At this year’s World Economic Forum gathering in Davos, Switzerland, PR firm Edelman shared its comprehensive annual Trust Barometer, confirming what we all know: global trust in institutions and leaders is at an all-time low. Fully two-thirds of countries are now considered “distrusters” (under 50% trust in the mainstream institutions of business, government, media and NGOs to do what is right), compared to about half a year ago. This is a stunning collapse in trust, even from last year’s low base.
Trust in leadership is equally low. Only 37 percent of the general population believe CEOs are credible, even worse for government officials – 29 percent credible. A paltry 15 percent believe the system is working. Ironically, it was Chinese Premier Xi, in his first address at Davos, who stood in defense of globalization (quoting Abraham Lincoln, it should be said), arguing that the system is sound, but it is (Western democratic) governance that has failed. Note China ranked second on the trust index, second only to India.
Talk about a humbling moment (if that’s possible) at the annual gathering of the global economic and political elite.
There was lots of talk this year at Davos about “inclusive capitalism” (Jack Ma actually puts substance behind the slogan in his must-watch interview — a great example of Alibaba’s seemingly regenerative business model in service to its network partners rather than extracting from them, and a sharp contrast to Amazon’s model, as Ma explains). But the “inclusive capitalism” talk included little honest analysis of the root cause of this stunning collapse in trust, why it is so dangerous (the rise in extreme forms of authoritarian populism rooted in emotion more than evidence and its unpredictable path), and what if anything can be done about it at this late date. Nobel Economist Joseph Stiglitz wrote a prescient piece on this topic in 2013, and called for strong regulation and bold regulators to enforce the laws. Clearly, we have failed. And without a culture that not only values trust but demands it, I am not optimistic about better regulation and stricter enforcement.
The decline in trust pervades all four institutions studied in the Edelman survey. Unfortunately, Edelman did not single out finance and report on it separately from business. Surely few would doubt that the finance sector (Wall Street mega banks, in particular) would rank at the bottom of the trust barometer within the business category. In fact, research confirms that bankers are more likely to cheat than the rest of us. (As a former banker, this is upsetting to me!)
Nothing defines banking’s breach of public trust better than the 2008 financial collapse. Being told to move on, It is easy to forget how much of the world’s current social and economic woes can be traced to the financial bubble and subsequent 2008 systemic collapse, either directly or indirectly.
Recall that the financial collapse destroyed $19 trillion of economic value in the U.S. alone, permanently destroying the economic security of millions of families across America. An estimated 34 million jobs were destroyed globally in the process.
The rise of today’s dangerous brand of authoritarian populism—manifesting first in Brexit and now Trump—is directly connected to Wall Street’s breach of trust. It’s not just because of “globalization” or “technology” taking our jobs as if it were all inevitable. We cannot forget that compounding and exacerbating these legitimate and complex challenges, and more (climate change-induced drought driving immigration, linked to the Syrian carnage comes to mind) was the willful act of dropping a bomb into an already vulnerable society. The Goldman Sachs/John Paulson Abacus trade was the Hiroshima of modern financial history.
The mortgage fiasco was a massive, reckless act of violence, perpetrated upon global society by an industry failing in its critical purpose while instead proving itself willing to do just about anything to make grotesque profits through fraud and egregious deceit. The efficient market narrative of bringing home ownership to the masses was all a cynical cover. And the industry’s ongoing fraudulent activities post the crisis, from the LIBOR scandal to FX price rigging, to wrongful foreclosure with robo-signers to Wells Fargo’s opening millions of fake accounts out of its “community banking” division of all places (where the do-gooders are supposed to work), sealed the fate of the industry as devoid of trust for some time to come, unfair as that may be for the many honest bankers out there.
Blaming populism on bankers’ unparalleled breach of trust is a strong claim. But think about it:
Less speculative finance, less speculative real estate lending. Less boom created from unsustainable misallocation of human, physical, and financial capital to speculative real estate. Less wasted carbon in the atmosphere and less farmland destroyed, exacerbating the drought-driven migrations. Less unearned wealth for bankers and less resulting inequality, and less power for the sector to rig the rules, buy off and brainwash the politicians and even regulators, resulting in asymmetric risks only the opportunist bankers truly understood. (Trump once referred to the bankers—now his advisors—as “killers” on the campaign trail, and he’s had to cross them more than once, so he knows). Less demand on the public sector to socialize the losses to “save the system” and therefore less public debt and no need for the misguided austerity driving society further into despair. That means more resources available to address the consequences of globalization and automation, and greater acceleration of investment into the transition to renewable energy and into rebuilding our aging yet vital infrastructure. More assets channeled into education, perhaps even into the revival of civics classes! We know how this narrative continues. We know it does not end with the election of a fraud to the most powerful office in the land.
Donald Trump, whose ethics seem guided by the probability of winning lawsuits, is about as unlikely a remedy for broken societal trust as one can imagine, as his hopeful supporters are sadly about to learn. Coal is not coming back, sorry. So the consequences of lost trust will only amplify in dangerous and unpredictable ways that now stunningly include the Orwellian introduction of “alternative facts” into the Trump Administration’s everyday narrative.
The so-called “activist investor” Carl Icahn is Trump’s fellow bully buddy and now Special Advisor on Regulatory Reform. He has defended the need for Dodd-Frank banking reform in the past and held the banks responsible for the financial crisis in public statements. That is a testament to his common sense and refreshing objectivity as a Wall Street insider. Time will tell whether a man who has spent half a century as an opportunist (bully) stock speculator can come to see that an ideology that conflates speculation with investment and means (finance and the stock market) with ends (a healthy economy) can guide us to a more enlightened and still desperately needed financial system reform and begin the long process of rebuilding trust in Wall Street, and in the process within society.
Not holding my breath.
Imagine if you can, Donald Trump has arrived as a gift, to illuminate for us the American “shadow” at this pivotal moment in history. The Swiss Psychiatrist C.G. Jung refers to “the shadow” as the dark side of one’s self. The shadow, Jung wrote in 1963, “is that hidden, repressed, for the most part inferior and guilt-laden” aspect of our personality hiding out in the unconscious. Failure to recognize our shadow leaves us exposed to the destructive possession by our disowned shadow.
Are we prepared to see the message of the shadow, illuminating our ongoing collective cultural flaws—more prevalent and tolerated than we would like to admit—from narcissism and misogyny to racism and bigotry? Are we prepared to face the fact that our extractive neoliberal economic ideology has utterly failed us, including trade policies that Trump has shined a light on? Will we now address the lost dignity and fear among a majority of hard-working Americans while wealth soars among a small percentage of Americans to grotesque levels? Do we finally acknowledge the corruption of the special-interest-owned polity controlled by the donor and ruling classes who operate under different rules from the rest of us? The shadow points to lost trust in our institutions for good reason, from government to Wall Street to big business to mainstream media. Do we now see that wealth and winning at all cost is not success, that we lack urgency in dealing with the crisis in American education, or in our mental health crisis? (Yes, Trump appears mentally unstable.) Finally, and perhaps most dangerous in the long run, the shadow points to our lack of moral responsibility to deal with climate change with an urgency that is far beyond anything Obama has proposed.
Trump is of course a dangerous conman. The opportunist wants to “make America great again,” invoking a sense of loss among the vulnerable and cruelly seducing with false promises. But more deeply, is this call to recover our greatness not the shadow pointing to our inflated pride in the idea of American Exceptionalism? Is it not time we honor the greater and higher ideals America was founded upon – life, liberty, and the pursuit of happiness – and the timeless and universal values of humility, grace, gratitude, and loving membership within the beautiful and diverse humanity we share with one another, and with all life itself?
A prescient article on the collapse of American Oligarchy, written by Capital Institute’s Science Advisor Dr. Sally Goerner in April, is well worth a revisit on this new “morning in America.” And her timely analysis of the psychological underpinnings of Trump when he won the Republican nomination has now become essential reading if we are to understand why “this neo-fascist upsurge is a classic consequence of the breakdown of the bonds of love, strength, and intelligence that hold a society together and why rebuilding these bonds is critical to our survival.”
It’s been a slippery slope to our current predicament in my adult lifetime. I experienced this slide first hand on Wall Street beginning in the early 1980s, where our terminal, finance-driven neoliberal ideology first manifested, and then metastasized throughout society. So blame me. Turns out we were more clever than smart.
On one level, waking up on 11-9 felt worse than when I experienced 9-11 first hand. I have had very difficult conversations with my children, one of whom had to field questions from her second graders about whether “grandma would be deported.” It’s all incomprehensible, terrifying, and as my daughter said, it’s an embarrassment.
The “great change” we must usher in was not happening before. It was not going to happen under Hillary Clinton. The mere fact that the Clintons have amassed a $200mm fortune since the former President left office, without creating any economic enterprise, is beyond unseemly. With hindsight, it was a mistake of the Democratic Party to allow her to run, despite her unmatched experience and the appeal of the first woman to reach the White House. The self-important Party hacks were simply “not serious” about the real systemic change that awaits, and which is required. And that decision now has very real consequences. They could be catastrophic. Or maybe not? The stock market recovered quickly, predictions are a fool’s errand when the future is truly unknowable. Maybe this is just the jolt we need to seriously begin to question who we are as a nation…what values we stand for… And what responsibility the elite – in politics, business and finance, and in the media – has to the health of the greater whole.
Will we devolve into a second civil war? Will we destroy our last chance to deal with climate change responsibly? It’s unknowable today.
Or perhaps we will usher in a positive 21st century American Revolution and inspire the world again. Such a revolution will be built on a new story to replace the growth-at-all-costs, extreme neoliberalism that we have most certainly outgrown, and is in conflict with our understanding of how complex systems behave. This new story of the Integral Age entails a fundamental and profound shift to holistic thinking across all domains, with dynamic networks replacing failed command and control institutions. It demands clarifying means and ends in our economics and aligning them with the universal principles that define all other systems that survive over time, and the emergence of a regenerative society that is most certainly underway. Not overseen by Trump of course, but in the opportunity he will afford us, difficult as it is, to stare at our shadow over the coming four years, a mere blip in the course of history.