Credibility costs

Credibility is the degree to which others can believe that a promise will be kept, a commitment to be believed, and an obligation fulfilled. Credibility is easy to lose due to forgetfulness, sloth, myopia or through unreasonable assessment of capacity when the commitment was made. It is much harder to gain.

Building a long-term history of fulfilling one’s promises in a verifiable manner is a certain path towards credibility. The United States government has never defaulted on its bond obligations despite numerous times when short term economic or political gain may have made that option a tempting one. The T-bill has been considered to be the closest thing to a risk free investment on the planet due to this demonstrated credibility and commitment to paying investors back.

Most people and organizations do not have a two hundred year history to prove that their promises are honored, so there are other ways of guaranteeing an action. Promises and statements are very believable if there is a contingent incentive that penalizes the breaking of that promise. For instance, a defendant who pays for a bond guarantees that they will show up for a future court appearance or forfeit a significant portion of their current and future standard of living. Even if the defendant is not inclined to show up exclusive of the bond, the promise to suffer significant pain strongly motivates an individual to fulfill their promise.

If an organization makes a promise that they fulfill despite its very high costs, than the general public can believe that future statements are believable. The ACLU has a very strong belief that civil liberties are for all Americans, no matter how unpopular or despicable an individual or a group may be. This means that they’ll defend anyone as a matter of principal if the ACLU believes that there is a civil liberties issue. And this commitment is credible, for as Captain’s Quarters [via Memeorandum] points out, they are currently defending portions of the American Nazi Party for their right to assemble and protest. This is an evil group, but it is a necessary action if outside actors are to believe that ACLU promises are believable.

Defending the American nazi Party is an expensive act for the ACLU, but it reaffirms their credibility.

The basic act of inflicting costs on oneself to reinforce one’s commitment to principals and statements also applies to politics. Tim F at Balloon Juice offers an opportunity for Democrats to increase their credibility when they argue that they are serious in restoring openness, competency and an aura of non-corruptibility. He wants the Congressional Ethics Committees to start engaging in serious oversight of the members of Congress. There are numerous members of Congress from both parties, who are either massively corrupt or at least have enough fingers in suspicious looking pies, who deserve sanction. If the Ethics Committee can begin issuing sanctions future behavior should improve. The problem with this course of action has been a bipartisan ethics truce.

Tim proposes that this ethics truce be removed and that the first targets of Ethics Committee investigation be a couple of Democrats. I support this proposal as it should establish or enhance the Democratic credibility that they are actually doing something different and better by demonstrating that they are willing to incur significant costs to back up their words.

Credibility is key to good long term governance. People need to believe promises will be kept to the greatest extent possible and that short term self-dealing will have significant, predictable and near immediate repercussions.