Bankruptcy and collapsed future expectations erode even established trustworthiness

Evidence

Of course, when a manufacturer or dealer faces bankruptcy, its usual reputational and legally induced incentives to be trustworthy can deteriorate badly. When future expectations collapse for any such reason—the previously trusted party suffers from radically changed circumstances—there is less reason to expect trustworthiness. Similarly, governments may often be quite trustworthy in carrying out the laws, even though a particular government might be very untrustworthy in designing the laws to be carried out. In both these cases, institutional control devices are often powerful and well directed. — Russell Hardin, Trust and Trustworthiness, 257

Categorization

• XREF: This exactly parallels the chapter’s blindness collapse: when future expectations collapse, both trustworthiness and social order deteriorate — the same causal logic Hardin uses here applies to Saramago’s epidemic. — connects to: Severe financial crises trigger a loss of trust in markets; Celebrity financier reputations predictably collapse when detached from firm fundamentals. — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 177; Financial bubbles burst when future-productivity claims lose credibility — Max Haiven, Cultures of Financialization, 497 (+1 more)