Should our model of society be based on mistrust and reliance on self-interested behaviour? Or are we better off assuming most people are trustworthy and then deal with exceptions to the rule?

In an earlier Newsroom article, I argued why forcing returning Kiwis to pay for quarantine does not make sense. It now appears that both the leading parties, Labour and National, are keen on implementing quarantine charges on returning Kiwis.

A returning Kiwi couple with two kids older than three (essentially my family) will have to shell out $5000 or more for their quarantine.

The need for quarantine is predicated on the view that the high trust model of self-isolation does not work. This is inaccurate for humanity in general and of Kiwis, who are known for their norm adherence, in particular.

My arguments here apply only to those who have been residing abroad and not to those who went overseas on holiday.

In arguing for quarantine, much is being made of the fact that some people escaped quarantine.

But the question is: how many thousands of people returned and how many escaped? Is it one in a thousand? One in ten thousand? It is a very small number. Out of those who escaped, what proportion were sick? Now we are beginning to talk about vanishingly small probabilities. Is it really worth investing in this vast bureaucracy for an event whose probability is exceedingly small?

Does our population (or any population) consist of selfish jerks? Yes, but study after study find that the proportion of these types is a small minority. The vast majority follow the rules. More importantly, our behaviour is conditional: We act in ways we think our peers will. If our peers are cooperative and law-abiding then so are we.

Rather than spending vast amounts of resources on thwarting a few rule-breakers, we are better off trusting the majority with effective sanctions of the small minority who violate the rules.

This should be doable by asking people to self-isolate, asking them to show up for a three-day and 12-day nasal swab and establishing effective contact tracing. Violators can be prosecuted. Some of these savings can be diverted to supporting the public health system.

Self-isolation was the requirement in Level 2. Is the situation now worse than that requiring more stringent enforcement?

Current evidence suggests that the high trust model actually works well.

Der Wiener Deewan serves buffet-style Pakistani food on Liechtensteinstrasse in Vienna. But the owners’ motto is: “Eat all you want, pay as you wish”. Self-interest would suggest that unless there are people who live close by and intend to engage in repeat business, others, particularly visitors to the city that are unlikely to go back, should eat a lot and only pay a small amount. But, the restaurant has been thriving and other restaurants around the world have successfully copied this model.

Similar findings are reported from extensive research in agency relationships between employers and employees. The bulk of the evidence suggests that when you subtract compliance costs, the benefits of labour contracts that rely on authoritarian measures do not necessarily outweigh the benefit of ones relying on mutual trust and reciprocity.

A group of researchers at Stanford examined the impact of organisational practices on employee turnover in a sample of high-technology start-ups in California’s Silicon Valley. These researchers focus on two different approaches. The ‘autocratic’ model, which looks at employment relationships as a simple exchange of labour for money and is based on formal carrots and sticks. The second is the ‘commitment’ model, which entails reliance on emotional-familial relationships based on mutual trust and reciprocity between management and workers and workers themselves.

Firms with CEOs who rely on the autocratic model experience far greater turn-over and much slower revenue growth than the firms that implement the commitment model.

The Grameen Bank of Bangladesh makes small loans to the rural poor without requiring any collateral. The system is based entirely on trust and peer monitoring. Grameen Bank’s track record has been notable, with loan repayment rates of close to 100 percent. More than half of its borrowers (close to 50 million) have risen out of acute poverty thanks to these loans.

In 2006, the founder Muhammad Yunus and the Grameen Bank together were the recipient of a Nobel Peace Prize “for their efforts to create economic and social development from below”.

So, my question is: what is your model of our society? One based on mistrust and reliance on self-interested behaviour? Or are we better off assuming that most people are trustworthy and then deal with exceptions to the rule? Which do you think would be the easier, cheaper and more effective way of proceeding?

As Emerson said (please excuse his sexism): “Trust men and they will be true to you; treat them greatly and they will show themselves great”.

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