In the News (VestiFinance): “Much of the political turmoil in recent years, including the rise in popularity of populist parties in Europe, the presidential nomination of Donald Trump in the United States and the British referendum on withdrawal from the EU, is explained as protest against the existing elites. People no longer trust the leading politicians, nor the facts that the mainstream media convey. All this, of course, has enormous economic and political implications. …
“Trust – the foundation of almost any form of economic activity. As soon as people began to specialize, they expected others will produce what they did not do themselves: farmers needed the blacksmith to produce agricultural tools, and a blacksmith needed the farmer to produce food for him.
“The global trading system forces us to deal with complete strangers on a daily basis. We have to trust companies that deliver our ordered products, employers who pay our salaries, and the banks that hold our money.
“Any hint of confidence erosion …would be an extremely disturbing signal. …
“The crisis of 2007-08 showed what can happen when confidence disappears in the financial system. Banks began to doubt the solvency of each other and refused to lend; the multiplier effect is that the companies had difficulty obtaining trade credit. As a result, it very much affected economic activity. In 2011, investors lost confidence in the creditworthiness of a number of European governments: bond yields soared, and the recession began.
“The dependence on trust makes the global economy extremely vulnerable.
“The system benefits from its openness …
“Today’s economy and financial system depends on global cooperation, but the current political system has become such that cooperation from voters looks doubtful. And this is a dangerous gap.”
My Comment: In the past, people saw each other, but the global era of financial and commodities exchange requires more than trust; it requires an understanding and a sense of the communal system we inevitably find ourselves in.
The sense of responsibility has to stem from the feeling that the whole network of communication between us is as a family, the feeling that the network binds us like parts of one body. But this is impossible without teaching people to establish a sense of cooperation between them. If we don’t establish that by ourselves, nature will force us to do so by terrible blows, crises and wars.