November 1, 2011 § Leave a comment
The Spirit Level shows that income inequality is significantly negatively correlated with the percent of the population who agree that most people can be trusted. This holds across countries and across US states: Mississippi and Alabama, the states with lowest trust, are unequal, while North Dakota and Montana, the states with highest trust, are relatively equal. There’s something to this. There probably is a fairly simple set of causal pathways that connect the variables “inequality” and “trust”. But are these cause-and-effect type pathways or confounding-type pathways?
The book asks: “But does inequality create low levels of trust, or does mistrust create inequality?” This is a false dichotomy. Variables may have a common cause and no effect on each other. To get a more realistic answer, we turn to the literature they cite.
First, we show by a cross-national statistical analysis that inequality is a key factor in shaping generalized trust, but that there is no direct effect of trust on inequality (the causal direction starts with inequality).
A detailed account of the historical development in the Swedish case indicates that it was the impartiality of the government institutions, especially those handling policies related to the labor market and social policy, that made the development of an “historical compromise” between labor and capital possible. This compromise was to a large extent built on “a spirit of trust” that developed into the well-known “Swedish Model” that came to mark the Swedish society after 1936.