alt Hacker NewsYou have to understand how gears shift from there. Trust is essential for business transactions and specifically for long term investments. You can’t make massive leaps in technology or medicine or many other areas without trust (a lot of money on a leap means if you don’t trust the other side or the government to keep conditions stable, you won’t see a return).
Now if you are in a high trust society, you may have a lot of leveraged businesses or governments who have gotten loans or permission to do something based on past trust history. If the trust degrades systematically Investors may want returns faster, or interest rates go up, or partnerships don’t happen. That’s why low trust places don’t grow as fast - trust is the oil for growth engines and lack of it is sand for the same.
Corruption also does a lot of small-profit-for-the-corrupt that leads to massive damage to the overall society via second and third order effects. (example: someone stealing copper cables that stop electricity to entire cities for a while).
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For business it’s almost a simple as adding another factor to your model: the odds of expropriation by the leader and his cronies.
It does not take a very high number to make most capital investments look really bad.
And you compare that (investing in something new), to instead using the capital to bribe your way into the “system”.
Did you meant to write "You *can't* make massive leaps in technology or medicine" instead of *can*?
I have an unusual perspective here.
In my country the politicians are openly very corrupt. (Well, possibly yours too ;)
Recently there has been a lot of improvement to the infrastructure. I realized that what has happened is, a lot of EU funds have been made available for development, and people are lining up to skim a little bit off the top.
How you say, the incentives are aligned, yeah?
I find myself in the odd situation where for each dollar that gets embezzled, a little bit of actual construction happens. That seems like a force you'd want to work with, rather than against.
I mean yeah ideally we'd get rid of corruption, but haha good luck with that. At least now they're fixing the roads.
Your example isn't corruption. That's just crime. But it does do massive damage.
> You have to understand how gears shift from there. Trust is essential for business transactions and specifically for long term investments. You can’t make massive leaps in technology or medicine or many other areas without trust (a lot of money on a leap means if you don’t trust the other side or the government to keep conditions stable, you won’t see a return).
I am not quite sure, how exactly you mean "trust". For example there are countries, that I would consider quite corrupt, but that are able to leap ahead. I would say there can be a lot of trust, even in a corrupt system, if the ones making the leap, are part of the corrupt system, and trust that system to continue to "work". But you could say: "Well, then there is trust!"
Ultimately, I think where there is more trust, there is more to destroy, so any betrayal of this trust, causes more damage, than in a low trust environment, where there was not much trust to begin with.
Yeah, exactly. One example of a low-trust society was the US in the decade after 1929.
> You can’t make massive leaps in technology or medicine or many other areas without trust.
Incorrect. You can’t do it without cooperation. You can cooperate without trust.
Are we living in the same reality?
Look at how business works in the rich west works. Everything is formalized with contracts, risk is portioned out and offloaded to every party under the sun. You bring in people with licenses and accreditation, 3rd party consultants, etc, etc. All of this work and expense is incurred so that if things go wrong then the parties all have precisely defined ways in which they can (expensively) drag the matter through a courtroom and whatever comes of that will be enforced with state violence.
Contrast with (certain parts of) the far east and eastern europe. The west is the low trust environment.
> You can’t make massive leaps in technology or medicine or many other areas without trust
The Soviet Union did manage to get massive leaps in some areas (in particular related to armament, but not only) such as
- armament/weapons
- space technology
- mathematics
- physics
> (a lot of money on a leap means if you don’t trust the other side or the government to keep conditions stable, you won’t see a return).
I guess you can immediately see how the Soviet Union "solved" this problem by the fact that you simply couldn't gain a lot of money from your innovation.