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The Free Market Is the Source of Trust

October 17, 2019

October 17, 2019
By Trevor Bratton

Trust runs deep into the fabric of the American experiment—it’s an imperative element in making our country work. John Locke wrote of the importance of trust within a community, and that trust that links citizen to citizen is the same trust that exists today in interactions at the grocery checkout counter, the doctor’s office, and the cubicle at work.

This link, however, is coming undone. A recent study by the Pew Research Center found that the overwhelming majority of Americans between the ages of 18 and 29 (73%) believe people only to be self-serving, while 71% believe most people would defraud them if given the chance. It should come as no surprise, then, when 60% say most people simply can’t be trusted. On the other hand, of those 65 years and older, these percentages vary significantly: 48%, 39%, and 29%, respectively. These discrepancies matter—and they constitute a worrying trend for the direction of the country.

So where should we look to boost the waning trust we have in each other? The answer is the free market.

There is clear evidence that as trust in a society declines, a desire for greater government intervention fills the gap. An analysis published in the Quarterly Journal of Economics found a strong link between societies of low trust and high government regulation. Economist Alex Tabarrok coined this shift to higher regulation stemming from low social trust as the beginning of a “distrust trap” in which further forms of regulation tamp down the potential of its citizens, resulting in less economic prosperity, leading to more distrust and more regulation. Many Americans reveal this truth when they step into the voting booth: If you can’t trust your neighbor, your pastor, and the local cosmetologist, then government intervention must be the answer!

Then of course, there are the polls that show the growing appeal of socialism and socialist policies, especially among young people. A Harris poll from earlier this year found that about 73% of Millennials and Generation Z believe the government should provide universal healthcare, and about 67% say the government should provide tuition-free college. And, believe it or not, just about half say they would prefer living in a socialist country (even though, as discussed on this blog, many young Americans don’t really understand what “socialism” is).

Distrust of fellow citizens blinds us into believing that government is the lesser of two evils. But if it is true that humankind is selfish and corrupt, then the bureaucrat is just as corrupt and self-interested as the businessman. Only, the businessman’s power is harbored by the rule of law and profits, whereas the bureaucrat is left without restraint. The politician’s profit are votes. Who, then, is most dangerous?

The free market is, instead, the source of trust. Who would have thought 60 years ago that today we would be willing to hop into the backseat of a person’s personal car to drive us to a destination 20 miles away? Or who would have thought 60 years ago that today we would be willing to purchase a product directly from a relatively faceless seller? Or who would have thought millions of people would be willing to rest their head in a home owned by a person whom they know little? Because of the myriad of incentives (Uber’s star ratings), consumer protections (eBay’s member-to-member contact policy), and vetting processes (Airbnb’s background checks), access to solutions that make consumers’ lives easier and allow for the attainment of additional income make the world today—transaction by transaction—considerably safer than before.

Despite all this, many Americans say that free markets are more a rusty method of exploitation than a means for prosperity—and they certainly don’t see how free markets are a strong contributor to the feelings of trust that do exist in our daily lives. These Americans focus so much on how the pie is sliced that we forget we must first have a pie. When people ask us “Why do you believe in free markets?”, our answer should be that we believe in potential and dignity and trust others to realize theirs. The question we should ask ourselves is: How are we contributing to it?

Trevor Bratton is a Koch Associate and Policy Analyst Fellow at the Goldwater Institute.



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