The Economics of Enough_ How to Run the Economy as if the Future Matters - Diane Coyle [82]
The mechanisms for the creation of this high level of trust are unclear, and indeed change over time in the same city. A comparison of New York City in 1980 and 2010 would well illustrate the scope for quite dramatic change in a short time in levels of trust and social harmony. Perhaps a lot of it is simply familiarity through diversity—if you attend school with refugee children from Somalia and the children of immigrant workers from Poland and those of Japanese businessmen on a two-year posting, it takes some effort not to develop open-mindedness and tolerance.
And, of course, the trust factor is not universal. All global cities have their dark side and some are dysfunctional. There are ghettos of poverty, unemployment, and drugs. The global mafia operates through the global cities, just as legitimate multinational businesses do. But in contrast to those who are nostalgic for a supposedly gentler and kinder past, I would strongly argue that the “average” trust level can be higher now than it was twenty years ago and indeed is higher in certain cities such as New York and London.31 These megacities are the successful hubs of the global economy. The higher value activities in which they now specialize are higher trust activities, albeit with clear fragility such as the collapses we’ve seen in the financial sector in both cases. Others which are low-trust places, such as Mumbai or Sao Paolo, still have to cement their role in the global economy; it’s not yet clear whether or how well they’ll succeed.
Yet at the same time that new technologies have made high trust essential for economic productivity, they have stretched and strained that trust in new ways. They have brought about a dramatic restructuring of industry and work. They’ve created the diversity of the modern city and workplace, bringing many people into contact daily with a much wider variety of others than ever used to be the case. And there are much larger geographical distances in production too, due the fact that economies have become more open to trade and investment, and that companies are more likely to be part of a global supply chain.
THE CHALLENGE OF BUILDING TRUST
There are, then, a number of ways in which the technology-driven structural changes in the economy have been simultaneously increasing the importance of trust or social capital and making it more fragile. At the heart of this tension is the way so many people of so many different backgrounds, expectations, and habits are now in contact with each other. The everyday miracle of complex economic organization described by Paul Seabright is becoming increasingly challenging.
Diversity is an important strength in the ideas-based economy. People who are alike, think alike. There is some evidence that more diverse groups are better at solving problems. The underlying intuition is that problems that look difficult from one perspective can appear straightforward from another, or at least can be approached in a fresh way, so a variety of perspectives increases the chances of finding a solution. Perhaps more surprisingly, under certain conditions, a random selection of problem solvers will outperform a group of the best individual problem solvers. Improved results are more likely when there is underlying agreement on aims and values.32
However, diversity is also problematic. Like globalization, like increasing urbanization, like the reshaping of companies and other organizations as a result of