Sunday, August 11, 2019

Trust Me

Have you ever interacted with people who would feel embarrassed to admit that they watch television? I wonder what they would make of my unabashed disclosure of having binge-watched the critically-acclaimed television series Breaking Bad thrice! Chemistry was my favourite subject in school, which might partly explain my admiration for Bryan Cranston in the role of a cancer-stricken Chemistry teacher turned drug mastermind, nicknamed Heisenberg. Supported by his sidekick, former student Jesse Pinkman, and a superb cast of actors, Walter White discovered that he had the cold-eyed deftness for “cooking” methamphetamine (crystal meth), an illegal recreational drug.


With a handful of murders under his belt and, after outwitting more seasoned criminal minds, Walter White-Heisenberg convinced himself that he broke bad for the sake of his young family. In the penultimate series episode, he ended up in an icy log cabin as a fugitive, with the assistance of Ed, an extractor-disappearer, who had provided him with a new identity and the safe house. In one of the most poignant exchanges of the series, a despondent and ailing Walter White-Heisenberg asked if Ed would ensure that his family received the balance of his fortune, north of $9 million, in the event of his death. Replied Ed, “If I said yes, would you believe me?” Needless to say, he did not, and plotted an alternative arrangement centred on two of his past tormentors.

A close study of Walter White-Heisenberg’s preposterous and desperate request to Ed, an underworld character, illustrates the natural human inclination to trust others, often against our best judgment. Let us remember that, in a best-case scenario, trust is a very nebulous primordial instinct held in awe by psychologists, anthropologists, and others who study human nature.

Without mutual trust and cooperation, it is difficult to imagine how early human communities could have evolved into well-functioning and civilised societies. Since no one is an island, trust between two parties invites either party temporarily to give up control and rely on the competence and actions of the other party for a desired outcome. Statistically, the odds of both parties being satisfied or disappointed may vary anywhere from zero to one hundred per cent. As economic agents, in particular, trust is our most conspicuous calling card.

A good case study is the example of eBay, an online auction and shopping website. When the marketplace was launched in the mid-1990s, sceptics were quick to point out why it would fail. The general feeling was that “if one party attempts to sell a defective item, the buyer would simply send a cheque primed to bounce. Even with eBay’s money-back guarantee backed by law-enforcement regulations, the risk that the platform would collapse under the weight of counterfeits and distrust remained high. As it turned out, eBay was one of the few start-ups that survived the carnage of the dot-com bubble. Would it be naive to ascribe eBay’s surprising success to subscribers’ altruism or innate trustworthiness? On the other hand, could it be due to individuals’ desire to protect their reputation, or did eBay benefit from an environment that was predicated on the rule of law?

More broadly, a case could be made that a country with a relatively honest or ethical civil service and judiciary is infinitely more likely to prosper. By contrast, nations with corrupt institutions, weak law enforcement, low social trust, and uneven governance structures tend to stay poor and anarchic. Rampant skulduggery and lack of accountability are other hallmarks of venal and dysfunctional states. Clearly, there is no gainsaying the fact that economies thrive better in a transparent environment where reliability, predictability and security exist, and business confidence is high.

So, to these questions. First, are human beings inherently trustworthy or dishonest, and are we more likely to trust those with whom we share the same culture and values? Second, is there a correlation between poverty, scarcity, and untrustworthiness? Third, how much do peer reviews and legal agreements moderate business behaviour? Fourth, how effectively do spiritual and secular norms promote ethical practices? Lastly, what can be done to spread and entrench the benefits of a universal framework of good governance? Almost certainly, these and similar questions will continue to attract the attention of social scientists, game theorists and policymakers.

Plainly, the world of business could do with more trust-building measures, not less, since the future will always be uncertain. Though an intangible quality, trust represents an essential social capital and secret sauce of business success, by helping opposing parties manage expectations, transaction costs, and myriad contingencies.

All told, trust could be extremely fragile because, once lost, it can prove difficult to regain. And as a rule, if you encounter someone who plays fast and loose with the prefix “Trust me,” don’t recoil. Such a glib red flag could be harmless but, then again, would you have any reason to question the integrity of a bespectacled high school science teacher?

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Later!

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