Cornell Video

Wesley Sine provides a direct link between equality and the cost of doing business. It’s common for an economy to be organized to deliver the most resources to the most skilled, and this practice brings about varying levels of inequality. Social inequality drives social mistrust, and this affects business practices, where entrepreneurs resort to excessive contractual and regulatory practices that increase the cost of doing business. “The cost of doing business goes down significantly,” however, “in areas characterized by high levels of trust, driven by high levels of equality.” Sine observes that when governments support organizations that work across social boundaries, like churches or social clubs, they can build social trust, thereby promoting entrepreneurship and innovation.