It’s fair to say that trust is the basis of all transactions, personal, legal or commercial. Without trust it isn’t an exaggeration to say that the world would descend into chaos and anarchy. Cooperation requires trust in the people you are dealing with. Without trust commercial activity would grind to a halt as contracts get flouted and international relations would deteriorate with wars becoming more frequent. Whilst the world still chugs along nicely in the spirit of trust there are cracks appearing in a number of institutions that we previously held to be reliable.

1. The Erosion of Trust
It’s fair to say that trust is the basis of all transactions, personal, legal or commercial. Without trust it
isn’t an exaggeration to say that the world would descend into chaos and anarchy. Cooperation
requires trust in the people you are dealing with. Without trust commercial activity would grind to a
halt as contracts get flouted and international relations would deteriorate with wars becoming more
frequent. Whilst the world still chugs along nicely in the spirit of trust there are cracks appearing in a
number of institutions that we previously held to be reliable.
The closer we get to the US Presidential elections the dirtier the process is looking. It isn’t just that
the President of the United States is calling into question the very legitimacy of the elections, it is that
he is misusing his vast executive power to help undermine the election result itself. The results will be
contested. Both sides feel that they can only lose through massive manipulation on the other side.
Calling into question mail-in ballots which have been in use since the beginning of US elections,
undermining the postal system by destroying over seven hundred mail sorting machines to delay the
counting process and disregard votes selectively and instigating his supporters not to accept a loss as
legitimate are illegitimate tactics the President is resorting to and are damaging the very fabric of
American democracy which is based on the peaceful transfer of power.
Similarly, in the UK, the Conservative party is being accused of open cronyism, threatening to break
international law in its exit from the EU and sending mixed signals on the coronavirus- indicative of
the lack of a plan using any scientific thought. These are either the
root of or because of the breakdown in trust. The UK government is now accused of disregarding
norms they themselves have set, going back on promises and openly lying about the pandemic
situation. There is a sense of gross incompetence being covered up by mendacity and callous
disregard for the public- much the same as in the US. One can argue that this breakdown in trust
between the government and the governed has been long in coming; the current crises have just
brought them out for all to see.

2. There is also a breakdown in trust that has arisen from the disconnect between the financial markets
and the ‘main street’. This break first appeared during the financial crisis of 2008/9 and is happening
again now with the equity markets all but reclaiming their previous peaks
(the Nasdaq did actually set new highs briefly) despite employment and production still remaining
well below their previous levels. Like the Occupy Wall Street movement post-financial crisis, there is a
seething class resentment between those who have benefitted the most from state handouts and
those who haven’t. This clear undercurrent of societal discontent has been simmering and this
explains the relative popularity of US Senator Bernie Sanders who keeps reminding people of the 1%
versus the 99%. He has been successfully riding this wave from the 2016 presidential campaign. The
US is facing multiple crises of trust simultaneously and the grievances are boiling over into the streets.
The attempted marginalisation of the Black Lives Matter movement, the forces working against
democratic norms (mainly from the Republican party- in terms of disenfranchising voters, dismantling
the postal system to handicap the election process and so on) and the widening gulf between the
wealthy and the poor with the hollowing out of the middle class are tearing apart the fabric of trust in
American society.
The erosion of trust is being felt in the UK too with the acrimony surrounding the exit from the
European Union. The government is passing an Internal Markets Bill which is a breach of Article 4 of
the Withdrawal Agreement. The bill is a breach of international law, something which will undermine
the global network of agreements between sovereign states. This is going to contribute to the erosion
of trust in the government both from outside but also from inside. There are many Brexiteers who
have come to regret their decision which was anyway sold on promises of ‘GBP 350 million per week
being sent to the EU which could be better spent on the NHS’. Whilst the European continent is
working to erase borders as nationalist impediments to greater economic prosperity the island nation
has mislead its populace about the greater advantages of getting out of such a set-up.
We are at a critical juncture globally: much of the bounce back- which would have been perfectly
understandable had the pandemic been short and sharp, is being called into question by the lingering
effects of a second wave. The equity market sell-off following two Federal Reserve board members-
Richard Clarida and Loretta Mester, saying that the economy remained in ‘a deep hole’ with
joblessness and continuing weak demand, highlights the need for continued financial support for the
real economy. Whilst the US Fed QE programme has been buying USD 2 billion of assets per hour
since March to support the financial markets, the government is struggling to agree on the fiscal
budget required to fund more unemployment support. The Fed members have specifically highlighted
the need for more fiscal stimulus. This failure to act in times of desperation for millions of
unemployed will lead to a further erosion of trust in institutions.
Even the financial markets are having a crisis of trust. The near record prices of gold are a testimony
to that. Normally gold sees huge gains at a time of high inflation. But now, as in 2008/9 it has been
because of the fear of the after-effects of ultra-low rates and high liquidity. Inflation is- in fact, unable
to even reach the Fed target of 2%. High gold prices are a sign of low trust in the monetary policies of
the central banks. It is clearly saying that the experiment will fail and there will be a debasement of
the currency. They may have a point: where do the central banks go from here?
Countries may already be aware of the growth of ‘fake news’ which gets disseminated far faster and
with more sophistication than ever before in history. Ironically, at the height of the age of information
it’s actually misinformation that is causing a regression into a lack of trust. Individuals can doctor
photos, videos, create fake text and push it out into any social media site and start a viral chain of
falsehoods. This has led to the sharp rise in the QAnon conspiracy theory group which is snowballing
in the US- based as it is on the most ridiculous assertions it defies logic that educated adults would
buy into it. But governments are both the victims and authors of many cyber-sabotage operations. It’s
well known that Russia, China and Iran are interfering with the US elections with the aim of sowing
divisiveness. Similarly, across the world social media is both a rallying point (the Arab Spring for
example) and a scourge, but the danger is not so much the information it spreads but the
disinformation. This is yet another way there is a rising erosion of trust both nationally and

3. internationally. And it isn’t as if governments haven’t sought the cooperation of these social media
outlets to curb the menace- with limited, varying success.
Trust is in short supply at the moment. Vaccines are being doubted even as the pandemic is surging in
some parts where people are flouting social distancing norms. But just when global cooperation is
most required to address the key issues confronting us all there is a rise in behaviours that were kept
in check before. The solution has to come from the top even as self-interest, realpolitik, social
discontent, untrustworthy politicians, fake news and unresponsive policymakers are making that near
impossible.