Trust

Well, I'm in China no longer. I flew through Cambodia and am now visiting family in the UK. It's fitting, then, that I just caught up with Stumbling and Mumbling.

I think it's important to look at the effects of inequality beyond the obvious harm to the less well off because not only does this help us understand society but, additionally, any costs felt by everyone could help to clarify and support opposition to the current level of inequality. There are many Econ 101 arguments in favor of some inequality, like incentives or differing marginal productivities, that people hold up as irrefutable points in support. Moreover, it's hard to convince someone espousing these arguments that any given level of inequality is bad because they can always reply that larger inequality creates greater incentives, or that its unfair to not pay people based on their contributions (since that's what markets do, right Mr. Economist?), dragging the discussion into the grey areas of moral choice. Costs felt by everyone, especially those for which the cost increases with inequality, provide a stepping stone out of morality and an irrefutable point against inequality.

Chris Dillow:

"... We have good evidence that increasing inequality leads to lower trust. As Mitchell Brown and Eric Uslaner write (pdf):

Declines in trust stem from economic inequality. As economic inequality increases, people feel that they have less in common with others, and therefore trust less.

The idea here is simple. As Alberto Alesina and Eliana La Ferrara say, “individuals trust those more similar to themselves”. In unequal societies, however, rulers and experts are less similar to laymen, and so are less trusted*. This might be magnified by the outgroup homogeneity bias. Readers of this blog might be well aware of the big differences between, say, Ed Miliband and David Cameron, but to someone living in poverty in Hull they are both posh Oxford types.

As we’re seeing, this distrust has important effects upon political culture. For one thing, as Gillian says, it leads to a groupthink in which every tribe builds its own reality. Also, it erodes representative democracy. One reason why we had a referendum on the EU was that many voters didn’t trust MPs to take the decision for them. There’s a third thing, pointed out by James Coleman:

There seems to be extensive evidence that the rise of a charismatic leader…is likely to occur in a period when trust or legitimacy has been extensively withdrawn from existing social institutions. (Foundations of Social Theory p196) 

The popularity of Nigel Farage [and Donald Trump] fits this pattern: we should worry that the gap left by his retirement will be filled by someone even worse...."