Chapter 8: Public Trust in Institutions in Pre- and Post-Crisis Iceland (II): Institutionalised Mistrust

Abstract Public trust in institutions in Iceland plunged after the country’s banking sector collapsed. The political system wobbled under outrage and anger when the general public took to the streets. The Parliamentary Special Investigation Commission conducted a ground-breaking crisis-induced investigation, delivering a report that was a milestone in Iceland’s history of politics and public administration. Yet, despite this endeavour and the fact that subsequent investigations have disclosed ample information intended to restore trust in institutions, public trust remains unsteady. This chapter addresses the following questions: How has public trust in institutions progressed after the crash? Why is it taking so long for trust to return? In Chapter 3 in this volume, we examine data on public trust in Icelandic institutions from Gallup surveys over the 15 years from 2002 to 2017 in order to identify and explain patterns of trust in the aftermath of the crisis. Our interpretation of theory in this chapter suggests that elements of mistrust inherent in the principal–agent approach to accountability in public administration, implemented in previous New Public Management reforms, undermined the creation of a climate of trust necessary to ensure effective accountability mechanisms. We argue that in the absence of a climate of trust, accountability mechanisms of culpability that conflict with mechanisms of answerability, combined with a succession of post-crisis scandals, mainly explain the slow return of the public’s trust.