“Trust is the cultural key to prosperity.”

– Francis Fukuyama

Every year, the World Economic Forum — “an independent international organization committed to improving the state of the world” and holding celebrity studded meetings in glitzy locales — publishes its Global Competitiveness Report (GCR).

As with most such lists, it draws headlines for a day or two touting various countries that have moved up or down and is promptly forgotten until the next year’s edition. This is unfortunate because there are often extremely interesting facts hidden in the minutiae assembled to generate the headline-grabbing final numbers.

In the 2012-13 edition of the GCR, one such treasure trove is found under the heading “public institutions.” The scores and rankings in this category are not derived from published numbers purporting to measure a concept or activity, but from a global survey of over 14,000 business executives from 144 countries.

And the survey does not ask its questions with respect to some absolute, measurable global standard but with respect to the given executive’s opinion. For instance, one question is: “To what extent do government officials in your country show favoritism to well-connected firms and individuals when deciding upon policies and contracts? (1 = always show favoritism; 7 = never show favoritism).”

In this case, the higher the score, the more impartial (and therefore presumably competition enhancing) is the regulatory environment of the country in question. And, since respondents are asked only about their own country, each country is ranked according to whatever definition of “favoritism” is common to its sample of business executives. In short, the question measures how well a country is doing not according to some absolute global “favoritism” (50 bribes for every 100 transactions, for instance), but according to whatever standards executives in the country already have in their minds and bring to the question.

And this is where the rankings get interesting for the United States. Overall, combining all the measures (both “hard” published data and “soft” opinion data), the U.S. received a score of 5.47 in 2012-13. This score put us seventh among the 148 countries measured, behind Switzerland, Singapore, Finland, Sweden, Netherlands and Germany. This rank was a drop of two spots from our fifth place finish in the 2011-12 rankings.

But on the “favoritism” question noted above, our score was 3.22, good for rank number 59, just below Bolivia, Guinea and Tanzania. For the question, “How would you rate the level of public trust in the ethical standards of politicians in your country?” our score was 3.13, good for 54th place, just below Kuwait, Morocco and Zambia, and far below China, which ranked 26th.

For the question, “How easy is it for businesses in your country to obtain information about changes in government policies and regulations affecting their activities? (1 = impossible; 7 = extremely easy)” our score was 4.41, good for 56th place.

For the question, “How would you rate the composition of public spending in your country? (1 = extremely wasteful; 7 = highly efficient in providing necessary goods and services)” our score was 3.16, good for 76th place in the rankings, just below Nicaragua, Mali and (God forbid) Ireland.

The point here is not to say that our government is as corrupt as those in sub-Saharan Africa or as wasteful as Ireland’s, but that over more than 400 U.S. executives seem (for whatever reasons they may have) to think that it is. And that’s a problem, a major problem.

Business executives who think our basic institutions of government are corrupt and wasteful are not going to rush out tomorrow and hire the people who need jobs to make our country prosperous. More than tax rates, more than energy research, more than pension reform, we need institutional renewal if we are to achieve the economic growth we need to escape our present morass.

Charles Lawton is senior economist for Planning Decisions, a public-policy research firm. He can be reached at:

[email protected]