Recently the news has been flooded with sound bites devoted to the now infamous “Madoff scandal”…the gigantic ponzi scheme devised by Bernard Madoff that has bilked investors of a reported $50 billion dollars.  Thousands of investors who thought their investments were not only safe but almost guaranteed handsome annual returns have been blindsided by a new reality.  As it turns out, the man revered on Wall Street and who even the savviest investors trusted with their fortunes has turned out to be possibly the biggest crook of all time.   How could this have happened?   What kind of impact will this have on his investors and the public at large?   But more relevant to our topic..."Is there something that we can learn from this event that will better help us identify and navigate deceit when we encounter it in our own lives?"

Now before you breathe a sigh of relief that you were not a victim of this massive fraud you might want to reconsider your good fortune.  You see, whenever a public icon or worse yet person with whom we have a close relationship is revealed to be a fraud or is caught in a betrayal, we are all left to cope with one of the biggest hidden tragedies of such actions…the erosion of our own willingness to trust.

Of course there are many voices today acknowledging how trust has been violated in the financial community.  But I am on a short list of those audacious enough to suggest how the direct financial losses being suffered by Madoff investors pale in comparison to the costs incurred when the critical fabric of social trust is compromised.  While there is of course no way to quantify the social costs of any betrayal, suffice it to say that when individuals are exposed, either directly or vicariously, to personal deceit the stakes are high...very high.  Why do I say this?  Let’s start with the obvious…the economy.

Economists are currently being reminded that the economy is really no different than any other form of social organization in that it is built on faith and trust.  When that trust is compromised, the economy suffers because people become more risk-averse and slow down or stop spending and investing.  And because people are both rational and emotional by nature, during times of heightened risk/stress their emotional selves often become dominate leading them to become excessively cautious and risk-averse…even in situations that do not warrant such caution.  This is not to suggest that when trust is violated that more caution is not warranted.  It is.  What it does suggest though is that because of real or perceived losses, many people become more risk-averse than is warranted for a given situation.

Seen in this light, a recession is as much a mental event as a financial one.  While the end result of a downturn in the economy is financial scarcity, subdued business activity, and of course lost jobs, these consequences of a recession are due in large part to the social forces that are unleashed when individual and corporate trust is violated.  To be clear this view of a recession is not meant to suggest that it is simply a “mind event.”  Rather it is meant to emphasize the significant role that a trusting mind plays in healthy economic activity.

So how does this apply to our own experiences with personal deceit? As previously indicated many people who experience betrayal understandably react to such violations of trust by being excessively cautious and risk-averse…even in situations that do not warrant such caution.  They become victims of what might be called the “Madoff Effect,” where real or perceived violations of trust, directly or vicariously experienced, have resulted in such losses or perceived risks that a person begins to live a life of excessive and indiscriminate caution.

Just like the person who exercises excessive economic caution, we begin to avoid appropriate personal relationships because we fear the risks involved.  We become indiscriminate in our appropriations of mistrust and begin to see all actions of a particular person, type of person, or group of people as untrustworthy…even when evidence suggests that we should do otherwise.  Certainly there are times when deceit and betrayals require the need for strong responses and may even require that we sever a relationship with the person or persons in question.  But even if a separation is warranted, there is still a need for openness to other more trustworthy relationships.  And at other times the possibility of reconciliation needs to be considered.  Whatever the situation, succumbing to the Madoff Effect will hinder us from moving forward in a healthy way in our lives.

A clinical distinction may be helpful here.  Contrary to the simply paranoid person who experiences a constitutional incapacity to trust and who views all people and events suspiciously, those who suffer from the Madoff Effect possess the capacity to trust but refuse to exercise that trust because of the perceived degree of risk.  A person caught up in this self-protected mode of living believes that avoiding all types of risk related to certain people or situations will result in a more secure and thus happier existence.  However, an examination of such strategies usually reveals a person living a bland stale existence where their rigid interpersonal boundaries have left them devoid of the critical relationships that infuse life with joy and satisfaction.

So what do you do if you find yourself struggling to trust appropriately? Well, a good place to start would be by memorizing the following definition of trust and allowing it to guide your decisions when navigating your connections with others.

Interpersonal Trust - “the choice to place firm confidence in the good intentions and capable actions of another person encouraged by their previous trust engendering behaviors.” (Sphar, © 1997)

Now that is a lot to take in so let’s break it down to see what it all means.

1. First, appropriate trust involves a “choice.” Nobody makes us trust another person…it’s inherently volitional and can be understood as a leap of faith… where we leap from “what is” to “what is believed to be possible.”

2. Second, “firm confidence” suggests that this decision will involve a need to hold firmly to one’s choice in the face of the inherent uncertainties of human behavior. If the behavior were guaranteed there would be no need for trust. In this sense, trust can be seen as a gift since the giver deems the recipient worthy of such confidence.

3. Third, we trust people to possess both the “good intentions” and the “inherent abilities” to carry through on those intentions. Good intentions, while necessary, are not enough. The person must have given us some evidence that they can carry them out. These two qualities are essential if we are to consider someone trustworthy or worthy of our trust.

4. Fourth, we base our choice to trust on “previous trust engendering behaviors.” The choice to trust should be reasonable in that we need some past history on which to build our leap of faith. Therefore the decision to trust should not be confused with an act of “blind faith.” Furthermore, the presence of history also implies a connection between the decision to trust…the degree to which we trust…and the passage of time. Trust, is both something we do and something we accumulate…it is scalable and our capacity to trust can be built degree by degree over time.

5. Fifth, while not inherent in this definition, we need to be reminded that trust can be applied to both to the global and individual qualities of another person. When trust is compromised in a certain area of a relationship we may still find areas of that same relationship worthy of our trust. For example, a friend who shares a confidential disclosure to a third party may still be trusted to care for your children during a time of crisis.

By beginning to internalize the distinctive features of a well-formed view of trust you will hopefully discover a new liberty to embrace appropriate trust in your life.  If nothing else, the Madoff scandal has highlighted for us the tragic social effects that play out in all relationships when trust is violated.  Hopefully these lessons will not be lost and we will all be prompted to re-evaluate the importance of trust and of being a trustworthy individual in our dealings with others.  Healthy and meaningful connection, a critical need that we all share and without which we suffer, depends on both our ability to trust appropriately and to be a trustworthy point of connection with others.

Are you trying to determine if you may need more ongoing assistance with issues involving trust?  Consider the following questions:

1. Have you been deeply hurt by betrayal and disillusioned by the idea of trust?  Have you become resigned to the view that trust is nothing more than the fools gold of the unsuspecting and naïve, promising a reward that is illusory and ultimately just disappointing?

2. Do you need help learning how to trust yourself and/or your own instincts about others?

3. Do you want to work on being a more trustworthy and reliable person to others?

4. Do you need help working on reconciliation with another person…an inherently trust building process?

5. Do you find yourself needing help with discriminating between trustworthy and untrustworthy relationships?

If you have answered yes to any of these questions, give us a call at 512.351.4933

Copyright © 2009 Asa R. Sphar III, Ph.D. - All Rights Reserved

Asa R. Sphar III, Ph.D., LPC, LMFT

Professor / Chair, Psychology and Counseling Department - NOBTS (1993 - 2007)

Author: Helping Hurting People: Reconciliation-Focused Counseling

Director: Counseling Services of Austin, LLC

Reconciliation-focused therapy has been taught to literally hundreds of graduate counseling students over a period of 10 years and it continues to be developed and refined through rigorous empirical investigations.  In 2002 the first book on reconciliation-focused counseling was published.  Subsequently, three attachment scales were designed that serve to objectively measure the quality of a person’s attachments across three relational domains.  These instruments serve to guide therapists in their approach to the counseling task.  To date, these attachment scales have been the subject of empirical investigation by two doctoral dissertations.  In 2002, RFC was presented to the International Conference of the Christian Association for Psychological Studies.