Trust will be key to the recovery from the COVID-19 pandemic and recession. Yet over the past ten years, people’s trust in governments, public and private institutions, and one another has declined across many of the advanced economies. As is typical in periods of deep uncertainty, the price of gold has skyrocketed in recent months.
Today’s rock-bottom confidence should come as no surprise. The current crisis is not only globe-spanning and unprecedented in many ways, but also highly ambiguous. While the public-health emergency has escalated and triggered a collapse in the real economy, financial markets have boomed. As with the 2008 global financial crisis, the COVID-19 pandemic has decisively weakened public confidence in expertise. Conspiracy theories and political rhetoric rejecting science have proliferated. But if the public does not trust the recommendations of scientists and financial experts, the crisis will be prolonged.
Trust can prevail, but only if we start working toward a new economic and institutional paradigm. And that means addressing head-on the public’s growing skepticism toward most major institutions – from central banks and international financial organizations to the World Health Organization and academia – not to mention Big Tech. These doubts are no longer concentrated just among populists and people on the margins of society. In the United States, 30% believe that the SARS-CoV-2 virus was created in a laboratory, and 35% say they would refuse a COVID-19 vaccine.
At the same time, policymakers now question how far fiscal and monetary policy can and should go in underwriting the economy. Since being relaunched in March, the US Federal Reserve’s quantitative-easing program has purchased assets at a rate of $2 billion per hour. What are the downstream effects of such a policy? And how much longer can Wall Street defy gravity while Main Street is in free fall?
Never before has so much money been made available to so many so quickly. In the space of just a few months, we have already gone far beyond the post-2008 playbook. Mobilizing financial resources (both quantitatively and qualitatively) on an unprecedented scale has demonstrated the sheer power of finance to protect or reorient entire economies. Yet by highlighting the growing disconnect between Wall Street and Main Street, it has also invited political challenges.
This can last only as long as there is still sufficient trust in the system. If the public’s confidence in central banks were suddenly to evaporate, the financial system would collapse. And if enough people suddenly refused to continue tolerating the continuing enrichment of the few while the many are being impoverished, liberal democracy, too, would be in peril.
Similar warnings can be issued with respect to the sciences. Never before the pandemic have research and data-sharing occurred at such a rapid pace. Never before have so many people from so many countries come together to pursue the same goal: the development of a safe and effective vaccine. This mass mobilization is exciting to behold, but also is worrying in the current climate.
In the immediate term, the growing distrust of medical experts threatens to reduce the efficacy of vaccination against COVID-19. The recent reversal on whether hydroxychloroquine should be used to treat COVID patients (it should not) left many members of the public with even less trust in their leaders. And reports that US President Donald Trump’s administration has been interfering with the work of public-health agencies has made such doubts justified in some cases.
At the global level, there are also questions as to whether vaccines will be distributed equitably and according to genuine need. And, against the broader backdrop of declining trust in expertise, one wonders if the current levels of research funding in science and medicine will be sustained. Scientific and technological research will be essential to address problems from climate change to inequality, and there is a growing need for smart medical devices, remote-learning systems, and new drugs and antibiotics to avert future public-health crises.
Given the risks, we simply cannot afford further erosion of public trust. For leaders in finance and the sciences, the task now is to develop transparent and robust rules of the road, so that decision-making processes are clear and assessable to policymakers, the media, and the general public. The overall goal should be to empower people and restore their trust. That means explaining what is at stake, developing true accountability, and recognizing what is not working. In a media environment that is increasingly prone to misinformation and 280-character thinking, leaders in finance and science must proactively engage the public.
But we should not fool ourselves into thinking that the system merely needs to be patched up. A full redesign is in order to ensure that our institutions are serving the common good. No longer should the relationship between experts and the public be predicated on a “take it or leave it” black-box model of self-governance for science and finance.
Trust, having become scarce, is now in high demand; but it is a volatile good. It’s chilling even to think about what a further loss of it would mean for today’s crisis-ridden world. A flight from currencies? A widespread refusal to be vaccinated? Denial of global warming in a world that is literally on fire?
Restoring trust will not be easy. But, to overcome today’s crises and prevent those we can foresee, it must be done.
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