Why Markets Run on Trust: Tawni Ferrarini on Honesty, Reputation, and Decentralization in the Information Age
Markets don’t work without trust. Tawni Ferrarini joins Juliette Sellgren to explore how honesty and reputation make exchange possible — from medieval trade networks to blockchain and Amazon reviews — and why decentralized trust systems matter in today’s economy of polarization, misinformation, and weak institutions.
- Douglass C. North , a brief biography at Econlib
- Katherine Mangu-Ward on AI: Reality, Concerns, and Optimism, a Great Antidote podcast.
- Charles Noussair on Experimental Economics and Testing Institutions, a Great Antidote podcast.
- Lars Peder Nordbakken and Leonidas Zelmanovitz, Ideas Trigger Change, at Econlib
- Douglas J. Den Uyl on Artificial Sociality: Can human beings and machines with artificial intelligence (AI) be friends or social companions?, at AdamSmithWorks
Read the transcript.
Juliette Sellgren
“Science is the great antidote to the poison of enthusiasm and superstition.” Hi, I’m Juliette Sellgren, and this is my podcast, The Great Antidote, named for Adam Smith and brought to you by Liberty Fund. To learn more, visit www.adamsmithworks.org.
Welcome back! Today, on September 19th, 2025, we're going to be diving into the life and legacy of Douglass North. We're going to be talking about trade, honesty, how institutions work and how they can become corrupted and why they're important, and how everything he studied is still relevant today and those ideas and how they can shape the success or failure of societies and why that matters. And to help us figure that out. Tawny Farini is joining us. She is one of the co-authors of Common Sense Economics, so go check that out. And she's a longtime friend of the podcast and an economics educator. We take a lot of time, the two of us on the podcast to talk about economics, education, and the importance of communicating these ideas. So today's going to be a little different, but I think along the same vein as always. So welcome back.
Tawni Ferrarini (01:28)
Oh, well thank you. I mean, thank you for having me back, Juliette. I'm excited about today's podcast because I really do think it's important to explore these rigorous academic research that's written by these bigger than life the econ influencers have passed so that we can illuminate today's most pressing challenges. And as we know in this era of social media, we have all these echo chambers and political polarization and information overload. It's easy to get swept up in all of this and get emotional and intense about daily events, but if we step back, we can see that there's tremendous value in kind of looking at some of the things that were written in the past in those econ influencers that made a difference in our lives today. And it provides a common ground where people from all different perspectives can look at the same piece of literature or study about the same person, and they can do it in a way that's somewhat objective and definitely unemotional based on current events.
Juliette Sellgren (02:36)
I love that. I am excited to get on track, but for now, I mean, I've asked you this question about a million times, and so I'm excited to hear what you have to say this time. But what is the most important thing that people my age or in my generation or younger now we have people that are kind of conscious in younger generations walking around should know that we don't?
Tawni Ferrarini (03:01)
Well, this is a great question, and I gave this some thought because the theme of this podcast is different than those in the past. So as I step back and I thought about it, I think the most important thing for young people to know today or to think about is that in this world where throughout high school and colleges we're taught to rely on centralized systems to maintain trust in a world where there are so many forces kind of swirling around us, we can constantly interact with each other with strangers in systems and using some of the personal things. And informal institutions rely on our religion or our social institutions, or even the technology such as an eBay or an Amazon, to create these powerful reputation systems that help us communicate in a world where there is dishonesty and that dishonesty might impact us negatively in our lives, in our communities and beyond.
Juliette Sellgren (04:08)
I love that, and it's so related to what we're going to talk about, so let's just jump right in.
Tawni Ferrarini (04:12)
It's exciting. Economic history is just so exciting. So I'm glad that you agreed to this podcast and I hope your listeners agree with us.
Juliette Sellgren (04:22)
Yeah, I mean, I guess we'll see about that.
Tawni Ferrarini (04:25)
Right.
Juliette Sellgren (04:26)
So, let's start with the basics. Who was Douglass North and why is he remembered as such an important figure in economics?
Tawni Ferrarini (04:36)
Well, what's interesting, Doug, is he was an influential American economist. He was born in 1920 and he passed away sadly in 2015. And he received the Nobel Prize in economics along with Robert Fogel in 1993. And they, especially Doug, was recognized for applying economic theory and quantitative methods in historical or to historical analysis. And so it was a systematic way to change how economists understood trade long-term economic development and such in an objective way. I mean, the tools that you choose are always subjective, but it was with intent that they brought this level of objectivity in quantifiable testing the evidence using some data retrieved historically to test those theories. And sometimes they were right or there was evidence to support, and other times there wasn't. And so it just kind of revolutionized the way we approached, especially looking at history trade and the globalization of the world,
Juliette Sellgren (05:53)
How to ask this, how exactly did he apply these methods? What sort of areas specifically within trade was he focusing on? And I don't know, I mean to pioneer a novel approach is kind of bonkers. We live in a world where so much has been discovered and learned, and so it feels like there's not much more to do, but he found something new. And so what was he studying and how did it come about?
Tawni Ferrarini (06:31)
Well to peel back the layers, Doug, he started out as a Marxist and went into socialism, and then he spent time in the Navy, which gave him a lot of time to read. And through his readings, he moved from advocating for a centrally planned approach for growth and development to one that was more decentralized. Most of his work focused on institutional economics and the role of institutions on economic growth. And institutions just simply are rules and regulations that influence behaviors. And if they're formal, they're written down, they're they're official, they're informal, such as religion, habits, customs, norms and such, they're not. And it's through the interactions of both the formal and informal institutions that incentives are shaped. And as we all know, individual behavior is influenced by those incentives. And so Doug was interested in understanding his research and the co-authors with whom he worked, what are the crucial determinants of a society's economic performance over time?
And so they were really focused on these institutions and how they affected transaction costs, the cost of exchange in different environments. When we're in our small circle of friends, we have a reputation with these personal signals that tell us whether this person is honest or dishonest or dishonest and such. And we kind of factor that into the cost of transacting or exchanging with that person. And it can be formal, but it also could be non-formal, informal. And so he was taking what he observed in everyday behavior and what he knew about behavioral science, and he was trying to bring it to the economic performance level. And some of the pieces are very interesting, and one of the reasons we chose the piece that we do with the law merchant and talking about honesty as an economy grows, even you, when you move from a personal exchange of words or feeds or even market transactions, you move into a bigger space that you can be taken advantage of, you can be exploited.
Some people are dishonest. So how do you protect yourself? And so in our conversations, we're looking at how you move through the various systems where there wasn't a government like that. We see in the United States, especially at the beginning, where there are these institutions who protected the rights of individuals to move freely throughout society and as long as they didn't bring harm or hurt to others and do whatever they please. And then the government served and its limit capacity to protect the rights of person and property and provide just a few, just a narrow what is the number of public services? And beyond that, people have a natural tendency to better themselves by helping others and what is needed institutionally, what rules and regulations are needed and what can we garner go back and look through history and see what lessons can we learn about what worked and what didn't? Because the ultimate goal is to help humans flourish and make society better.
Juliette Sellgren (10:08)
I know I said this to you before, but I just have to say it again because it's so relevant, is you hear this sort of thing and if you know anything or follow any sort of news about economics, you remember, oh, well the most recent Nobel Prize in economics was awarded for a kind of similar focus for research that was related to actually why nations fail.
Tawni Ferrarini (10:43)
Or why some prosper, right?
Juliette Sellgren (10:45)
And how it works and how it doesn't. And so what's kind of astonishing to me is that the quest is a never done, but that B, I guess in part we always had the answer. And this is just a formalization of things that started with North or even before North because it's so mainline. It goes back to Adam Smith. And I don't know, it's just the growth of ideas and the way that they've built since then. And honestly, I mean before then is kind of wild. But how does North, I mean, given that I'm around now and I know what I know about growth and development and all of that, how was he placed at the time in all of economics? Because now it's a very clear there is institutional economics, there's development, there are entire disciplines within economics that focus on this, but it seems all downstream of him.
Tawni Ferrarini (12:10)
It is. But he was also very humble person and he recognized that there were influences on his life that mattered because he and I, in addition to him serving as my chairperson, he was also a father-like figure in my life. And he and his wife, Elizabeth, stood up for me and my husband at our wedding. And so there were many nights that we talked not only about economics, institutional economics, but also the personal things that shaped us in our lives and the professional paths that we took. And for Doug, in the private conversations that we had, it wasn't just about publishing, it was about bringing the obvious to people. Remember we've got World War II when he really moves into his work, through his education and through his time at the University of Washington and then later at Washington University, where I actually had the pleasure of working under him as a teaching assistant research assistant, is that he could see that formal and informal rules governing economic behavior, what was lacking at the time.
And this is the entrepreneurial or the academic entrepreneur in him. It's just like, well, how are we going to systematically look at how these rules, these institutions both formal and informal, systematically govern economic behavior? And then when you're moving across individuals and across communities and different groups, how do you bring it all together in a way where you're lowering the cost of transactions when people don't know each other? And how does having a decentralized system where there isn't a central government where people believe that you have the benevolent social planner hovering over everyone across the various groups with different interests, different priorities and such, how can you trust the system and lower the cost of transactions in exchange both formal and informally in such a way that our personal activities can contribute to the community and then onto the nation? And when you step back and you look at the world and you consider how many countries we have and how many different approaches to economic growth and prosperity there are, it's really hard to narrow in on just saying that there's one path. And when you go to the neoclassical theory, there's basically one path. And so this was a way to bring in those social, those cultural dynamics. And the bottom line is you lower transaction costs, you facilitate exchange most formal and informal, and it's through that exchange and the investments people make because uncertainty is reduced that you get the growth and prosperity and things imagined and unimagined.
Juliette Sellgren (15:18)
So I love the way that you phrased the bit about trading with people when there's kind of risk. You don't actually know them. How do you trust people that you don't know and how do you kind of develop those relationships? And that's entirely, I mean, that's how individual life functions. You start, you're born, you don't know anyone, and then obviously, hopefully you're raised in a family. And so you have these kind of relationships that become natural and kind of like a guiding point. But then now, I mean we trade every day with people that we don't know. And you go from literally knowing no one to knowing only your family, to actually interacting regularly with strangers. And so every step of the way from the day you're born to the day you die, or even if we just look at the macro and entire countries, that is the fundamental question of how we get to prosperity. And so we were talking about trade and honesty. There was not always benevolent central planners. And I mean, even now I would say even when we try, are there really benevolent central planners?
Tawni Ferrarini (16:46)
No.
Juliette Sellgren (16:46)
Does it function?
Tawni Ferrarini (16:47)
It's possible they can have that in their heart and in their minds, but it's impossible when you consider the mass amount of information in a swirl of historically obvious and unsettling political, social and events. Sometimes it overwhelms you, but we have systems in place that can help settle what's happening and trust that we can navigate and move forward, especially in this digital age.
Juliette Sellgren (17:20)
I guess let's kind of work through time when there is not this huge amount of trust in government. And when the public planner e arm of life is not very well developed, how did these mechanisms function? What institutions were at play to help develop trust and to keep people honest? Because you kind of do need insurance when you're dealing with people you don't know what happens if someone wrongs you. How did people deal with that? And I mean, this sounds crazy to ask because obviously we wouldn't be here if they didn't figure out how to do that. But so much of our life, you think when something goes wrong, you tell the authorities, what do you do? Who is the authority when there's no authority?
Tawni Ferrarini (18:17)
Well, if we look at the hockey stick of economic growth, we see that throughout most of human history, there really wasn't benevolence in central planning. Power and control was concentrated in the hands of the few, and then the masses basically had to succumb to their wishes. And then we see, especially in medieval times, if you go back, and this is the great thing about using North and his co-authors to go back in history and get unemotional about the systems in place, is that the medieval law merchant of past really revealed this powerful truth. And it is that a good reputation can be an effective bond for honest behavior in a community of traitors as members of the community know how others have behaved in the past. And this came straight from the article that we'll be discussing in a timeless virtual reading group by Liberty Fund.
And so when you step back and you look at it and you say, well, it's not just about medieval commerce, it's about the fundamental challenge of how do people go about transacting in a world in which there are honest and dishonest people? And what is the fundamental challenge? How do you identify somebody who cheats? And then the big question is, what are you going to do afterwards? And if there's not the judicial system that we think about in modern day history or the one that we've studied since we're in high school and beyond college, especially in college, is like we can go back in history and grab these examples of how people promoted trust through reputation and through that trust, you get efficient exchange as we describe it in the world where we're focused on the economic growth of countries and the betterment of society as a whole, which society is made up with people like you and me and people from other countries.
What is it that we do in that world where there isn't this big authority hovering over us and telling us what to do, when to do, how to do it, and what happens if somebody violates one of the rules? And so it's really kind of interesting to step back and look at it. And so if you go back into the medieval times, you see that there was the law merchant, there were fares. And in many ways you can go into the agricultural community of today and the US and see that there are similar informal mechanisms that guide the behaviors of the farmers and the use of social capital versus the physical capital or the human capital, the education that we normally think about. There's this institutional capital we know about how people kind of navigate through these different environments that asse us. And there are mechanisms in there that are placed where it helps us identify who are the cheaters, who are the honest actors. You move towards the honest actors, the cost of transacting with them is going to be lower than the dishonest actors. And so that's where you're going to get the investment in the savings and such that propels an economy and lists the community up and out of the poverty if that's where they start, or to the new level of prosperity.
Juliette Sellgren (21:56)
In a way, what's interesting, kind of centralization, bit aside for a minute, the amount of information we have available to us nowadays on the one hand seems like a really good thing because the cost of knowing the potentially important factors has decreased, right? Because you have all of it in front of you. You can type someone's name in. I was watching How I Met Your Mother the other day, and there's this one episode where every time one of their friends goes on a date, they look up the girl before and then they're like, ah, we found something kind of weird about her. And usually it's like mundane stuff that doesn't matter. But it seems like in a way, there can be too much information and there's a cost to sorting through it to figure out what the relevant factors are. Or sometimes it's factors that are not relevant, which clog the system.
And just because you have a piece of information, you allow it to influence you even though it's not relevant in that sphere. And I mean, now I'm thinking cancel culture. Why do we care about what businesses care about with their marketing? Are they environmentally this? Do they believe in these sorts of justice issues? Whatever. It kind of seems like it's all wrapped up together where you have signaling because you need to signal in order to show people who don't know you that you're honest and worth trading with and all of that. But also it seems like it can get inflated if there's too much information.
Tawni Ferrarini (23:39)
Well, it can get inflated if there's too much information and you don't know whether or not you can trust the information. And is it a product, the information that you're receiving, is it a product of special interest groups swapping what it is that they value most for something that they don't value at all? And kind of creating a temptation for people to act on misinformation. And then what's going to happen once you act on the misinformation? And when we're talking about businesses because you brought them up, what if misinformation, because we're so connected now through the digital means that you've mentioned that we end up taking out a business, an entrepreneur that was misunderstood, or somebody who disagreed with a political or social stance that that entrepreneur took, then all of a sudden everything crumbles. And we're talking about not only closing the business for the day or slowing down the number of visitors or customers, but it could also mean the livelihood of this person.
And then you leave a digital footprint, and as you said, it may have been the product of misinformation or an agenda by one group that they wanted to advance at the expense of another. So it really is a new world, and we constantly say that, but it's always going to be a new world. The world is always evolving. We will always have advancements in technology that connect us and such. The thing is, is that we have to figure out what it is that we're going to lean on to help us identify, let's say the cheaters or the individuals or the systems in this era of chat, GPT, that may have these echo chambers that take bad ideas and they promote them and they build on them, and what's going to happen? How do you know there's nobody to hold responsible? The things that come from chat, GPT, what is it? I don't want to say prompts, but generators.
Juliette Sellgren (25:49)
It feels as though the more, not just the more information, but the more powerful of tools we have, the more we are required to, right? Okay. So we talk a lot about how the tools are great because they save us a lot of time, but the more time capacity you can save up by relying on these tools. Actually the more I importance it is that you as a human and a person using a tool, exercise, discretion and discernment and you understand. And I think that this kind of mean goes exactly back to the North point. At the end of the day, we rely on mechanisms and institutions that can kind of sort those people out and products out for us, but we have to be really careful. And that's always been on us, but the stakes increase, the more productive we get, right? I don't know if that makes sense.
Tawni Ferrarini (26:59)
Well, it does actually. Let's tease out some of the arguments that you made there because when we look at the advancement in technology that has given us these tools that we find that in terms of time, they save us a lot of time on one hand, but then when we look and we say, Hey, we have to check and make sure that the citations that they gave are trusted citations, are they accurate? Are they made up? Then we're just shifting our time from writing a prompt and then getting a response and then going through and checking the logic behind the response and then identifying the citations that have been given to us. And as a researcher, as a teacher, I understand that this is still an innovative tool. At some point, we'll have technology that comes on top of the current technology, and we'll make sure that hopefully that what's coming out is trusted and it's backed by a wide range of resources and not just select resources that happen to be popular on Google searches now, because right now they're just casting in great big net.
And what I see with this emergence of moving away from the large language models to the specialized language models is that we're getting more selective. We're kind of realizing that there is a comparative advantage to build these systems based on all these algorithms and make sure double check the sources that are being drawn from in order to provide the information that is prompted to be retrieved in a way that is reputable. And so right now, I think that this is a perfect example. Juliette is where, because this is so new, it's up to the individual to figure out if you can trust the prompt answers that you receive the responses. And that in itself is a transaction cost. And the higher the transaction costs, the more time we're going to spend outside of productive activity. So your time checking through the citations that you receive is time spent away from generating reports, from communicating with customers, getting to know.
So there will be a shift. And the great thing about transaction costs is that in a world where people want to get rid of them, the technology is going to move in that direction because that right now is going to be assuming that the technology is not already there. That's going to be a high profit earning adventure because everybody's talking about it right now. And that's how you get that spontaneous innovation that Schumpeter talked about and Hayek and such is through that decentralized system. We don't know where it's going to go, but we trust it's going to go on average or on net in a beneficial direction for both the individual as well as the community, and of course the society as a whole.
Juliette Sellgren (30:09)
So to bring the centralization bit back in, we know that we need to be more discerning and that the technology will get there because we want to decrease the transaction cost of actually having to check all this stuff. And that's great, but part of our preference for being able to discern and wanting to honestly rely, I rely on ourselves, but also rely on this technology and actually develop the ability to say, wait, I need to check that I'm the one who's looking out for me, or this entrepreneur needs to provide a good service, otherwise it won't work out for them. That is kind of dependent on us wanting to and needing to do that for ourselves. And with the increase in centralization, and honestly in my whole lifetime, the amount of authorities and agencies who take care of every little thing, you have the FDA and the consumer protections and the this and the that, and you can't even name all of them, but they're all tasked with protecting people from risk and keeping organizations and people honest and honestly kind of removing the burden from people of having to discern and learn to trust and all of that for themselves. And I see how in a way, it could be an attempt at being a benevolent planner, right? Because you do want to formalize these institutions to make it easier to trust so that there's transparency or something. But also I feel like we've kind of lost our ability to feel the need to double check our sources effectively because we don't have to, because someone will sue them or the government will stop them or something.
Tawni Ferrarini (32:14)
When we're talking about, let's say the chat bots right now, who are they going to stop?
Juliette Sellgren (32:20)
I mean, that's exactly the question.
Tawni Ferrarini (32:24)
We have industry leaders who are telling us that it's impossible to identify right now the original source, if there was some type of dishonest behavior in producing an algorithm, in choosing the information that is mobilized in order to provide a response to a prompt. So it's an interesting world.
Juliette Sellgren (32:48)
But we expect that someone will figure it out for us so we don't have to think about it. And there's something about that that I see my peers and I feel it myself that I just assume that someone will take care of it and not feeling the need to take care of it myself or check myself because we trust, because we've been told that everything is taken care of and that there's obviously an authority to make sure that there's nothing sketchy going on, that I just don't worry about it. But it's something that I think we should kind of be worried about and not even worried about, but it's something that you should be actively doing, right?
Tawni Ferrarini (33:29)
Something you recognize.
Juliette Sellgren (33:30)
Yeah, the act of thinking about where is this information coming from? Where is this business coming from? Where is this other person I'm sitting across the table from? Where are they coming from? And being able to even have a mental institution. Now I'm getting really weird, like an informal mental institution where you just have an intuition even or a way of gauging if someone is trustworthy, honest, and genuine. We don't have that as much as we do or as much as we used to. I think.
Tawni Ferrarini (34:04)
This is where Doug North and others like him, the new institutional world, you recognize that there is this world without any central authority, and it is what you said. Your generation has been brought through an educational system that has really emphasized the role of the central authority in their lives inside the classroom, outside the classroom, in their profession. It is a way of thinking. And so this is why we're doing what we're doing. And we're not saying that world with a central authority is a bad world. We're not casting judgment on it. It could be a bad world. That's just not where our head is. What we're trying to do is just say, let's look at the world without essential authority. And there are examples throughout history where we can illustrate the power of having these decentralized systems. In this example or in the piece that we are talking about in the medieval times, you had these law merchants and basically they have reputations to protect. And then when you look at some of the fares you'd go to, a fair was a place where people started collecting themselves from different areas and different regions and medieval times, and they came, they not only did they transact, but they exchanged information about the reputations of the people who are buying and selling.
Are they trustworthy? And as they expanded and they started trading farther and farther out, it became more difficult for them to really rely on those institutions, those rules and regulations to help communicate the information about honesty and bravery and transparency and reliability, accountability, and the list goes on. Now we have the emergence of what we call blockchain technology. And with minors, all of that happens right away, almost in a moment's notice. So it's going to be interesting to see how it all emerges and what happens in the world today, but I think that your generation is at an interesting point because you're being challenged to think on your own and on your own two feet. And what does it look like to be in a world where there isn't any central authority?
Juliette Sellgren (36:36)
Yeah. Well, I mean especially because with all of the generative AI and stuff, knowing things and just having information is not the game anymore. It's entirely about what do you do with that? If all the information is given, what choice do you make, do make with that information? And it kind of turns everything on its head because the game in school, the game in life has been just knowing the stuff. If you know the stuff, you're good. And now we have to make decisions because the technology has evolved to a point where the human value add is being discerning and being able to be an agent that makes decisions and has kind of this cognitive engagement, which I think is cool. I think it'll be good for us. But I think the rise of decentralized institutions and kind of stuff like Bitcoin and blockchain and all of that is really cool. It feels like a response. I know we kind of talked about this, but it feels like a response to just how, I don't know, public slash not in our hands. The trustworthiness bit is right. It's a totally private thing.
Tawni Ferrarini (38:18)
Entity, system that it bears out the dishonest people. I mean the records and exchanges that take place in the blockchain. And with cryptocurrency and such, you have these entities called minors especially that come in and check for transparency, making sure the actions are authentic and that they're properly recorded and the list goes on. And if they're not, they're pushed out immediately. And that's what the minors get paid to do is kind of make sure that the system is honest and trustworthy and that you're getting what you thought you were getting. But I'd like to circle back with something that you said earlier,
And that is you are receiving information at a historically fast pace. Your generation is, and it's great to have that information. It's great to you as a human, to go in and check the accuracy of the answers that you're given, making sure that they're based on critical reasoning and that the source is cited or actually reliable and valuable. But remember, you have to have an exchange partner on the other end of it. What are you going to do with that information and how is it going to compare to the systems that are already in place? Is it going to take you more time using AI to search for and create a report after doing everything that we described? Or do you rely on just your mental capacity and the knowledge that you have and such? So it's an evolving process that I don't think we're going through it right now, but in this digital age, especially in this world, the political and social activity that's happening not only in the United States, around the globe, we have to ask how are we going to build and maintain trust?
And those are the types of questions that Doug North and others are interested in doing. And so sometimes you're talking about questioning whether a central authority can do that in modern days. Let's look at the decentralized paths that have been taken throughout history. And no, we're not going to repeat exactly what happened in the past, but we're going to evolve a new system. We're past. Yeah, we're past that. That's right. But then now when we look at the blockchain technology and the things that happened with cryptocurrencies, and we still don't understand it, they're not mainstream yet, but they are being tried, they're being tested, they're being perfected. And in these instances, it's a decentralized system where the people have individual power and authority and they're responsible for the actions and the interactions that they have, and they can do it in a variety of settings and not just one.
Juliette Sellgren (41:09)
What do you think, I mean, given everything that we've talked about that North would kind of make of the situation we find ourselves in, right? With the evolution of technology and all of the political and economic uncertainty that's been happening in the past, not that long.
Tawni Ferrarini (41:29)
Well, we've seen the rise in central authority in everyday life. And as you described before, your generation has been taught that that's the only path forward. And you just trust that the central authority figure in your life is going to act out of benevolence. When we're seeing now that there's evidence to suggest that the swapping of votes, special interests, concentration of power and authority in the hands of the few is a very dangerous thing. And how do we respond? How do we act? And I think that one of the things that we can do so you don't feel hopeless is go back and look at some of what happened historically and see that it is spontaneous. We're not going to be able to pull from medieval times and say, this is what they did, so we can do it now. We can just trust that if we, as Adam Smith said, focus on our relationships individually and then into the proximity factor, plays a big role in Smith's role that as we work in our community, our self motivation, our drive to make ourselves better by serving others is going to help us in our everyday life, but also in our family life and our community and of course society.
And so I think getting back to the basics, understanding that the individual, it's out of our natural interest. We can strip away all these things that modern society has given us because it is just our natural interest to do better every day. When we wake up in the morning, we want to be better at the end of the day, want to be better at the end of the week, year, and so on and so forth. And how do we do that best? We're creatures of habit. We're creatures of norms. We're community members. We have this social interest in helping ourselves by serving others in meaningful ways.
Juliette Sellgren (43:42)
I love that. And I mean, that's such a good note to end on because I feel like that's the human condition. I feel like that's what we all want and what we all are. I have one last question for you.
Tawni Ferrarini (43:58)
What's that?
Juliette Sellgren (43:59):
What is one thing that you believed at one time in your life that you later changed your position on and why?
Tawni Ferrarini (44:05)
It actually is that central authority piece that you brought to the forefront? In our conversation throughout my high school and undergraduate education, I was taught that especially when you look at the complex world beyond our classrooms, is that it requires massive government enforcement and involvement to prevent chaos. And then I discovered economic history through Douglass North and others like him. And through that investigation, through time and time again, across countries and different situations, people emerge to create these sophisticated systems that can handle international trade and spanning transactions and exchanges across country and across time. So when I think about you and your generation, I would encourage them to do, as I did, is go on a quest, figure out what the pure mechanics of reputation is. You've got 'em all around you, eBay, PayPal, WhatsApp and such. You're constantly keeping track of each other's exchanges and you mentally note, if not formally note any violation of trust or dishonesty.
Just think about what role that plays, what happens when you don't have that central figure in your life, kind of like hovering over you, telling you what to do, how to respond, when to respond. So the kicker with all of this is that there's a private system out there. Even though some people, your generation, many think that it's a primitive system and it doesn't really apply to modern society. It does. And often these private systems can be more efficient than the centrally planned one. And there are ways beyond the bureaucratic system to maintain trust and to protect our reputation. And with that, as we move into this, take this information and bring it into your online presence, your professional network, and create a digital footprint that makes you an honorable person and projects to the work, to the world that yes, you're a worthy transaction partner. Whether it's personal exchanges on a dating app or it's working as an online creator, it doesn't matter. Just figure out what you can do because you have the power to change your world and people's perception of you every minute, 24 hours a day, 365 days a year.
Juliette Sellgren (46:50)
Once again, I'd like to thank my guests for their time and insight. I'd also like to thank you for listening to The Great Antidote Podcast means a lot. The Great Antidote is sound engineered by Rich Goyette. If you have any questions, any guests or topic recommendations, please feel free to reach out to me at greatantidote@libertyfund.org. Thank you.