is bestselling book Trust, Francis Fukuyama argued that social capital is an essential prerequisite to prosperity. High-trust societies enjoy complex networks of voluntary associations, and this creates a climate conducive to commercial cooperation, entrepreneurship, the building of large companies and international trade. He warned in the 1990s that trust was in decline in the US; research by YouGov suggest that this process of social disintegration is certainly accelerating in the UK.
The decline in trust in many professions is astonishing. BBC news journalists were trusted a great deal or a fair amount by 81 per cent of the public in 2003; this is down to 44 per cent today. Senior police officers are down from 72 per cent to 49 per cent; senior civil servants from 26 per cent to 21 per cent. Trust in family doctors, school teachers, trade union leaders, local police officers and judges has also been significantly eroded. Just 38 per cent trust upmarket papers, down from 65 per cent. Even estate agents are down, from 16 per cent to 10 per cent. The City and financial firms have clearly suffered a massive loss of trust. The only slightly surprising finding is that local MPs are only a little less trusted: down from 44 per cent to 37 per cent. More intuitively, all the parties are hugely mistrusted, even by many of their own voters: just 16 per cent trust top Lib Dems, 19 per cent top Tories and 23 per cent top Labour politicians.
Of course, excessive trust is a bad thing. It breeds complacency and an ultra-deferential society which doesn’t question elites or the received wisdom sufficiently. Figures of authority aren’t always right; sometimes, they commit horrendous crimes. They often make mistakes. Scientists, economists, doctors, policemen, judges or bankers can all be horribly wrong.
But extreme lack of trust isn’t healthy either: when nobody believes anything anybody says, we end up with ignorance, fear and misery, with conspiracy theories and mob rule (including of the digital kind) replacing sensible, rational debate.
It is also in this context that the recent energy manipulation allegations must be seen. Markets needs to be transparent and reliable. Investors need to assume that prices are a true reflection of supply and demand. They need to be able to trust organised markets; in the wake of Libor, which virtually everybody trusted too much, they cannot. So the claims that there may have been some dodgy dealings in the wholesale energy market – with several individuals going on the record with such allegations – is a matter of extreme seriousness.
The good news is that even if such manipulation did take place it doesn’t seem to have had any impact on prices charged to consumers or companies. In some cases, prices may have briefly been pushed down. That, however, is scant consolation. The authorities must ensure that all wholesale markets are clean – and that includes Libor and other interbank lending rates, but also energy, commodity markets and all other indices. There are always bad apples in every walk of life. They need to be rooted out and punished.
White collar crime, if that is indeed what has happened, needs to be punished severely. It is only when wrong-doers are routinely jailed – regardless of profession, income or status – that the criminal law will properly act as a deterrent and that the public will realise that the authorities are serious. in most cases, the decline in trust that affects so many UK institutions was deserved. Those who messed up must show that they have changed – and start the fightback to regain the public’s confidence.
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