A Question of Trust

"I'm not upset that you lied to me, I'm upset that from now on I can't believe you." - Friedrich Nietzsche

The Goldman Sachs scandal brings to light the functioning of modern day financial system. Evident from the recent senate hearing concepts of ethics, morality and humility are often lost on Wall street. Origin of finance lies in origin of trust, a fundamental foundation of any societal state. The essence of trust is evident even in the basic human actions. A shake hand for instance expresses an idea that I trust the other person with one hand that he/she would not strike me a blow, but will retain the other as a protection. Every society operates in the assumption that the framework and implementation of law that would protect the rights and liberties of each of its citizen. By participating in any society, each citizen lay their "trust" these laws will be followed and enforced.

When a key member of the society engages in an act of commerce by concealing the true value of good its transacting in, it destroys the essence of this trust. All citizens of the global society should question the current framework of finance. Do you trust your banker to protect and act in your interest? Do you trust the bank's business model that would install confidence in their solvency through tough times? Above all do you trust the central bank/government to preserve the value of your underlying currency (unit of account)? If the recent scandals at Goldman Sachs or the obfuscation of public finances by European governments, are anything to go by the society needs to restructure the global financial system.

The first step in this process is to realize that finance is a service industry. It does not produce anything substantial neither does it propel humanity forward. A service or knowledge industry cannot form a stable base of any society. If everyone is servicing one another, who is actually involved in production? The core of the society should focus on addressing the impending needs such as clean water harvesting, climate change, renewable energy, food shortages etc. The above needs are easy to identify and many companies are working towards a solution. The need for restructuring of the financial system isn't quite obvious yet, but in due course it will be. When the system is restructured, it must be built from foundations of trust.