Is Public Trust Damanaged Beyond Repair?

Griftopia: Bubble Machines, Vampire Squids, and the Long Con That Is Breaking America

Last Week I wrote an article that was titled "What about the people who did the right thing?" Today I read an interesting essay that came out of the Wharton School of Business published last year. There is a section that I underlined that refers to how the public feels betrayed by Wall Street and the government. What it the import question to ask? Is public trust damaged beyond repair? 
 
The essay frames the financial crisis  as a crisis of trust rather than one of confidence.  The ability to have confidence with out trust is rare.  We have seen the government and the banking system completely twist reality to meet their expectations.  They convinced themselves that bailing out banks was a necessity and it posed no moral hazard because they wanted to bail out the banks.  They have let the financial institutions palaver about a moral hazard if home owners are not left to shoulder the entire burden of the financial crisis.  The government has created an image for themselves as untrustworthy.  They are also seen as manipulable and easily bought off by big money.  They have shown close to zero interest in what happens to the citizens who had done the right thing for years only to have been steam rolled by this crisis. 


Read the full Wharton School article here
"According to David M. Sachs, a training and supervision analyst at the Psychoanalytic Center of Philadelphia, the crisis today is not one of confidence, but one of trust. "Abusive financial practices were unchecked by personal moral controls that prohibit individual criminal behavior, as in the case of [Bernard] Madoff, and by complex financial manipulations, as in the case of AIG." The public, expecting to be protected from such abuse, has suffered a trauma of loss similar to that after 9/11. "Normal expectations of what is safe and dependable were abruptly shattered," Sachs noted. "As is typical of post-traumatic states, planning for the future could not be based on old assumptions about what is safe and what is dangerous. A radical reversal of how to be gratified occurred."
"People now feel more gratified saving money than spending it, Sachs suggested. They have trouble trusting promises from the government because they feel the government has let them down."

He framed his argument with a fictional patient named Betty Q. Public, a librarian with two teenage children and a husband, John, who had recently lost his job. "She felt betrayed because she and her husband had invested conservatively and were double-crossed by dishonest, greedy businessmen, and now she distrusted the government that had failed to protect them from corporate dishonesty. Not only that, but she had little trust in things turning around soon enough to enable her and her husband to accomplish their previous goals.
"By no means a sophisticated economist, she knew ... that some people had become fantastically wealthy by misusing other people's money -- hers included," Sachs said. "In short, John and Betty had done everything right and were being punished, while the dishonest people were going unpunished."

We still are waiting for the answer to our question: Is public trust damaged beyond repair?

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Griftopia: Bubble Machines, Vampire Squids, and the Long Con That Is Breaking America