Shocking impact of mistrust in South America
Trust thought for today - really eye-opening report on the devastating implications of mistrust - here for the economies of Latin America & Caribbean.
From chief economist at Inter-American Development Bank in today's FT (sorry, paywall, source report below) https://on.ft.com/3cOlFu9
"Trust is the most pressing and yet least discussed issue confronting Latin America and the Caribbean. It underlies countless interactions that are essential for healthy societies.
"Trust, in this report, is the belief that others will not act opportunistically. They will not make promises they cannot keep, renege on promises they can keep, or violate norms to take advantage of other people who adhere to them. In short, trust is faith in others—in their honesty, dependability, and good will.
Here's what a lack of interpersonal trust and untrustworthy government results in:
* Reluctance to pay taxes means the region’s tax intake is about 13 percentage points of GDP lower than in OECD countries.
* The shadow economy is bigger by almost 20 percentage points of GDP.
* Individuals and companies do not trust others to pay their taxes, starving governments of much-needed funds.
* Informality is higher when companies and workers do not believe that others comply with government regulations.
* Consequently, nearly 60 per cent of workers in the region work in informal firms, which are less productive and offer fewer benefits to employees.
* Our surveys reveal many company owners do not trust others. They prefer to hire family members and have difficulties growing their businesses.
* Mistrust distorts what citizens want from government. Most believe public officials cannot be trusted to efficiently invest in the public interest.
*Corruption scandals deepen scepticism. People prefer programmes that provide money-in-hand now, such as cash transfers and subsidies.
*As a result, governments struggle with longer-term policies that boost growth, such as pension, labour and fiscal reforms, support for research and development, openness to trade and infrastructure spending.
This and the 'what to do instead' pretty much maps exactly to actions aligned with the 7 trust drivers from my report - Public Good Intent, Openness, Integrity, Competence, Inclusion, Openness, Respect, Fairness. It will be very instructive to apply lessons to the UK, I will put something together for later this week.
One for you Laura Smillie, Laurent Bontoux, Valeria Croce, Paulo Finuras, Mathew Mytka, Kent Grayson, Ruth Steinholtz, Nathan (Nate) Kinch, Steven Tiell, Matt Beard
https://lnkd.in/e5N8Z-jS