: So – optimism and empowerment.

EU: Yes – and now for the punch line, the second order drivers of those two.  A propensity toward social trust is influenced by a) education, and b) economic inequality.  The less educated people are, and the greater the income dispersion in society, the lower will be the social trust.

CG: That makes some sense.

EU: It makes more than sense. Denmark is one of the highest-trust countries in the world, and also has extremely high education rates, and very low rates of economic inequality. Equally important, economic mobility is far greater in Scandinavia (and even in the UK, these days), than it is in the States.

CG: Why do education and income disparity drive social trust?

EU: Education teaches people that their worldview is not the only worldview. It’s the touchstone of tolerance and appreciation. And economic disparity – at least past some tipping point, indicated by the ability of groups to migrate upward economically – is an indicator of hope, or of hopelessness. Also, the further apart we are economically, the less it appears to all that our fates are linked.

CG: So where do we stand these days in the US, and in other countries?

EU: We have increasingly solidified patterns of racial and economic segregation of housing. Social mobility is now behind that of dozens of other countries.

In the US, the flight of the black middle class has left the double-whammy of economic and racial segregation, with no powerful social institutions to get people out. Segregated communities are dysfunctional across a plethora of indicators – both groups tend to identify more with in-groups, and less with the society at large.

CG: What can business do?

EU: Get involved in the larger society. It’s unfortunate that most business rhetoric has tended to work against any sustained effort to fight inequality. Historically, go look at what Coca Cola did in Atlanta, and what Henry Ford did in Detroit. Coke knew that good people wouldn’t want to move to a segregated city, so they became active in integration of schools. Henry Ford famously paid his people enough to be able to buy cars. If Ford had not been such a rabid anti-Semite, he might have had more influence on public policy on inequality.

The more companies pursue their own interest, the more difficult it is for them to pursue bonds with their own community, which drives inequality even further. The prevailing ideology of business these days is at odds with the creation of a society that nurtures business; it’s very short-sighted thinking.

In the US, I’m reminded of an old CBC comedy skit, The Royal Air Farce, who said, “Things are going to get a whole lot worse before they get bad.”

CG: And on that light note, we’ll have to leave it.  Please come back and chat some more, Ric, this has been extremely enlightening.

Why Trust In Our Institutions Is So Low

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Heads? Or Tails?The headlines, surveys and news stories are everywhere. Trust is down – in world leaders, in legislatures, in financial institutions, doctors, even religious leaders and educators. It is very, very easy to draw one conclusion from all this – that we have a crisis of trustworthiness.

Not so fast. That is a half-truth.

Trust is a Two-Sided Coin

One of the tragedies of discussions about trust is that the very language we use is flawed. Consider this simple, self-evident truth:

Trust is a non-symmetrical interaction between a trustor and a trustee. One trusts, one is trusted. One does the trusting, the other is the one who is trusted. To trust someone is different from being trusted by someone.

It would seem obvious that if there is a failure in trust, we should look at both sides to determine where the problem lies: is it in paranoid trustors, or in untrustworthy trustees?

And yet – the presumption we all make when reading those news stories is always about the latter – “It’s those lying ___’s, you can’t trust any of them, none of them are trustworthy.”

But what about the other side of the trust relationship?  What’s up with trusting?

The Problem of Low Propensity to Trust

I used to hitch-hike. Who does that anymore? I’m sure the proportion of people who lock their doors habitually has gone up. The proportion of people who buy guns for self-protection has gone up, just as crime has gone down. All these are daily indicators of a decline in propensity to trust.

At a business level, consider the enormous growth in lawyers. Consider the increasing length of contracts, for the most trivial transactions. Consider the ease with which people resort to civil lawsuits. Ask yourself what happened to the handshake deal?

At the national political level, I’m seeing articles about how President Obama might be lying to the world about chemical warfare in Syria. Let’s review the bidding, in reverse chronological order:

  • George W. Bush told us there were weapons of mass destruction in Iraq
  • Bill Clinton said he didn’t have sex with “that woman”
  • George H.W. Bush said, “Read my lips – no new taxes”
  • Ronald Reagan said, “Trees cause more pollution than cars”
  • Jimmy Carter said he had left Georgia with a budget surplus – far from true
  • Gerry Ford lied about discussing East Timor with Suharto; not to mention Nixon’s pardon
  • And Nixon? Well, enough said
  • Turns out even George Washington’s cherry tree “I cannot tell a lie” story is itself apocryphal.

And the press? Well, what about the entire wink-wink/nod-nod approach to Presidential sexual liaisons back in the day of John F. Kennedy? That level of tolerance in the fourth estate is unimaginable today.

My point is not that society has become more trustworthy rather than less – my point is that people have, in many ways, simply become less willing to trust.

Low Trust: A Chicken and Egg Problem

Consider in your own life the truth of this quote: “One of the best ways to make someone trustworthy is to trust them.”  Or, “Whether you think good or ill of someone – you’ll be right.”

The principle of reciprocity underlies a great deal of human relations. We return good for good and evil for evil. The simple nature of etiquette is a way of ensuring that we practice reciprocity in all our daily doings.

So it’s only fair to ask: when there’s a crisis of trust – how much of it is due to lower trustworthiness?  And how much of it is due to our reduced propensity to trust?

You don’t have to be a Pollyanna about trustworthiness to see this. All that’s required is we stop being crybabies repeating endlessly, “Well Johnny did it to me first!”  Get off the paranoid pity pot.

At its extreme, a low propensity to trust descends into paranoia, resentment, low expectations, cynicism, tribal clannish behavior, lower levels of generosity and charity, and a “raise the gates” mentality. It’s not going too far to say that the roots of civic morality lie in the willingness to trust others.

What Can I Do?

Of course we can all do a better job of being more trustworthy. But that’s almost a passive activity, waiting to build up a track record that others can see. Interestingly, it’s a lot easier to practice trusting.  Here are just a few ideas to practice on in your daily life:

  • Smile at someone on the street, and don’t look away immediately
  • Ask someone at the coffee shop to watch your computer while you go to the restroom
  • Think what tool you have that a neighbor might benefit from using, and lend it to them
  • Join some form of the sharing economy
  • Practice not locking your car so often (not everywhere, I know)
  • Ask somebody for advice on something – then immediately take it
  • Ask a stranger to hold your briefcase while you tie your shoes
  • Ask a stranger to take a photo of you and a friend while on a trip

What else? What are some actions you can take to help increase the level of trust in the world? Please add your suggestions to the comments below.

After all, it’s better to light a candle than to curse the darkness.

Boston Trust

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Last week, trust was destroyed. Then it was rebuilt.

At least, that’s the party line in all the media and the social buzz channels. But it’s not the whole story. The whole story is, unfortunately, not so good.

Particularized Trust and Generalized Trust

Dr. Eric Uslaner, arguably the world’s leading academic on the subject of trust, makes a key distinction between two types of trust – particularized and general. Particularized trust is experience-based trust in specific things – particular people, or institutions.

Particularized trust is what happens when we experience people to be similar to us. When a runner stopped to aid a race spectator, for example, or when the citizens of Watertown recognized that the police were on their side. This kind of trust is what we hear talked about most in the press. It’s what we mean when we say “trust takes time.” (Which it doesn’t, by the way; but that’s another story).

The other kind of trust – what Uslaner calls generalized trust, or moralistic trust – is the really powerful kind. Uslaner explains:

[Moralistic] trust doesn’t depend upon evidence or experience. It is the belief that we can trust people whom we don’t know and who may be different from ourselves. This is the sort of trust that helps societies solve key problems. It is more based upon our belief that we ought to trust people—the Golden Rule—than our experiences with people we know well and who may look and think like ourselves.

This kind of trust changes only glacially from experience. It is not “destroyed in an instant,” as particularized trust can be destroyed by an instance of betrayal. Generalized trust is gotten from our parents, even our grandparents; it’s handed down with mother’s milk.

When someone says, “You’re way too trusting, you know,” that’s the kind of generalized trust you’re not likely to change just because you get burned once.

The Powers of Trust

For all the print space given particularized trust (e.g. trust in banking is down, trust in government is down, Bostonians are wicked trustworthy), high levels of particularized trust are by no means all positive. The worse experiences people have, the more they are tempted to withdraw into tribal groups, where they experience particularized trust – trust in those who are like them, in shared opposition to those who are not. “We” are not going to let “them” stop us.  Boston Strong is a tribal cry in this sense.

But it is generalized trust that makes for powerful societies, efficient economies, flourishing nations – not the tribal bonds of particularized trust. Uslaner:

…particularized trust as a substitute for generalized trust is a negative for a group.  If a group limits its trust, it results in closed minds, cultures, and economies.

And now we can see the sad trade-off in Boston. The story wasn’t Trust Lost and then Trust Regained. It was a slight, but real, loss in moralistic, generalized trust – with a swap-out for particularized trust. Net net, it’s a loss for society.

For all the tribal celebrations and tales of individual courage and grace, the impact of a dent on generalized trust is negative. It will most likely result in pressure against immigration, not in favor of it. It will most likely result in closed borders, not open; more surveillance, not less; more suspicion, not less; and more enmity of “us” against “them.”

Building Generalized Trust

In Uslaner’s latest book – Segregation and Mistrust – he enlists massive amounts of data to show that diversity doesn’t help or hurt generalized trust – it is integration that helps it, and segregation that hurts it. And our society is becoming more, not less, segregated – in housing, in race, in income, in social groups.

The two largest drivers for greater generalized trust, he notes, are high levels of education and low levels of income inequality. It’s not looking good for either these days. Instead, we’re seeing higher levels of the wrong kind of trust – the tribal bonding of like people, trusting each other in a joint mission to make sure that the “others” don’t win.

Uslaner points out that high-generalized trusting people broadly believe two things: that the world is generally getting better, and that they have control over their own lives.

By contrast, low-generalized trusting people believe the world is going to hell in a handbasket, and it’s “those others” who are conspiring to keep “us” down. It’s a society dominated by that kind of thinking that, in extremis, produces nihilistic, desperate bombers.

Talk of “Winning” against “Others” is not a good omen for the important kind of trust. The legacy of the Boston bombings will be more negative than positive.

 

The Ugly Truth Behind Goldman Director’s Resignation

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A few hours ago, the New York Times published a blistering Op Ed by Greg Smith, a Goldman Sachs director, titled Why I Am Leaving Goldman Sachs. It is getting remarkable coverage in the twittersphere, blogosphere and conventional press.

And no wonder! It is a scathing indictment by a privileged insider of one of the great Wall Street firms. It’s Matt Taibbi’s Vampire Squid story all over again – but this time from the Inner Circle.

I’m going to let everyone else revel in the spectacle of moral outrage, and focus on one statement Mr. Smith makes:

If clients don’t trust you they will eventually stop doing business with you. It doesn’t matter how smart you are.

This is true: but occasionally clients will need a little help from their friends.

Trust or Money?

The public dialogue about trust in business is polarized. One side says, “Trustworthy behavior ultimately pays off.” The other side says, “Get real, only suckers believe that.”

I’m a believer in free markets. I also believe free markets are relatively rare. Here’s how trust plays out in them.

Personal Trust

The market for trust at the most basic level – interpersonal relationships – is very free. If you behave in an untrustworthy manner, you will lose the trust of others, quickly and surely. If you betray a co-worker or a boss, you’ll get your come-uppance quickly. Ditto for one-on-one retail businesses.

It is also at that level – the deeply personal – that trust is strongest. The difficulty always comes in scaling trust.

Scaling Trust

The easiest form of social trust is tribal, clan-based. Think of the Mafia, think Chinese family culture, think sports fans. The way to operate a really successful clan is through culture. Read Francis Fukuyama on national cultures of trust.

Now read Epicurean Dealmaker on Goldman Sachs’ culture, The Fish Stinks from the Head, written three years ago. This movie has been playing for some time now.

When corporations achieve great internal trust through strong culture, they can accomplish great things. They can also accomplish terrible things.

The market for trust at the corporate level is far, far from a free market. The power of tribal trust alone is enough to crush dissenting individuals. Whistle-blowers rarely fare well; and the stronger the culture, the worse they are treated.

We hear too often the debate about whether trust is profitable or not. In the long run, across enough organizations, the answer is yes.  (See Trust Across America for some data to this effect).

The question is: is there a linkage in the shorter term, in fewer interactions? If Greg Smith is right that customers eventually leave untrustworthy companies – how come it takes them so long?

The Wheels of Justice Grind Exceeding Slow

There is no iron-clad “law” of social justice that says high trust will yield high returns, or that good will be returned for good, etc. Despite the best efforts of trust proponents and new-order-capitalism theorists, the trustworthy behavior of one individual or one company is not guaranteed to be rewarded in this lifetime, this market, this quarter.

Worse yet, downright villainous bad behavior can be rewarded very, very handsomely.  Greg Smith quit Goldman today after 12 years; but those 12 years have been astronomically profitable for Goldman. Markets these days are far from free and trust doesn’t pay off quickly.

So let’s not be naïve about the inherent power of trust to vanquish all evil.

The challenge for all of us is to get above tribal trust and climb to a higher level of societal trust.

Can the GOP stop its circular firing squad? Can the US Congress ever serve its broader constituency? Can organizations like Goldman re-learn how to transfer internal trust to external clients? Can salespeople learn to trust, and entrust, their customers? Can the Chamber of Commerce stop fighting regulators?

Goldman can’t be relied on to fix itself. It has failed to do so. The question is not how evil they are or how many more public resignations it will take. It is how long will society wait for corrections to happen?

The Invisible Hand is not all-seeing when it comes to trust. In fact, it can be downright blind. Occasionally, clients need a little help.

What is To Be Done?

You can find your own battle in this framing of the war. Ask yourself: whom do you trust? Who’s your clan? Who do you throw in with?

Then ask yourself: whom am I fighting? Who is the enemy? Who don’t I trust? And challenge yourself to take it to another level.

Don’t be a voyeur watching the Goldman saga turned into TMZ gossip television.  Use it. Do something about it. Up the stakes.

Trust one-on-one is easy. Even tribes and corporate culture aren’t all that hard. The challenge is to remember that we no longer live in a tribal world.

The Ugly Truth in the Goldman story is that it’s not self-correcting. This is not a Greek tragedy with the gods pulling the strings. It’s not even a Hollywood comedy, with script-writers pulling us to a natural resolution.

Social trust is a choice, not an inevitable law of nature. And this is not a dress rehearsal.

How Does Wealth Inequality Affect Trust?

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An old Frank Zappa lyric went, “What’s the ugliest part of your body? I think it’s your mind.”

Similarly, we might ask, “What’s the lowest-trust place in (corporate) America? I think it’s Wall Street.”

Which brings us to the latest issue of Harvard Business School Working Knowledge.

I find HBSWK a pleasure to read—they identify the coolest topics for study. The treatment of those topics—well, that can be quirky.

One fascinating current item is “The Dynamic Interplay of Inequality and Trust: An Experimental Study,” by Ben Greiner, Axel Ockenfels, and Peter Werner.

Here’s the (partial) synopsis:

We study the interplay of inequality and trust in a dynamic game, where trust increases efficiency and thus allows higher growth of the experimental economy in the future. We find that trust is initially high in a treatment starting with equal endowments, but decreases over time. In a treatment with unequal endowments, trust is initially lower yet remains relatively stable.

Cool! An egalitarian society shows a greater decay of trust than one with initially disparate endowments? The implications for political theory, economic policy and social dynamics are juicy, to say the least.

The “dynamic game” the authors use to add some empirical juice to theoretical discussions involves a trustor and a trustee. In a series of interactions, the trustor offers a sum of money to the trustee, which sum is then multiplied by the game; the trustee then returns a certain amount to the trustor.

As the authors say, “The amount sent can be interpreted as a measure of trust, while the amount returned measures the degree of trustworthiness.”

Then ensues 20 pages of analytical bludgeoning. Did you know about the Wilcoxon Matched Pairs Signed Ranks (WMPSR) test? Me neither. Did you know the lowest Gini factor ever measured was in Bulgaria in 1968?

I am numbed and humbled; you could say I’m numbled.

And sure enough, the graphs show a decrease in trust if all players start equally, vs. a low-trust start with sustained low trust if players begin with inequality.

But wait a minute! What happened to Frank Zappa?

The appendix lists the instructions given to the players in this game. Here they are:

Welcome! You can earn money in this experiment. How much money you earn depends on your decisions and the decisions of the other participants…it is guaranteed that you do not ineract with the same participant in two subsequent rounds…The identity of the participant you are interacting with is secret, and no other participant will be informed about your identity.

OK, so I want to measure the role of trust and inequality in an economy. Where should I go?

Los Angeles? Omaha? Detroit?

Nah. Let’s go somewhere people aren’t distracted by entertainment, or meat-packing, or cars.

Let’s go where people interact solely around money. Anonymously. And never with the same person twice. (Blindfolds and knives might make it even more interesting).

And let’s call that a trust experiment.

If this game had a geographical correlate, it would have to be the Land of Gekko, where Fear and Greed are baseline hiring criteria—Wall Street.

Not exactly where I would have suggested one go searching for insights about trust.

What’s the ugliest part of that trust? I think it’s the game.