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{{d|Credit|/ˈkrɛdɪt/|v|}} | {{d|Credit|/ˈkrɛdɪt/|v|}} | ||
A merchant’s ability obtain goods or services before payment, based on the provider’s trust that the Merchant will subsequently pay for them. ''From the Latin, | A merchant’s ability obtain goods or services before payment, based on the provider’s trust that the Merchant will subsequently pay for them. (''From the Latin, credere, to believe''.) | ||
'''TL;DR''': A | '''TL;DR''': A feature, not a bug. | ||
[[Trust]] | [[Trust]] is fundamental to every legal, political, and financial system that has ever existed. It is the one component of a prosperous polity that cannot be dissolved by technology.<ref>Not even [[blockchain]]. ''Especially'' not blockchain.</ref> Trust converts the “''single-round”'' [[prisoner’s dilemma]] — in which a rational ''homo economicus'' would, and therefore ''should'', throw {{sex|her}} co-conspirator under the bus — to the “''iterated”'' [[prisoner’s dilemma]], in which the longer term benefits of ''not'' doing that outweigh the undeniable headrush it would provide in short term if you did. | ||
If you know you will a fellow merchant again, and go through this again — or even if you aren’t pretty sure you won’t, but ''can’t quite be sure —'' the rational thing to do is cooperate, at least as long as your co-conspirator does. | |||
[[Trust]] is a ''moral'' imperative, not a legal one. It derives its power from the very fact that it is ''not'' backed by obligation. It is not a compulsion; it is a voluntary submission to the mercy of a third party in the hope of a reciprocal submission back. It is to make oneself vulnerable for the betterment of all. It explains the fable of the wealthy merchant who accosts the elderly pauper. | [[Trust]] is a ''moral'' imperative, not a legal one. It derives its power from the very fact that it is ''not'' backed by obligation. It is not a compulsion; it is a voluntary submission to the mercy of a third party in the hope of a reciprocal submission back. It is to make oneself vulnerable for the betterment of all. It explains the fable of the wealthy merchant who accosts the elderly pauper. | ||
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By way of analogy, converting a ''moral'' obligation to someone else (say, “pick your children up promptly at the conclusion of today’s kindergarten session”)<ref>You may remember this from Freakonomics</ref> into a ''financial'' one (if you arrive more than ten minutes after the session ends, you will be charged a late collection fee) has the same effect. Now there is a price on your time: I can pay for my delinquency without compunction. | By way of analogy, converting a ''moral'' obligation to someone else (say, “pick your children up promptly at the conclusion of today’s kindergarten session”)<ref>You may remember this from Freakonomics</ref> into a ''financial'' one (if you arrive more than ten minutes after the session ends, you will be charged a late collection fee) has the same effect. Now there is a price on your time: I can pay for my delinquency without compunction. | ||
Social relationships, friendships and emotional connections — which [[High modernism|modernist]]<nowiki/>s view as irrelevant at best, or more likely indications of graft or nepotism in the system — in fact have a perfectly sensible role: ''they reinforce bonds of trust'' between participants. | Social relationships, friendships and emotional connections — which [[High modernism|modernist]]<nowiki/>s view as irrelevant at best, or more likely indications of graft or nepotism in the system — in fact have a perfectly sensible role: ''they reinforce bonds of trust'' between participants. | ||
now to be sure: this may be unfair to outsiders who don’t have those connections or any way of making them — but the answer is to create opportunities for those at the margins, who might otherwise be disenfranchised (as they are systematically deprived of the opportunities to enter the market in favour of insiders) to build those social relations. For example: be imaginative about your hiring choices. Why do you reflexively hire from magic circle firms and Russell Group universities? but a decentralised ledger where no-one ''needs'' to trust others in the market is hardly a decent no substitute. You cannot banish bonds of trust. | now to be sure: this may be unfair to outsiders who don’t have those connections or any way of making them — but the answer is to create opportunities for those at the margins, who might otherwise be disenfranchised (as they are systematically deprived of the opportunities to enter the market in favour of insiders) to build those social relations. For example: be imaginative about your hiring choices. Why do you reflexively hire from magic circle firms and Russell Group universities? but a decentralised ledger where no-one ''needs'' to trust others in the market is hardly a decent no substitute. You cannot banish bonds of trust. | ||