The End of Trust

Suspicion is undermining the American economy.

4-panel cartoon with 2 figures in business attire: both standing; the left figure falling in a trust fall; the right figure walks away and left figure hits floor
Albert Tercero

Manufacturer inventories. Durable-goods orders. Nonfarm payrolls. Inflation-adjusted GDP. These are the dreary reportables that tell us how our economy is doing. And many of them look a whole lot better now than they did at their early-pandemic depths. But what if there’s another factor we’re missing? What if the data points are obscuring a deepening recession in a commodity that underpins them all?

Trust. Without it, Adam Smith’s invisible hand stays in its pocket; Keynes’s “animal spirits” are muted. “Virtually every commercial transaction has within itself an element of trust,” the Nobel Prize–winning economist Kenneth Arrow wrote in 1972.

But trust is less quantifiable than other forms of capital. Its decline is vaguely felt before it’s plainly seen. As companies have gone virtual during the coronavirus pandemic, supervisors wonder whether their remote workers are in fact working. New colleagues arrive and leave without ever having met. Direct reports ask if they could have that casual understanding put down in writing. No one knows whether the boss’s cryptic closing remark was ironic or hostile.

Sadly, those suspicions may have some basis in fact. The longer employees were apart from one another during the pandemic, a recent study of more than 5,400 Finnish workers found, the more their faith in colleagues fell. Ward van Zoonen of Erasmus University, in the Netherlands, began measuring trust among those office workers early in 2020. He asked them: How much did they trust their peers? How much did they trust their supervisors? And how much did they believe that those people trusted them? What he found was unsettling. In March 2020, trust levels were fairly high. By May, they had slipped. By October—about seven months into the pandemic—the employees’ degree of confidence in one another was down substantially.

Another survey, by the Centre for Transformative Work Design in Australia, found bosses having trust issues too. About 60 percent of supervisors doubted or were unsure that remote workers performed as well or were as motivated as those in the office. Meanwhile, demand for employee-surveillance software has skyrocketed more than 50 percent since before the pandemic. And this spring, American employees were leaving their jobs at the highest rate since at least 2000.

Each of these data points could, of course, have multiple causes. But together they point in a worrisome direction: We may be in the midst of a trust recession.

Trust is to capitalism what alcohol is to wedding receptions: a social lubricant. In low-trust societies (Russia, southern Italy), economic growth is constrained. People who don’t trust other people think twice before investing in, collaborating with, or hiring someone who isn’t a family member (or a member of their criminal gang). The concept may sound squishy, but the effect isn’t. The economists Paul Zak and Stephen Knack found, in a study published in 1998, that a 15 percent bump in a nation’s belief that “most people can be trusted” adds a full percentage point to economic growth each year. That means that if, for the past 20 years, Americans had trusted one another like Ukrainians did, our annual GDP per capita would be $11,000 lower; if we had trusted like New Zealanders did, it’d be $16,000 higher. “If trust is sufficiently low,” they wrote, “economic growth is unachievable.”

If you can rely on people to do what they say they’re going to do—without costly coercive mechanisms to make them dependable—a lot of things become possible, argued Francis Fukuyama in his 1995 book, Trust. In the late 19th century, it was “highly sociable Americans” who developed the first large-scale corporations, effectively pooling the ideas, efforts, and interests of strangers. In the late 20th, some of the earliest iterations of the internet emerged from the same talent for association. Throughout nearly all of America’s history, its economy has benefited from a high degree of trust.

But leaks in the trust reservoir have been evident since the ’70s. Trust in government dropped sharply from its peak in 1964, according to the Pew Research Center, and, with a few exceptions, has been sputtering ever since. This trend coincides with broader cultural shifts like declining church membership, the rise of social media, and a contentious political atmosphere.

Data on trust between individual Americans are harder to come by; surveys have asked questions about so-called interpersonal trust less consistently, according to Pew. But, by one estimate, the percentage of Americans who believed “most people could be trusted” hovered around 45 percent as late as the mid-’80s; it is now 30 percent. According to Pew, half of Americans believe trust is down because Americans are “not as reliable as they used to be.”

Those studies of suspicious Zoom workers suggest the Trust Recession is getting worse. By October 2021, just 13 percent of Americans were still working from home because of COVID-19, down from 35 percent in May 2020, the first month the data were collected. But the physical separation of colleagues has clearly taken a toll, and the effects of a long bout of remote work may linger.

Why? One reason is: We’re primates. To hear the anthropologists tell it, we once built reciprocity by picking nits from one another’s fur—a function replaced in less hirsute times by the exchange of gossip. And what better gossip mart is there than the office? Separate people, and the gossip—as well as more productive forms of teamwork—dries up. In the 1970s, an MIT professor found that we are four times as likely to communicate regularly with someone sitting six feet away from us as with someone 60 feet away. Maybe all that face time inside skyscrapers wasn’t useless after all.

Trust is about two things, according to a recent story in the Harvard Business Review: competence (is this person going to deliver quality work?) and character (is this a person of integrity?). “To trust colleagues in both of these ways, people need clear and easily discernible signals about them,” wrote the organizational experts Heidi Gardner and Mark Mortensen. They argue that the shift to remote work made gathering this information harder. Unconsciously, they conclude, we “interpret a lack of physical contact as a signal of untrustworthiness.”

This leaves us prone to what social scientists call “fundamental attribution error”—the creeping suspicion that Blake hasn’t called us back because he doesn’t care about the project. Or because he cares about it so much that he’s about to take the whole thing to a competitor. In the absence of fact—that Blake had minor dental surgery—elaborate narratives assemble.

Add to the disruption and isolation of the pandemic a political climate that urges us to meditate on the distance—ethnic, generational, ideological, socioeconomic—separating us from others, and it’s not hard to see why many Americans feel disconnected.

What has suffered most are “weak ties”—relationships with acquaintances who fall somewhere between stranger and friend, which sociologists find are particularly valuable for the dissemination of knowledge. A closed inner circle tends to recycle knowledge it already has. New information is more likely to come from the serendipitous encounter with Alan, the guy with the fern in his office who reports to Phoebe and who remembers the last time someone suggested splitting the marketing division into three teams, and how that went.

Some evidence suggests that having more weak ties can shorten bouts of unemployment. In a famous 1973 survey, the Stanford sociologist Mark Granovetter discovered that, among 54 people who had recently found a new job through someone they knew, 28 percent had heard about the new position from a weak tie, versus 17 percent from a strong one. When the weak ties fall away, our “radius of trust”—to borrow Fukuyama’s term—shrinks.

That’s a problem for individual employees, as much as they may appreciate the flexibility of working anywhere, anytime. And it’s a problem for business leaders, who are trying to weigh the preferences of those employees against the enduring existence of the place that employs them. They don’t want to end up like IBM. It saved $2 billion making much of its workforce remote as early as the 1980s, only to reverse course in 2017, when it recognized that remote work was depressing collaboration. Microsoft CEO Satya Nadella recently wondered whether companies were “burning” some of the face-to-face “social capital we built up in this phase where we are all working remote. What’s the measure for that?”

A trust spiral, once begun, is hard to reverse. One study found that, even 20 years after reunification, fully half of the income disparity between East and West Germany could be traced to the legacy of Stasi informers. Counties that had a higher density of informers who’d ratted out their closest friends, colleagues, and neighbors fared worse. The legacy of broken trust has proved extraordinarily difficult to shake.

It’s not hard to find advice on how to build a culture of trust: use humor, share your vulnerabilities, promote transparency. But striking the right tone in today’s pitched political climate, often over Zoom, possibly under surveillance, is no easy feat.

Even so, it may be instructive for companies trying to navigate this moment to remember why they were formed in the first place. By the late 19th century, it was evident that some jobs were too crucial to leave to a loose association of tradespeople. If the mill had to be running full steam at all hours, you needed to know who could handle the assembly line, who could fix a faulty gasket, and above all who would reliably show up day after day. Then you needed those people legally incorporated into one body and bound by the norms, attitudes, and expectations baked into the culture of that body.

Not so incidentally, those first corporations went by a particular moniker. They were called “trusts.” And without that component underpinning all the industrial might and entrepreneurial ingenuity, you have to wonder if they could ever have been built at all.

This article appears in the December 2021 print edition with the headline “The End of Trust.”