Reprinted by permission of the publisher, John Wiley & Sons, Inc., from The Decision to Trust: How Leaders Create High-Trust Organizations by Robert Hurley. Copyright (c) 2011 by John Wiley & Sons, Inc. All rights reserved.

Hope for the Future of Trust

By Robert Hurley

Whether it is the financial system, politicians or our boss, we often fail to do our due diligence to gauge trustworthiness. We use a limited schema to judge trust and are then shocked at betrayal. This lack of rigor in making good trust decisions creates an incentive for the untrustworthy. We can blame the untrustworthy for the low state of trust, but we also need to look in the mirror.

After all, should we expect theuntrustworthy to reform themselves? Perhaps the answer is to reform the untrustworthy by withholding our trust? If trustors make better decisions to trust and withhold commitment from untrustworthy agents, Darwinian selection will take hold -- become fit (trustworthy) or die.

Consider the decline of the U.S. auto industry. Up to the 1980s, the Americanautomobile manufacturers dominated the market. Years of prosperity, increasing union wages, benefits and executive bonuses ensued. Executives, acting opportunistically, approved unsustainable wage packages and raised prices until the 1980s when Japanese car companies started producing better quality cars at lower cost.

The U.S. car companies improved quality but, again acting opportunistically, also lobbied Congress for protective quotas and exemptions from the clean air statutes. In advertising, the American car companies exhorted members of their tribe to be loyal and "buy American." Quality really only improved when it became a crisis and people started voting with their check books -- buying the Japanese cars.

When trustors stop holding trustees accountable, betrayal cannot be far behind.Thomas Jefferson suggested that an ability to hold government accountable and protect liberty was a central reason for public education of the masses: "Every government degenerates when trusted to the rulers of the people alone. The people themselves are its only safe depositories." It is not practical or cost effective to assume that formal contracts, monitoring or sanctions themselves will be adequate to ensure trust.

Regulating distrust certainly has a role to play, but we also need individual actors, using a clear trust decision process to hold trustees accountable. The cycle of trust-betrayal is enabled by our tendency to move from trust as a decision to trust as a default -- where no decision process or vigilance is applied.

This is not to suggest that trustors become paranoid. The paranoid, like thecompulsive micromanager, also makes poor trust decisions. Their default is to distrust.

This has its own poor outcomes like the loss of valuable relationships, failure to engage others in committed cooperative ventures and the like. The suggestion here is that responsibility for growing trust falls on both the trustor and the trustee. Everyone in the social system must take responsibility for understanding not just ethical and moral decision-making, but also the decision to trust.

Learning to make better trust decisionsdisciplines a system and provides a self correcting mechanism to withdraw resources and support from less trustworthy agents. Whether you agree with their politics or not, it was a sign of hope that the Tea Party movement in America helped remove elected officials from office who it felt had not represented their interests.

Dr. Bob Hurley is an award-winning Professor at Fordham University and President of Hurley Associates. This excerpt is based on his book, The Decision to Trust: How Leaders Create High-Trust Organizations.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.