or the world leaders gathering in Davos, Switzerland at the World Economic Forum to solve the globe’s most pressing challenges, perhaps the most insidious is the deep distrust the public has in institutions.
The average confidence Americans have across all institutions is at a new low of just 27% according to a Gallup survey that first began in 1973. Only two institutions—small businesses and the military—are trusted by a majority of Americans. Moreover, Edelman’s 2022 “Trust Barometer” shows that globally concerns about fake news are at an all-time high. And according to the Organisation for Economic Cooperation and Development (OECD), only about half of people worldwide say they trust their national government.
This is not surprising. The COVID-19 pandemic is partly to blame, as numerous governments responded incompetently and myriad weaknesses were exposed in healthcare, finance, and other important social systems. But trust in institutions was on the wane well before COVID-19. The consequences are widespread and severe. For example, a lack of trust can lead to fewer people taking necessary health precautions, divestment in our communities, and an epidemic of mental health problems, among others
So, what can we do to start to rebuild trust? Transparency. Individuals should demand it and institutions should offer it.
As the OECD notes in its global report on building trust in institutions (see chart), people who perceive information to be open and transparent also have higher levels of trust in institutions.
That people value transparency is clear in other ways, too.
Across the United States, localities are instituting pay disclosure rules so prospective employees know the salary of jobs they are applying for. Nearly 100% of all employees think employers should disclose salary ranges in job postings, according to a survey from the jobs site Monster. (This example also serves as a reminder that transparency can have unintended consequences—some businesses may no longer want to post jobs in a given state if required to disclose salaries.)
Globally, Transparency International, most known for its Corruption Perceptions Index, advocates for transparency as a way to root out corruption. It launched a specific initiative a few years ago to combat COVID-19 corruption, with a particular focus on increasing transparency for how governments spend taxpayer money.
Global industries are also taking up the mantle of transparency. No industry takes transparency—and its twin, privacy—as seriously as Web3, a space that captures blockchain and cryptographic technological systems. That is a bold statement to make in the wake of the collapse of the cryptocurrency exchange FTX, but it is one that is borne out by the evidence.
Web3 businesses take transparency seriously because their users demand it and because it is at the heart of blockchain technology. The technology underpinning Web3 first emerged during the Global Financial Crisis when people everywhere realized the deep harm that comes when the prevailing values at major financial institutions were greed and opacity. No one, it seemed, had a handle on the way complex financial derivatives had built a house of cards waiting to be blown over at the first sign of wind.
Blockchain, in contrast, is inherently different. Transactions are publicly available for tracking, tracing, and auditing. It is why there are so many headlines about crypto being used for illicit activity—it’s easy to trace down when most transactions are publicly available.
Take the Colonial Pipeline Ransomware Attack. Blockchain analytics firm Chainalysis was able to help the U.S. Federal Bureau of Investigation track the funds used in the attack within a month. Blockchain transparency, in short, is helping fight crime globally.
There are other examples of how blockchain technology is leading to an unparalleled level of transparency. After FTX collapsed (and even before in some instances), digital asset exchanges began attempting to implement “Proof of Reserve” audits to help show customers, regulators, and the general public that they had sufficient customer funds. More work needs to be done on these, but it is a good signal that industry players know transparency is the way to build trust.
Transparency alone is not enough to rebuild the public’s trust in institutions. That will take hard work across the whole of society. But if transparency is adopted as a core societal value, the likelihood that people and institutions will do the right thing increases immensely.
We would all be wise to remember that even in a dark time, sunlight is still the best disinfectant.
a global affairs media network
Fill the Global Trust Gap with Transparency
Photo via Adobe Stock.
January 16, 2023
For the world leaders gathering in Davos, Switzerland at the World Economic Forum to solve the globe’s most pressing challenges, perhaps the most insidious is the deep distrust the public has in institutions. To fix this, transparency must be demanded and offered, writes Circle’s Jared A. Favole.
F
or the world leaders gathering in Davos, Switzerland at the World Economic Forum to solve the globe’s most pressing challenges, perhaps the most insidious is the deep distrust the public has in institutions.
The average confidence Americans have across all institutions is at a new low of just 27% according to a Gallup survey that first began in 1973. Only two institutions—small businesses and the military—are trusted by a majority of Americans. Moreover, Edelman’s 2022 “Trust Barometer” shows that globally concerns about fake news are at an all-time high. And according to the Organisation for Economic Cooperation and Development (OECD), only about half of people worldwide say they trust their national government.
This is not surprising. The COVID-19 pandemic is partly to blame, as numerous governments responded incompetently and myriad weaknesses were exposed in healthcare, finance, and other important social systems. But trust in institutions was on the wane well before COVID-19. The consequences are widespread and severe. For example, a lack of trust can lead to fewer people taking necessary health precautions, divestment in our communities, and an epidemic of mental health problems, among others
So, what can we do to start to rebuild trust? Transparency. Individuals should demand it and institutions should offer it.
As the OECD notes in its global report on building trust in institutions (see chart), people who perceive information to be open and transparent also have higher levels of trust in institutions.
That people value transparency is clear in other ways, too.
Across the United States, localities are instituting pay disclosure rules so prospective employees know the salary of jobs they are applying for. Nearly 100% of all employees think employers should disclose salary ranges in job postings, according to a survey from the jobs site Monster. (This example also serves as a reminder that transparency can have unintended consequences—some businesses may no longer want to post jobs in a given state if required to disclose salaries.)
Globally, Transparency International, most known for its Corruption Perceptions Index, advocates for transparency as a way to root out corruption. It launched a specific initiative a few years ago to combat COVID-19 corruption, with a particular focus on increasing transparency for how governments spend taxpayer money.
Global industries are also taking up the mantle of transparency. No industry takes transparency—and its twin, privacy—as seriously as Web3, a space that captures blockchain and cryptographic technological systems. That is a bold statement to make in the wake of the collapse of the cryptocurrency exchange FTX, but it is one that is borne out by the evidence.
Web3 businesses take transparency seriously because their users demand it and because it is at the heart of blockchain technology. The technology underpinning Web3 first emerged during the Global Financial Crisis when people everywhere realized the deep harm that comes when the prevailing values at major financial institutions were greed and opacity. No one, it seemed, had a handle on the way complex financial derivatives had built a house of cards waiting to be blown over at the first sign of wind.
Blockchain, in contrast, is inherently different. Transactions are publicly available for tracking, tracing, and auditing. It is why there are so many headlines about crypto being used for illicit activity—it’s easy to trace down when most transactions are publicly available.
Take the Colonial Pipeline Ransomware Attack. Blockchain analytics firm Chainalysis was able to help the U.S. Federal Bureau of Investigation track the funds used in the attack within a month. Blockchain transparency, in short, is helping fight crime globally.
There are other examples of how blockchain technology is leading to an unparalleled level of transparency. After FTX collapsed (and even before in some instances), digital asset exchanges began attempting to implement “Proof of Reserve” audits to help show customers, regulators, and the general public that they had sufficient customer funds. More work needs to be done on these, but it is a good signal that industry players know transparency is the way to build trust.
Transparency alone is not enough to rebuild the public’s trust in institutions. That will take hard work across the whole of society. But if transparency is adopted as a core societal value, the likelihood that people and institutions will do the right thing increases immensely.
We would all be wise to remember that even in a dark time, sunlight is still the best disinfectant.
