Beyond the Grand Illusion

There is deeply disturbing news in the 2016 Edelman TRUST BAROMETER: A yawning trust gap is emerging between elite and mass populations. The global survey asks respondents how much they trust the four institutions of government, business, nongovernmental organizations and media to do what is right. The survey shows that trust is rising in the elite or “informed public” group – those with at least a college education, who are very engaged in media, and have an income in the top 25 percent. However, in the “mass population” (the remaining 85 percent of our sample), trust levels have barely budged since the Great Recession.

From the economics of inequality, described by Thomas Piketty in his best-seller, Capital in the Twenty-First Century, we now observe the inequality of trust around the world. I would posit that there is a “grand illusion” at play – a lingering notion that elites continue to lead and the masses will follow. This historic model of influence was predicated on the belief that elites have access to superior information, their interests are interconnected with those of the broader public, and that becoming “an elite” was open to all who work hard. Rising income inequality, high-profile revelations of greed and misbehavior and the democratization of media have, flipped the classic pyramid of influence. The trust of the mass population can no longer be taken for granted, and any continuation of the “grand illusion” is dangerous for leaders in today’s world.

In more than 60 percent of countries surveyed for the Edelman TRUST BAROMETER, the trust levels of the mass population are below 50 percent. By contrast, trust levels of the elite population are at the highest levels in the years we have done this survey, with double-digit jumps in the United States, United Kingdom, Canada, Italy and Mexico. In three-fourths of the countries, trust levels in institutions are over 50 percent among elites.

The average gap in trust in institutions between the elites and the mass population has grown to 12 points (across the developing and developed world). In the U.S., the difference is 19 points; in the U.K. it is 17 points; and in India, it is 16 points. The Edelman TRUST BAROMETER also reveals that trust inequality correlates with income inequality across the world. In 18 of 28 countries surveyed, we see a double-digit gap in trust between high-income and low-income respondents. In the U.S., the gap is 31 points, in France it is 29 points, in Brazil it is 26 points and in India, 22 points. This trust divide also corresponds to the public’s expectations of its future well-being. For example, in two-thirds of the countries surveyed, fewer than half of mass population respondents think they will be better off in five years.

The most profound difference between elite and the broader populations is found in their attitudes toward business. There are double-digit gaps in half of the countries surveyed, the most significant being in the U.S., where 70 percent of the elite population express trust in business in contrast to 51 percent of the general population, a 19-point difference. This skepticism is clearly manifested in the perception of specific industries, in particular the financial services sector where there is a gap of more than 20 points between the elite’s trust in the sector and the general population’s. CEOs are substantially more trusted by the elite population, and double-digit trust gaps exist in half of the countries.

Inequality of trust has important consequences. The most obvious is growing receptivity to politicians who prey on fear instead of offering solutions. Examples include assertions that refugees are a major security threat and that unemployment can be addressed by stopping foreign trade. Trust inequality seems to be a major pillar in the campaigns of Donald Trump in the U.S. and Marine Le Pen in France.

Another consequence of the trust divide is the increasing skepticism of business innovation as well as expectations of governments to enact additional regulation. By a margin of two-to-one, the general population believes the pace of innovation is too rapid. The industries of greatest concern are food, which is linked to popular worries about genetic modification, and financial and online services which raise fears about privacy and security.

In tandem with these developments, we are seeing the flipping of the classic pyramid of influence as peer-to-peer discussions overtake the influence of elites. It is my belief that the mass population is relying less on newspapers and magazines and, instead, chooses self-affirming online communities and television news. The most credible source of information on social networking sites is “my friends and family,” a source considered nearly twice as believable as CEOs and government officials.

However, the survey shows that despite the general population’s skepticism, business has the best chance of bridging the trust gap while still fulfilling its mandate to create value. The general population sees business as the institution best able to keep pace with rapid change, ranking it well above government and higher than nongovernmental organizations. Business is also substantially more trusted than government. In Mexico, it is more trusted by 44 points, in South Africa by 44 points and in the U.S. by 12 points.

According to the Edelman TRUST BAROMETER 2016, a decisive 80 percent of the general public expect that businesses can both increase profits and improve economic and social conditions in the communities in which they operate. A good example of this is Tupperware Brands. There, a global salesforce of almost 3.1 million women in countries including China, India, Indonesia and South Africa drive sales revenue for the company while earning much-needed income from selling the products.

The public is also responding positively to CEOs who believe they can fulfill the dual mandate of earning profits and providing societal benefits. In fact, trust in CEOs has risen substantially in the past five years to a global average of 49 percent. This is a vote in favor of the CEOs who have stepped forward on important issues, including Paul Polman of Unilever on the environment, Howard Schultz of Starbucks on youth employment, Cyrus Mistry of Tata on education and Jack Ma of Alibaba on inclusion.

We are in a time of discontinuous change, urbanization, mass migration, environmental constraints, technological advances, globalization and challenges to public health. These disruptions provide commercial opportunities, but they also create societal problems and expectations that businesses will collaborate with civil society and government. Realizing this opportunity will happen one company at a time, driven by leaders courageous enough to embrace the business possibility and wise enough to operate within a framework of inclusive growth, in which all stakeholders reap the benefits of change.

For the past seven years, in the wake of the Great Recession, the overwhelming majority of business leaders have tended to focus on their enterprise and short-term performance. The time for that narrow focus to end is now. Trust inequality has many negative consequences, but it also presents an opportunity for businesses which want to achieve differentiation and sustained growth. Modern, effective leadership means moving beyond the “grand illusion” to embrace and engage the new influence of the mass population. Trust in institutions is no longer automatically granted on the basis of hierarchy or title. In today’s world, that trust must be earned.

Richard Edelman is president and CEO.