With the coronavirus pandemic threatening lives and well-being, most governments in Latin America and the Caribbean have imposed strict limits on social interactions to better manage the contagion. After two months under lockdown, however, the toll on the region’s economies is apparent. Nearly half of households report job losses and most businesses have either closed down or drastically cut operations. As the infection risk subsides in the weeks and months ahead, a gradual lifting of restrictions offers the hope of putting the region on the path to economic recovery.
The rebound will not happen overnight, however. Immunization against the disease may take 12 to 18 months until a vaccine becomes widely available. Rebuilding the economy during this transition depends on the extent to which citizens resume their roles as workers and consumers. That requires trust that they can safely do so: trust in others, trust in businesses, and trust in government. The region’s levels of trust, unfortunately, are at historic lows. This is a broader global phenomenon, but particularly severe in Latin America. The latest version of Latinobarómetro, a well-regarded public opinion survey, found that only 14% of people in the region trust others, 38% trust domestic companies (34% trust foreign companies), and 22% trust their government. Reversing a trend of declining trust is challenging. But it is necessary to stem the current economic fallout and stimulate economic growth in the near term.
Social Trust During the Reopening
Emerging from the lockdowns requires social trust that others will act responsibly to maintain public health. In a recent Harvard Business Review article titled “The Trust Crisis” the authors define trust as the “willingness to be vulnerable to the actions of others because we believe they have good intentions and will behave well toward us.” Does one believe that other people wash their hands regularly, wear face coverings in public, and respect social distancing? That they self-isolate when they experience symptoms or test positive? If so, more people will be willing to take public transportation, shop in stores and eat at restaurants, setting off the process of rebooting the economy.
Although everyone benefits when this happens, each person has a rational incentive to act individualistically; for example, to hoard disinfectant at the supermarket or bribe a doctor to get a coronavirus test first. In game theory this is known as “the prisoner’s dilemma.” Uncooperative behavior may bring a personal benefit in the short term. But society as a whole loses out. That is not the case if public health is broadly seen as a public good. If there is mutual trust that others will collaborate to protect it, participation in the economy will gradually increase.
Trust in Businesses and Technology
A similar dynamic extends to business. In order to venture out and spend money, customers must trust that retail outlets, restaurants, airlines, and other businesses prioritize sanitation of buildings and merchandise and require employees to wear face masks and undergo temperature checks. Workers need to know that their employers are being transparent about labor conditions and that they can bring up workplace safety issues without threat of reprisal.
Technology companies have recently developed promising apps that efficiently perform contact tracing, a key strategy in controlling the spread of Covid-19. To be able to map out the disease in real time, the app must be adopted by large numbers of cellphone users. In South Korea citizens have been willing to voluntarily share personal data to help in the public health effort. For citizens to take that step, however, local digital providers must earn their subscribers’ trust by implementing effective safeguards to prevent leakage of personally identifying information. Alternatively, users can retain ownership of their data and “the right to be forgotten,” i.e., permanently erase personal data from the public domain.
A Coordinating Role for Government
Governments have been at the center of the Covid-19 response, and rightly so. As the entities responsible for public health, public assistance, and public information, they have taken the lead in managing the crisis. However, their policies are effective only to the extent that citizens follow their directives. When citizens trust government-provided information to be accurate and timely, citizen compliance will be high and the government can become an effective coordinator of pro-social behavior. Real-time transparency about the spread of the virus and a clear public health strategy coupled with an effective communication campaign can go a long way in building this trust. That happened in Singapore where the Ministry of Health made available reliable real-time infection maps on their online dashboard, so that citizens could know which areas were safe and which should be avoided. Governments can also play a role in encouraging social trust among citizens by nurturing a sense of community and social responsibility, conveying the message that “we are all in this together.” And they can regulate minimal safety standards for businesses and data handling by technology companies.
Recent years have not been good for trust in Latin America. Political polarization, government and business corruption scandals, economic crises, high levels of crime, and the online spread of disinformation all have eroded it. Research has shown that high trust fosters positive economic and social outcomes: higher economic growth, increased innovation, better crisis response, and stronger health outcomes. A quick and lasting economic rebound from the current pandemic depends on citizen behavior that requires trust at numerous levels. Public and private institutions would do well to recognize that reality and make smart decisions to regain this important social asset. The future health of the economy is in the balance.