Trust

In a July 18th post, I had shared a video of two kids offering to shovel someone’s driveway for $20. Go there to get the context of this post.

As I wrote in the post, I would be happy to point out why [the video] delighted me. A reader obliged and asked what was so special about it. Therefore here is why that brief video warmed my cold, economist’s heart. It’s a mix of enterprise, innocence, trust, and division of labor — all things that go into the creation of wealth in a society.

The two kids were enterprising. They figured that they could make a few bucks in their spare time. But how? Some driveways in their neighborhood needed shoveling. They knocked on a door and said, “Would you pay us $20 to clear your driveway?” The lady of the house answers, “Sure. But we are going out for a bit. I’ll pay you $20 now before we go out.”

That “get paid now for work you promise to do” demonstrates trust. In a low-trust society that would not happen.

The kids are clearly happy that they got the job, and that they were being paid in advance. They were not planning to take the money and not do the job. They told each other that they must do a good job. They were conscientious and were committed to not letting anyone down.

The other side of the deal also involved trust. The lady of the house was not afraid that the kids would abscond with the money paid in advance. She trusted them to deliver on the promise.

The innocence of the kids was heartwarming. “We are rich. What are we going to do with the money we make doing jobs around the neighborhood?” “Oh, we can buy cars.” “What kind?” “Well, you are a shortie. So I think you should get a Lamborghini. They are low cars.”

The above exchange is not verbatim but it gets to the gist of the exchange between the kids. The innocence of the kids is palpable. They are clueless about how much sports cars cost. But never mind that. They are willing to work to earn a few bucks through exchange.

Free, voluntary exchange among people is the secret to the creation of wealth. The kids could have spent time just hanging out at the mall or playing video games at home. Instead, they said, “how about exchanging our labor for dollars?” Well, perhaps they didn’t use those words but the idea is central to a well-functioning economy.

The lady of the house did not have the time to shovel the driveway but had the money to get the job done; the kids needed spending money and were willing to exchange their labor for it. Both parties in any voluntary exchange wins. Both parties think that they are getting a great deal.

The homeowner is happy to have the driveway cleaned for $20; the kids are delighted that they’d be paid $20 for the job. Each party thinks that they are the winner in the deal. But it was a win-win situation all around.

What strikes me most is that this sort of exchange requires a background of mutual trust. The kids were given the payment in advance; they could have taken the money and not done the work. That they got paid in advance only motivated them to do a great job. The employer could have said, “First shovel, and only when I get back and see you have done it, I will pay you.” She didn’t. She trusted them.

The core directive in a good society is “Don’t take other people’s stuff, and keep your promises.” That the good society is also a materially prosperous society is a no-brainer. The prosperity is downstream of being good. From the video I believe that the kids are good and therefore they will be prosperous. Perhaps not rich enough to buy sports cars but rich in a broader sense of the word.

It’s all karma, neh!

Author: Atanu Dey

Economist. View all posts by Atanu Dey