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Government trust is declining, and ‘businesses have to step into the void’: Edelman CEO

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Edelman CEO Richard Edelman joins Yahoo Finance Live’s Julie Hyman and Brian Sozzi to discuss the cycle of distrust for government and media, trust index data, and the outlook for the state of media.

Video transcript

[MUSIC PLAYING]

BRIAN SOZZI: The world is failing to meet the unprecedented challenges of our time because it is embroiled in a vicious cycle of distrust, according to the latest Edelman global Trust Barometer. Let's talk more about this with Edelman CEO Richard Edelman. Richard, always nice to see you. Within this report, you're saying that distrust is now society's default emotion. Is that mostly because of the pandemic, or is there something else going on here?

RICHARD EDELMAN: I think the pandemic has actually worsened the situation, but we have some fears that really are core, which is downward economic mobility, fear of job loss to automation, sustainability, climate change, privacy. But what the pandemic has done is fundamentally weakened our belief in government. It's as in the democracies. Democracies are really declining.

And what you see is evidence that business has to step into the void. Five times more trust in business than in government on the matter of competence. 50 points. It's crazy. And again, the pandemic is the shop window that people are using to evaluate government.

JULIE HYMAN: Richard, it's Julie here. At the same time, this is a trend that's been going on for a couple of years now. I've been tracking your survey-- of course, we've talked about it before-- and that confidence in business has been rising, and we have seen this trend of businesses feeling they had to step in to try to solve some of the world's big problems. Now, your firm councils these guys, right?

Is it a blessing and a curse? What are the sort of pitfalls of being seen-- of being held in higher esteem and being sort of given greater responsibility on that front?

RICHARD EDELMAN: So it's a left hand and right hand, Julie. So on the positive side, by 5 to 1, people say, I want more business involvement on climate change or race and diversity or reskilling. But at the same time, for the first time, we find that there's a big drop in trust in business by Republicans, who feel that business has gone too far-- 12-point drop. First time we've ever seen Republicans trust business less than Democrats.

So, in fact, you have to have a swim lane. And to just say, OK, business, you take it all is a mistake. Business wasn't elected, it wasn't appointed, and we have to be sure that there's a playing field established by government, such that stakeholders see that, in fact, business is executing within its remit.

BRIAN SOZZI: But Richard, you also assigned some blame-- or the survey assigned some blame to the media. Take us through that.

RICHARD EDELMAN: Well, I think that government and media are in a death grip. The business model for media at the moment is moved to the extremes, generate heat by controversy, and that leads you to more subscriptions, and rinse and repeat. And on the other side, the government is aiming at division and makes its business, somehow, of fundraising improved by controversy.

And so these two institutions, which should be the most normal, logical, stabilizing force have actually forfeited that. And it has to be business that acts as the stabilizer in the next year or two.

JULIE HYMAN: Do you think-- do you see these percentages-- in terms of degrees of confidence-- do you see them coming back to more normal levels, or is this a change that is going to be more permanent?

RICHARD EDELMAN: I think government has the best opportunity to recover. We saw, in fact, at the beginning of the pandemic, that government was 65% trusted. The only institution with a big enough bazooka to handle the problem-- biggest since World War II-- but how we handle the pandemic in the next months is going to be the key to reestablishing trust in government.

Meanwhile, for the media, it has to be make your business about authority again, as opposed to chasing clicks. If, in fact, we are going to have a successful world, information quality has to improve so that we actually have a set of agreed facts and we can make decisions in everybody's interest.

BRIAN SOZZI: Richard, lastly, were you surprised that, in the Barometer, that many said they think they will be worse off financially in five years?

RICHARD EDELMAN: Look, I think it's a problem of democracies. We saw that no democracy actually had over 40% belief that they would be better off in 5 years. And similarly, 80 plus percent worry that they're going to lose their job to a machine. So until we solve those core problems, we're going to have a trust deficit in democracies, in government.

Also, the mass class divide is stunning. It is now between the highest and lowest class-- 25%, bottom 25%-- we see a huge divide. And again, it's because assets have gone up in value for the wealthier class, and, you know, the lowest 25% doesn't have access to those. So we've got to make sure that there's a fair solution for all. The system has to work. That's the key point.

BRIAN SOZZI: All right, we'll leave it there. Edelman CEO Richard Edelman. Always nice to see you and catch up with you on this. We'll talk to you soon.

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