Mucking Up the Trust System

The whole point of the modern global economy is Trust.  It instantiates the idea that we can work and produce in relationships with people who are not our blood kin.

Because we mostly take it for granted that we can trust people across the world to produce a good for us, it is difficult to understand how radical this is.

One way to appreciate the radicalism of global commercial trust is to rehearse the culture of China.  It is said that what prevented China from taking over the world was that the power of the top-down imperial state forced ordinary people to retreat into and defend themselves from the rapacious Mandarins in their kin networks.

In other words, a flourishing commercial culture requires the emergence of a trust culture and requires a government that keeps its hands off the people and their business.  China in the early modern period lacked this culture and so it suffered the two century humiliation of European dominance.

But don't worry.  Today's West is busily trying to demolish the trust culture that conquered the world.  That's what President Obama is doing when he, as the president of all of us, continues his Alinsky tactic of division from reelection campaign to everyday governance.

There's nothing remarkable in what the president is doing.  It's what any political leader does.  He rallies his supporters behind him in a war against evil.  The innovation is that never since the 1930s has a president rallied his supporters so nakedly against the productive sector, corporations and successful businessmen.

The trouble is that the president is demolishing the trust culture upon which our prosperity is founded.  Lewis Lehrman, in a quick history of money and credit, shows how the government's appetite for resources leads it to demolish the delicate skeins of money and credit.

Money and credit are based on trust, they entail "moral obligation," Lehrman writes.  Inflation through unrestricted fiat money creation is the breakdown of trustworthy money.

Inflation prevails in America and the world today because of a breakdown of the institutions of trust that convertibility to gold once provided for the dollar. People no longer gladly accept and hold the dollar for long periods. They try to get rid of it in favor of something real: commodities, automobiles, real estate, equities, art, antiques, or coins. Producers and consumers have lost faith in the dollar because the government and the Federal Reserve have created more dollars than participants in the market desire to hold. Government overproduced money and credit in order to finance its colossal deficits and manipulate the economy, prices, demand, and employment levels. As a result, the paper dollar has ceased to be real money.

The problem is that inflation leads from bad to worse.  "Inflation or monetary depreciation entails a price revolution. It often precedes, and indeed it may cause, a more thoroughgoing political revolution."

There's a book about that: The Great Wave: Price Revolutions and the Rhythm of History by David Hackett Fischer.  The classic Price Revolution is France in the 18th century.  France found that it could not keep up with the Brits to finance their Second Hundred Years War and so defaulted on its sovereign debt, again and again.  Naturally the French blamed the greedy bankers.

But the problem with screwing up the government's finances is that it lowers the prestige of the ruling class enough so that, in the end, you get the French Revolution.  Not that the French Revolution was much of an improvement on the douceur de la vie under the ancien régime.

The fact is that politics is about division.  A politician must divide the nation into "us" --  the ruling class and its supporters -- and "them" -- those dastardly Tea Party types that deserve what they get from the IRS.  Everybody does it; it's just that some people do it more ruthlessly than others, eh, Mr. President?

But the way you do division is to sow distrust among the people.  As in greedy insurance companies and greedy bankers and corporate greed.  Because if people trust their local supermarket and their local gas station and their local doctor why would they demand that the government solves the problem of greedy corporations and tax the rich to teach them a lesson?

Government is force, but even government needs an excuse, a justification, for waging war on regime opponents.  If you wonder how it's done, just listen to President Obama for a month or two.  Every word out of our president's mouth is about preparing the battlefield for another campaign of division.  It sows the fruited plain with the tares of mistrust.  To justify another program of coercion.

The great achievement of Christianity, according to Max Weber, was to get Europeans to trust people outside the limits of blood kin.

The great achievement of the Left is to get people everywhere to mistrust and hate anyone outside their "identity" group.

Go figure.