A lot has been said about Tuesday’s FBI press release. One of the most frequent comments was that it is further eroding what little trust people still have in government officials and the government in general. It also is increasing the feeling that is already prevalent (for very good reasons) that the rules do not apply to everyone the same. “The system is rigged” and ”the Clintons always get a pass” are complaints you hear regularly these days. If you add to that the complaint that ”politically connected companies get lots of goodies” you get a terrible picture of our government.
Now, you would think that the lack of trust in government should mean that people want less of it. As a libertarian, I would welcome that. Unfortunately, I was recently reminded of the work of Andrei Shleifer and his colleagues, which shows that it is not necessarily the case if there is also a lack of trust in businesses. In that case, their paper finds that the lack of trust in businesses often triggers a higher demand for government regulations and rules even when people think that the government is itself corrupt.
Sadly, I am afraid this may be the way many people think these days whether their distrust of businesses is justified or not.
Using the World Values Survey, we show both in a cross section of countries and in a sample of individuals from around the world that distrust fuels support for government control over the economy. Consistent with the model’s predictions, distrust generates demand for regulation even when people realize that the government is corrupt and ineffective; they prefer state control to unbridled activity by uncivic entrepreneurs.
The most fundamental implication of the model, however, is that beliefs (as measured by distrust) and institutions (as measured by regulation) coevolve. Beliefs shape institutions, and institutions shape beliefs. …
More generally, the analysis points to a broad complementarity between trust and free market economics, which remains to be explored.
Now, it could be that their model doesn’t apply to the US. That being said, I fear that the increased lack of faith in government isn’t going to breed the kind of reductions in government I would prefer. That’s a libertarian nightmare: bigger, more inefficient and corrupt government.