An even more troubling aspect of the collateral damage caused by the 2008 financial crisis is the global economy’s growth slowdown, which was further ignited by the Pandemic. According to new research, this stagnation has consequences that extend well beyond economic difficulties—such as the public’s declining trust in the government. This phenomenon can yield damaging outcomes for societies globally.
The Imminent Reality of A Global Slow Down
As stated in the source material, the International Monetary Fund‘s (IMF) World Economic Outlook indicates that the global growth rate is expected to hover around a mere 3% for the majority of this decade. Comparing to the average growth of around 4% between 2000 and 2019, this figure marks a steep decline. Perhaps most alarming is the situation facing developing economies, where growth is predicted to contract by a staggering one third—from 6% annually in the 2000’s to 4% in this decade. Economists believe these are the dismal future prospects for “secular stagnation,” a term increasingly being utilized to depict the rapidly declining rate of expansion and growth.
Beyond the Stagnation of Living Standards: The Erosion of Trust
These days, slow economic growth can result in living standards that are stagnant at best, but the effects reach far beyond this. The article claims that citizens’ older perceptions regarding the range of services a state is financially capable to offer, like for example healthcare, unemployment aid, or pensions and services of ancillary payments, are closely linked to how well the economy is performing. When the economy is growing, governments have too many services to offer – and by servicing these, every service gets unsatisfied.
But trust in any government fades fastest. The article cites long-standing deterioration of political trust, a phenomenon of its own which suffers existences even within rich states where there are sound democratic structures in place. A grand example is the United States; public trust in federal government and other political institutions has dropped abominably within a single generation.
Growth Champions: The Nourishment of Trust
The study uncovered an unexpected pattern: countries with long periods of vigorous economic growth seemed to have a notably high trust in the government. The reference text highlights the cases of Ethiopia, Qatar, China, and Rwanda as examples of countries in the upper right-hand corner of the graph highlighting this relationship.
Stagnation’s Toll: Countries with Declining Trust
Alternatively, the information does shed some light on the countries that have stagnated for a long time. Japan, Spain, and Greece are among the most prominently mentioned to have weak economic growth and simultaneously the lowest political trust in the world. This discovery illustrates the potential economic stagnation has to deteriorate trust in government institutions.
The Cohort Effect: Personal Experience in the Context of Nations
To make the analysis more precise, research focused on the perceptions of different age cohorts within one nation. By analyzing the trust in government of older versus younger people in relation to the government’s economic policies during their lifetime, the researchers could evaluate how different economic realities shaped the government’s image.
The American Story: A Clear Correlation
Researchers plotted trust in the federal government over the birth cohorts of the US population back to those born in the 1880s using ANES (American National Election Studies) data. The findings indicated a strong positive correlation concerning the growth experiences as well as the political trust across cohorts.
The 1958 data showed that younger cohorts who went through the post-WW2 economic boom had a significantly higher trust in government when compared to elder cohorts who spent their youth during the Great Depression. This supports the hypothesis that public trust tends to increase when fueled by government policies aimed at economic expansion.
However, the data from the 60 year later surveys tells a different story. The younger, 1990s born cohort, have relatively slower growth compared to older cohorts, who were afforded the privilege of earlier growing periods. This change is observed in their level of political trust which is much lower than older cohorts despite the overall trust deficiency across all cohorts.
A Global Phenomenon: Consistent Findings Across Societies
The researchers’ econometric analysis that incorporated data from over 2 million individuals demonstrates the enduring impact of growth experiences on trust in government. This relationship is valid for almost all regions of the world and for different political regimes. Interestingly, the study identified no comparable relationship regarding growth experiences and trust towards non-state entities, including religious bodies. Stronger growth experiences were correlated with greater satisfaction regarding income and living standards among respondents.
The Political Implications: A Vicious Cycle of Decline
Policymakers are particularly impacted by the findings of this research. As the article points out, low economic growth has dire economic effects from constricted public finances and lower employment opportunities, but also constitutes a critical danger to the social contract. Public trust decline could create a ‘vicious cycle,’ triggered by low growth leading to even greater mistrust in government, further hindering recovery implementation and policy enactment needed to facilitate economic growth.
A Call for Understanding: The Need for Continued Research
This focus is accompanied by the author’s reflection on the need to investigate the interplay of trust and economic development in greater detail. Learning how to manage public confidence in the government during times of economic stagnation is vital for social stability and effective governance considering future economic difficulties.