10/10/2008 03:40 pm ET Updated May 25, 2011

"Trust" in the Economy and Electoral Politics

I've been thinking a lot about trust recently. When it is abundant everything goes more smoothly: from love to commerce, from sports to politics. When it is lacking, everything else can seem broken or meaningless.

Nowadays we hear the word "trust" used all the time in relation to the credit crunch and the steep decline in stock markets. It's bad enough for the economy when a business can't provide credit to a consumer. No car loan, no sales; no sales, no dealership; no dealership, no factory and so on. But lately even banks are afraid to loan money to one another. There are certainly many reasons why trust has evaporated in the credit markets, but the basic fact is that too many financial institutions were making loans (or trading loans) without having any real assurance that the borrower had the capacity to pay back the debt. The number of borrowers multiplied as the loans were traded, and the crisis of confidence spread like a stomach virus on a college campus. It's hard to tell who has deep exposure to these bad loans, who has tried to make lots of money by trading them before anybody realized they weren't going to get paid back. Uncertainty is a lack of faith, and the lack of faith destroys trust.

It's a cliché that trust is a lot easier to destroy than it is to build. When children tell us that this time they are telling the truth, and that they lie only some of the time, they are about to learn that even one lie destroys the credibility of all your other statements -- even when these other claims are true. One lie creates general uncertainty. We are seeing this everyday on Wall Street and in the banking sector. Governments are desperately trying to restore trust, but as long as there is lingering (and, I might add, reasonable) uncertainty about who is holding the bad debts they once tried to profit from, it will be impossible to have the basic trust that makes our credit systems work.

"Trust" is also a big issue in the political world. Lately, Sarah Palin has been trying to undermine the confidence that many have developed in Barack Obama by insinuating that he has had associations with unsavory, radical characters -- terrorists even. When John McCain calls Obama naïve about foreign leaders, he is saying, "My friends, this young man is likeable enough, but he just doesn't deserve the trust you must place in the Commander in Chief." And of course, when the junior senator from Illinois fires back on McCain's singing about bombing Iran, he is saying: "Hey, you just can't trust this guy. He's too hot-headed and impetuous."

The problem with the politics of attack that the Rovesque McCain-Palin ticket is now employing, and the problem with Obama's defense through recrimination, is that both strategies erode trust in democracy itself. People get fed up with the electoral system and become less likely to participate in it. Sure, attack ads get our attention, but once their manipulations are exposed, we feel less likely to believe anything. And, as in the case of the credit crisis, once we lose trust in the political process, it is very difficult to restore our confidence enough to care about any election at all.

The erosion of trust in our economy and in our leaders is not exactly news. But what can we do about it? Scientists last year reported that oxytocin can retard the erosion of trust, but I don't think mass medication is a path worth exploring here (despite the jump-start it would provide the ailing pharmaceutical industry). After all, we have good reasons for losing trust.

The cure for the erosion of trust is not medicinal; it's social. Participation builds trust. On the university campus where I work, the only ways I've seen trust successfully restored is to involve people once again in whatever activity they'd become uncertain about. From athletics to music, from lab science to poetry workshops, participation reduces uncertainty and builds faith through practice. When you begin again to seek or offer credit in secure ways, when investments can be protected, then you feel prepared to take a few new risks. When you get involved with your fellow-citizens in a political campaign or make your voice heard with your neighbors, you begin to see that democracy isn't only about attack. Democracy is about participating with people who you grow to trust by working together.

Teachers know this. We have to earn the trust of our students everyday so that they can risk making mistakes, so that they can take the chance to open themselves to learning. That's why we encourage the participation of our students.

Our current, acute crisis of confidence will pass. Then we must rebuild trust by participating in our economy and polity rather than just try to tear down others who are doing so.