Trust allows more than one person to act collectively.
It is handy, for example, in all kind of scams. Also, it is handy when you are ganging up with other tugs to beat and abuse the people around you. It even helps in more respectable activities, as business and politics.
When you trust someone, you act as if the other person will complement your actions. It can fail, just as much as you can reach out to grab a glass and let it fall. But the reaching for it was confident, was straight. This is much more efficient than doubt, than carefulness, than negotiating all the way. By the same token, really trusting another person permits you two to negotiate fast enough to make it equivalent to being one agency.
Trust is not the same thing as being able to predict the trusted one’s actions. Children trust (most of the time) their parents, even if they are not able to comprehend their lives.
The thing is, two persons are as tough to beat if you are a lone person as to make it not worth the try at all. Tree persons ganging are virtually invincible. That generates all kinds of positive effects. For example, it is so hard to beat 3 guys that none of the other 7 guys will ever try, therefore making the 3 guys in effect more powerful than a larger number of guys.
The synergy effect, when turned to more long-term goals, as making dams and building an strong economy, can be devastating — it creates civilizations! It is not a matter of being good, mind you, but only of the time-reach of the goals.
However, I do not believe governments are based on trust. The argument goes that the people (meaning the array of every person you can find) only allow government because they trust their fellow human being as having the best interest for the collectivity, and therefore they all are able to agree on a social contract that unites them in a nation. That is to say, the nation and the government are forms of trust, are the same mechanism of the 3-guys gang applied in much larger scale.
It should be easy to establish that many people dislike their government, but that’s beside the point. What I mean is that the government is not based in the governed people acting collectively. Internally, the government might use a lot of trust (that is also beside the point), and it might make life more predictable and therefore more pleasant. But, trust-wise, there is no connection with the people.
The reason why a nation cannot be based on trust is that simply there is not this much trust around to be had. Trust can be built, but it is hard and even harder in large amounts. I for one will never trust someone as much as I do trust the two best friends I have from my childhood.
Therefore, humanity just can’t sit and discuss it’s problems and simply and directly act to solve them. That would require more trust than is available. For trust is a scarce good.