Trust crucial for the survival of the welfare state

The survival of the welfare state depends on citizens trusting each other. New research shows that trust is crucial for society avoiding corruption and exploitation of the system, while giving the private sector greater freedom to increase productivity.

2011.12.21 | Jesper Toft Madsen

Previously, social scientists claimed that a large and strong welfare state was a condition for creating trust among citizens. But it is quite the contrary, according to the conclusions of a new study conducted at Aarhus University, Business and Social Sciences.

Trust came before welfare state
- The welfare state cannot exist without trust. Trust among citizens has deep historical roots reaching back to a time when the welfare state did not yet exist, says Professor Christian Bjørnskov from the Department of Economics and Business, and provides an example:

- Even today, descendants of Scandinavian emigrants are the group in the US society with the highest level of trust. As they emigrated before the emergence of the welfare state, this is one of our signs that the high Scandinavian level of trust is older than the welfare state.

In collaboration with his colleague Andreas Bergh from Lund University, Christian Bjørnskov has studied 77 countries from a Scandinavian perspective based on historical factors within linguistics, climate and monarchy. Today, breach of faith and lack of trust may have fatal consequences for welfare.

- If citizens cheat and bribe each other, public spending goes through the roof and the welfare state falls apart, as we are seeing in Greece, explains Christian Bjørnskov.

Scandinavia is vulnerable
Historically, the large Scandinavian welfare states top the trust scale – a top ranking which makes Scandinavia more dependent on a well-functioning and corruption-free bureaucracy.

- The more we trust the man on the street and the bigger our welfare system grows, the more vulnerable we become to system exploitation. The state takes on an enormous responsibility, the tax burden reaches corresponding heights, and this makes the state vulnerable to fraud, says Christian Bjørnskov.

Fewer regulations strengthen productivity
Although a welfare state such as the Danish is vulnerable, you should be delighted with the high level of trust, according to Christian Bjørnskov. Trust means less cheating and protects society from increasing costs. Trust also means fewer regulations and allows the business community more freedom.

- In low-trust countries, there is a tendency towards regulating the working environment and even pay very closely. In the Danish model, the labour market parties enter into collective agreements without government interference, which has resulted in increased productivity, says Christian Bjørnskov.

Trust puts pressure on politicians
In Denmark, citizens’ trust in each other has grown over the past 30 years in step with the diminishing of the Second World War generation, which was characterised by distrust. On the other hand, the population’s trust in the politicians in power is the lowest since 1975. A large part of the explanation could be that the level of trust places heavier pressure on the leaders of the country.

- Generally, higher trust in other people also means higher trust in politicians. But the higher degree of trust also means that we set higher moral standards, and politicians are therefore not allowed to commit nearly as many mistakes before we lose trust in them, says Christian Bjørnskov.

Further comments

Christian Bjørnskov, Professor
Department of Economics and Business
Email: chbj@asb.dk
Tel.: +45 8948 6181

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