Dishonesty, lying and cheating are not treated with the right amount of opprobrium in today’s society.
To gain an appreciation for the significance of honesty and trust, consider what our day-to-day lives would be like if we couldn’t trust anyone. When we purchase a bottle of 100 pills from our pharmacist, how many of us bother to count the pills? We pull in to a gasoline station and pay $35 for 10 gallons of gasoline. How do we know for sure whether we in fact received 10 gallons instead of 9 3/4? You pay $7 for a 1-pound package of filet mignon. Do you ever independently verify that you in fact received 1 pound? In each of those cases, and thousands more, we simply trust the seller.
There are thousands of cases in which the seller trusts the buyer. Having worked 40 hours, I trust that George Mason University, my employer, will pay me. People place an order with their stockbroker to purchase 100 shares of AT&T stock, and the stockbroker trusts that he’ll be paid. Companies purchase 5 tons of aluminum with payment due 30 days later.
Examples of honesty and trust abound, but imagine the cost and inconvenience if we couldn’t trust anyone. We would have to lug around measuring instruments to make sure that it was in fact 10 gallons of gas and 1 pound of steak that we purchased. Imagine the hassle of having to count out the number of pills in a bottle. If we couldn’t trust, we’d have to bear the costly burden of writing contracts instead of relying on a buyer’s or a seller’s word. We’d have to bear the monitoring costs to ensure compliance in the simplest of transactions. It’s safe to say that whatever undermines honesty and trust raises the costs of transactions, reduces the value of exchange and makes us poorer.