Once Trust Has Been Lost, There’s No Going Back – Investment Watch

Guest Post from Charles Hugh Smith, writer at Oftwominds.com:

Now that the overlapping crises are upon us and the banquet of consequences is being served, we’ll see just who our elites and leadership really are.

The erosion of trust doesn’t require intent, it only requires the blind pursuit of self-interest above all else. Trust is fundamentally reciprocity and honesty: to construct trust, we must each perform our agreed-upon responsibilities and be truthful about our performance and actions.

Lies, obfuscation, misdirection and the sins of omission are all Kryptonite to trust. Those that put the pursuit of self-interest above all else prefer to think they’ll finesse their greed by omitting the reality slightly than presenting a fabrication / lie. But being social animals whose survival ultimately rests on trust, humans are keenly sensitive to the difference between the reality / honesty and self-serving prevarications corresponding to the sins of omission.

America’s elites and people living large in protected fiefdoms have persuaded themselves that their relentless pursuit of self-interest has no cost or consequence. Conveniently ignoring Adam Smith’s volume on the moral foundations needed to support capitalism, they think “the invisible hand” of the market is nothing greater than a feeding frenzy of self-serving greed, and so their relentless pursuit of self-interest will in some way magically transform their looting and free-riding right into a stable economy and society.

This is the reason trust has been lost in America. Everyone with any hold on power uses that power solely to learn themselves and their cronies, under the tissue-thin guise of “serving the general public” (or much more egregiously, “doing God’s work”–please hand me a barf-bag…).

When everyone seems to be issuing an countless spew of BS to cover their very own self-enrichment, trust is eroded after which lost. When everyone with any shred of power is scrambling to free-ride the system to serve their private interests above all else, the system itself can now not be trusted.

This is the reason institutions have lost public trust. Those happily ensconced in a politically powerful fiefdom can increase their private gains on the expense of the general public interest with none worries that the general public can ever make it through the complexity thickets they’ve erected to ring-fence their fiefdom.

The elites rig the system behind flimsy legal screens and declare the system one among “countless opportunity” without mentioning some are more equal than others. Markets are rigged, politics is theater and people within the know gloat as their personal fortunes expand like clockwork.

All of that is betrayal of the general public trust and the general public interest, and betrayal has a value and consequence: trust is lost. Betrayal hurts because we believed the pretenses and guarantees of the lying, cheating prevaricator. Once the reality seeps out, we’re done with the liar / free-rider / self-serving BSer.

That is where we’re: trust has been lost and there’s no going back. Because the chart below illustrates, social trust–our willingness to trust strangers–has declined for many years. There are various threads on this decline, but one is that everybody has transmogrified right into a scammer or grifter, attempting to extract something from us while giving us nothing in return except empty guarantees, phony gratitude or the pretense of reciprocity.

What exactly is the difference between the beggar with a phony story, a politician “explaining” a brand new junk fee or a private-sector elite rigging the system to learn their enterprise? There is no such thing as a difference. All are masking their pursuit of self-interest behind a phony story. The beggar’s story of needing $10 for gas is clearly threadbare; so too are the stories of pickpocketing “leaders” and SillyCon Valley monopolists.

Because the chart below shows, the center class that after trusted markets, institutions and civic leaders has seen its share of the national wealth decline as the highest 1%’s share increased. Wealth wasn’t “grown,” it was transferred. Eventually “investors” finally accept they’re nothing but marks for the financial elite to skim and scam and so that they exit the fake 3-card-monte “market.” The skimmers and scammers, bereft of marks, whine and beg for a return to the great old days after they could exploit all of the trusting marks.

Those that have looted the general public trust for their very own private gain now decry the lack of trust. Their tears are as fake as all their other stories. What they mourn is the marks awakening to their countless skims and scams, and the opting out of those that’ve finally had enough.

Every little thing’s gone so well that those with wealth and power have been in a position to pretend to be improbable. But now that the overlapping crises are upon us and the banquet of consequences is being served, we’ll see just who our elites and leadership really are. Pretending will now not work, and all of the self-serving prevarications on the planet will now not shield us from the results of a society stripped of public trust.

Once trust has been destroyed, there’s no going back.