Trust is an essential component of interactions among individuals in social and political settings. Without adequate levels of trust, relations among individuals would become unhealthy, dysfunctional, strained, unequal, abusive, and could eventually be severed. In the absence of trust, relations can be maintained only through coercion, fear, and at best, through manipulations and false pretences. The same is true of the societal settings. Relations in business firms, business partnerships, social organizations, political parties, political alliances, and governments would become strained, dysfunctional, or fall apart altogether in the absence of trust among the parties involved. At the societal level, once people lose their trust in government, the government is doomed. The only way for it to survive would be to resort to coercive and repressive measures.
Moreover, trust is an important component of the economic life in nation states, especially in the larger ones. Without trust, individuals will not be able to enter into any sort of healthy or meaningful interactions in business relations with other individuals outside of their closed circle of friends and relatives. While trust among individuals in traditional or smaller societies is established and sustained through cultural norms and long standing traditions, trust in business relations in modern nation states can only become possible through the medium of the law and the culture of obeying it, and hence through the state in a social contractarian sense. That is to say, all individuals agree to abide by a set of rules that are generally regarded as fair--a function of which is to instill and sustain trust--in exchange for the guarantee that everyone else will also abide by them. In this model, the government is the ultimate guarantor of the contracts as it enforces the laws even handedly and punishes those who break them. The Achilles' heel of this model lies in that for this arrangement to work, the people need to trust the ultimate guarantor, the government; otherwise, all deals are off.
The first section of the article develops a philosophical theory of trust, especially as it relates to the question of the public's trust in government and business. The theory developed here sets the framework for studying the question of the erosion of the public's trust in the United States in the ensuing sections.
In the second section, the article puts forth the argument that the rise of the public's trust in government and business in the U.S. began with the introduction of the New Deal reforms and regulations in the 1930s, and increased gradually over the following decades, finally peaking with the introduction of the "Great Society" programs by the federal government in the mid to late 1960s. The sentiments against the Vietnam War and the Watergate scandal in the 1960s and 1970s had negative impacts on trust levels of the people, especially among the younger generation. The programs and reforms of this period gave the federal government an activist role in solving social and economic ills, such as poverty and racial discrimination. They also burdened business with social responsibilities. These helped the majority of Americans see their government as a force for good. The net results were high levels of the public's trust in government and business. The reforms and regulations of the 1930s-1960s were democratic in nature in that they aimed at, and at some levels succeeded in, establishing a minimum level of social justice in the country through decreasing socio economic disparities and stabilizing the economy.
Starting in the early 1980s, the third section argues that, this minimum level of social justice began to fall apart. Deregulating of economy, downsizing of the welfare benefits, undermining of Affirmative Action, breaking of labor unions, relieving of business from its social responsibilities, and enacting of unegalitarian tax cuts have gradually led to the widening of the socio economic disparities. …