The price of mistrust

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The price of mistrust

Social mistrust in Korean society is at a serious level. According to an online survey of 2,000 Korean females and males aged 19 to 59, only 21 percent felt they could trust one another. Confidence in the government was even more dismal, at 8 percent.

Lack of trust can water down a sense of community and augment individualism and competitiveness, leading to unhappiness and a lower quality of life. In the scale of measuring happiness among the 34 members of the Organization for Economic Cooperation and Development, Korea ranked 27th. The happiness of Koreans is low against the economic rank due to a deficiency in trust.

Mistrust does not just cause problems at a social level but can weigh down the economy, hindering it from advancing towards a higher level. Political scientist Francis Fukuyama, in his book “Trust,” claimed that “one of the most important lessons we can learn from an examination of economic life is that a nation’s well-being, as well as its ability to compete, is conditioned by a single, pervasive cultural characteristic: the level of trust inherent in the society.”

He also argued that social capital - the ability of people to work together for common purposes in groups and organizations - with “familistic” association and voluntary interaction or openness to place trust in non-kin groups or strangers can better position the community to compete in the outside world. Empirical studies showed that a rise of 10 percentage points in the level of trust in society was able to boost annual economic growth rate by 0.8 percentage points.

The negative effect of mistrust on the economy is the increased cost. Conflicts can arise from frequent disagreements among social members.

A society running on a market economy based on democracy can be developed through the procedures of ironing out differences through dialogue and compromise. But when it becomes a norm not to trust one another, it would take more time and money for the concerned parties to come to a decision. Progress therefore would be delayed. The government also would have to pay a dear price to govern a society that is incessantly questioning one another and wrangling.

The country suffered economic setbacks from a series of social upsets and unrest, from the mad cow scare, Sewol ferry sinking and outbreak of Middle East respiratory syndrome, because the high level of suspicion and distrust interfered with decision-making.

The economy can gain vitality when it flows seamlessly. When suspicions and uncertainties increase, economic transactions could stall, generating stagnation in the economy. When society is believed to be unfair and unreasonable, people begin to feel they will be disadvantaged for following the rules and regulations, and act in a different way. When such practices become commonplace, social distrust and uncertainties get augmented and structural.

Western societies were able to revive their reputation as global powers in modern days because they were able to overcome differences through trust and rationalize an economic system. How do governments help to restore social confidence? Trust builds on reason, fairness and transparency. If the state maintains a reasonable system drawn up from transparent procedures and keeps it intact regardless of unexpected factors and upsets, social trust will naturally sprout.

Korean society is on the cusp of joining the advanced rank. But the spread of distrust and prolonged global slowdown is stalling the Korean economic recovery and its advance towards a more mature community. We must all do our part and cooperate to revive social trust based on reason and fairness. Someone who does not trust someone else cannot earn trust from another.

Translation by the Korea JoongAng Daily staff

JoongAng Ilbo, Dec. 4, Page B8

*The author is the president of the Export-Import Bank of Korea.

by Lee Duk-hoon

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