2023-10-16-Many problems, behind them are shadows of trust

Many problems have trust issues behind them -

Many problems have trust issues behind them

Some current phenomena remind me of an article written by Friedman in 2012, "What China lacks is not innovation but trust."

Both Chinese and foreigners believe in a certain saying: Chinese people are good at imitating and learning, but not good at innovation. Some even say that Chinese people will never invent the hula hoop. It is precisely because of this that in the early stages of economic development, Chinese people had a clear advantage due to their ability to imitate and learn. However, when it comes to the need for innovation, the disadvantages of Chinese people become apparent.

Friedman strongly disagrees with this view. He says, "I am surprised: how could a nation that once invented gunpowder, the compass, and paper suddenly fall to the point of only being able to assemble iPods?" Friedman believes that what Chinese companies currently lack is not a so-called culture of innovation, but something more fundamental: trust.

Why is the issue of trust so important?

Friedman believes that innovation is indeed the driving force behind economic development. However, innovation can only continue when trust exists in society, because people feel secure and are willing to take risks and make the long-term commitments required for innovation. When there is trust, people are not afraid of their ideas being stolen, and they are willing to share their thoughts and collaborate on innovative projects.

Therefore, the biggest problem China faces in becoming an innovative society is that it is currently a society with low levels of trust. If China wants to continue to improve its income level, it must become an innovation society based on trust.

In that article, Friedman describes some of his observations at the Alibaba e-commerce annual conference. He believes that one of the reasons Alibaba achieved its success at the time was because it established a reliable market in China where buyers and sellers trusted each other, connecting consumers, inventors, and manufacturers. He states that if Chinese society had more trust, China would see more globally trusted companies like Alibaba, and China would become the largest player on the global internet.

In fact, not only innovation, but trust is also the most important foundation of the entire economic and social life. If we trace the root of some of the problems in our current economic and social life, even some important ones, we can see the shadow of trust issues.

People often discuss the scale of M2. The huge and rapidly increasing M2 indicates the stagnation and lack of liquidity of money in banks. Why is money stagnant in banks? It is because investment channels are not smooth. Why are investment channels not smooth? Just think about it, wealth management can easily lead to scams; stock market investment results in more losses than gains; even keeping money in banks can be nerve-wracking. What does this indicate? It indicates a lack of trust in the capital market and financial system.

Let's talk about consumption. The current sluggishness in consumption is undoubtedly mainly due to income and expectations. However, if we think about it carefully, does it not have anything to do with the lack of trust in the commodity market? When you purchase some goods, there might be pitfalls waiting for you, especially in the case of food and durable consumer goods that require after-sales service. How many people have wasted money on travel? This indicates a lack of trust in the commodity market.

Since this summer, in order to boost the economy, relevant departments have introduced a series of policies. However, a clear feeling among people is that a considerable number of these policies have had little effect, and some important policies that are closely related to people's lives and interests have not generated the expected strong reactions in society. Why? A crucial factor is the issue of trust.

Nowadays, people often talk about the issue of expectations, but in fact, a significant part of the problem with expectations is still a matter of trust.

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