By Steve Kelman

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The miracle of social trust

Shutterstock image: executive handshake.

The Economist, the wonderful newsweekly that is the fount of so much useful information and insight, ran an article recently about the growth of LinkedIn. That business-focused social networking site is apparently expanding into a sort of generalized employment platform that is starting to include nonprofessional jobs as well.

What really caught my eye in the article, however, was a discussion of a French LinkedIn knockoff called Viadeo, which recently had an IPO in France and is trying to make a presence in places where LinkedIn does not yet dominate, including China.

Unfortunately, Viadeo has been having trouble getting Chinese employers to use its site to find job candidates, according to the article.

The question for you as a blog reader is: Why?

I quizzed a number of people, and all gave the same answer: In China, connections (guanxi) are extremely important in getting jobs, and employers would never think of going to some anonymous list of candidates they don't personally know or have friends who know.

That would have been my response, too. But it turns out it's the wrong answer. In fact, maybe you can guess the correct answer by looking at the title of this post.

The reality is that Chinese employers don't use the site because they don't trust the veracity of anything people post there about themselves. "Viadeo has had trouble getting Chinese businesses to pay for its services because no one trusted the profiles that members posted," according to the Economist article.

Reading that story reminded me again of something everyone in the United States -- and in some lucky other countries, such as Japan and most of Western Europe -- takes for granted: a very high level of social trust, or the belief we can generally take the representations of strangers for granted.

When I first visited India many decades ago, I was told that if I went to a post office to mail a letter (I'm dating myself!), I should always make sure the postal employee cancelled the stamp in front of me. Otherwise, the risk was too great that the employee would take my money for the stamp, put the stamp on the envelope and steam it off after I left so he or she could pocket the money and resell the postage.

Think of all the representations we take for granted in the U.S. without normally bothering to verify them. We don't re-weigh preweighed packages of fruits or vegetables in a supermarket. A university admissions committee generally believes what's written in letters of recommendation from a student's former professors -- something we do not do for applicants from China, where letters are often forged or purchased. If a restaurant says it is serving us beef, we don't worry that it might actually be serving us donkey meat -- another problem China has.

The costs society saves by not having to verify everything are enormous. In fact, if you had to verify everything before you engaged in any transaction, society would grind to a halt.

We see how bad things can get when trust breaks down. For example, the falsification of performance measures at Department of Veterans Affairs hospitals will create vast new costs and inefficiencies in checking data. Contractors complain about oppressive government audits, but what would things be like if the government felt it needed to have outside audits to recheck every invoice?

The level of social trust we have is a miracle we usually fail to fully appreciate. Behind it, though, must be a well-functioning government and legal system that, by reducing the ability of the untrustworthy to exploit the credulity of the rest of us, makes it possible to live our everyday lives without worrying that letters of recommendation are phony or stamps will be yanked off letters.

That is yet another hidden benefit of good government that, like trust itself, we should be careful not to take for granted.

Posted by Steve Kelman on Aug 26, 2014 at 11:02 AM


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