Markets and Trust

In a lovely piece on her blog, an engineer documents her experience working for Engineers Without Borders in Zambia. This segment from one of her posts documents markets and trust in a nutshell. The final paragraph is a quote she takes from William Easterly's recent book, White Man's Burden.

Markets and trust.

Local field workers are at the front lines of development projects. They are the ones who are ultimately responsible for translating those great ideas - seeming panaceas for poverty - into meaningful impact.

Problem is, big time donors, who are wildly excited about the great-idea-of-the-moment, expect big time results from these field workers, not just by now, but by
yesterday.

Expectations like that cannot be met in the blink of an eye. This project may be about getting more money down to farmers, but it takes a lot of time and concerted effort to get money to flow in a system that is completely devoid of any semblance of trust.

Functional markets are built on trust. Think about it: You implicitly trust that you’ll get the perfect non-fat, extra-hot, half-sweet venti chai latte from the stranger behind the counter mere seconds after you order it (at least I do). The barista, in turn, trusts that you will front the cash before you indulge in your afternoon pick-me-up.

Small holder farmers, however, have never been able to trust seed suppliers to offer reliable products and services, and vegetable buyers have never been able to trust small holders to supply a reasonable quantity and quality of produce. There is zero
institutional trust.

[L]ow income societies have less trust than rich societies….What is important is the radius of trust. Do you trust only the members of your immediate family? Or does the circle widen to include your extended family, or your clan, or your village, or your ethnic group, or all the way to strangers? In a low-trust society, you trust your friends and family, but nobody else. (William Easterly, White Man’s Burden)