Trust and Productivity

Originally published on Tumblr.

I can’t believe how long it’s taken me to realize that trust is critical to productivity. It’s so obvious that it must be part of economists’ base assumptions. I should read more economics texts.

It finally hit me a few weeks ago when I bought a SIM chip at the airport in Mexico City. I had to take a number, talk to a dispatcher, talk to a sales person to order the chip, pay a cashier for the chip, go back to the sales person to order my plan, go back to the same cashier to pay for the plan, and finally go back to the sales person to initialize the chip and setup the plan. While I waited in line to pay, the sales person waited for me to come back.

The whole process took over an hour.

Two months ago I did the same thing when I landed in Singapore. One person sold me the chip, the plan, took my payment, and setup my phone.

The whole process took less than five minutes.

This experience made me think back to my time in Italy where just about every bar and restaurant has a dedicated cashier.

It’d be nice to think that the specialization had something to do with efficiency — hey, it works in factories! — but it doesn’t. It’s all about trust. Small and large employers don’t trust their employees with money. Keeping the number of employees handling money to a minimum keeps things simple.

I don’t know if the issue is cultural or economic. I first thought it might be the latter, but Italy isn’t a poor country. On the other hand, it was before World War II, and that wasn’t so long ago from a cultural perspective. But maybe it’s something else. I really don’t know.

The SIM example may be extreme, but it’s certainly indicative of how trust can affect retail organization.

Unfortunately for societies with low levels of trust, wealth and productivity are correlated. The SIM vendors in Mexico are far less productive per capita than their equivalent in Singapore. This isn’t good for Mexico.

I’d love to know how much not trusting employees with money affects an economy, or more generally, how trust affects business efficiency in general. If anyone can point me to a book on the subject, I’d be grateful.

PS. In the US, Apple now lets their customers pay for items in their stores with their phones, without even talking to an Apple employee. That seems indicative of a whole new level of trust.