Valet Parking

Every now and again, you stop and think that we live in a very remarkable society.

One of the things that brought this feeling was giving my car to a valet the other night. Just consider for a second how his institution works. Guy A pulls up and gives his $80,000 Mercedes, keys and all, to Guy B. Guy B is likely making about $10 per hour and may very well have a net worth significantly less than the car he is entrusted with, and yet Guy A lets him drive it away to park it. Guy A probably walks away without even checking what happens when he leaves and without asking where it will be parked. At the end of the meal, Guy B brings the car back intact, possessions all inside.

To make things stranger, this happens for run-of-the-mill restaurants, amongst people who've never met before and may never meet again. It's not just at some high-end country club with repeated interactions.

How many countries in the world do you think this kind of norm could reasonably work in? How many periods in history did people exhibit this much trust towards complete strangers? My guess is that the rate of theft wouldn't need to get very high at all before this institution would collapse completely.

And yet there it is.

Luigi Zingales, who's done a lot of work on this area, would argue that trust is linked to economic development. There's all sorts of value-increasing transactions that can only take place among strangers when there's strong norms of co-operation and low rates of screwing people over.

In other words, we shouldn't be surprised that institutions like valet parking only exist in highly developed nations.

Strange times.

(from a conversation with The Greek).