In the United States over the past decade, we have lost confidence in both the government and the private sector to do the right things with our money, and as a result, we just don’t seem to have the stomach for making any new investments, even when good options exist.

For instance, investing to reduce the risk of climate change impacts has a highly profitable ROI, as The Economist and many other respected researchers have concluded. But it takes capital, and in this fearful environment, we are at an impasse. We have lost faith in the ability of our institutions to use our financial resources to create a better future. It is even possible that we have lost faith in the fundamental mechanisms that govern our institutions.

This is a worrisome turn of mind.

Over the past few months, I’ve been reading the Little House on the Prairie books to my daughter and the sequels about her daughter Rose that stretch into the early 20th century. One of the fascinating things about re-reading these books as an adult is encountering the relationship between the westward pioneers and their stuff. When Laura is five, she is delighted at Christmas to get her own tin cup for drinking, so that she doesn’t have to share one with her sister, Mary. There is barely enough, and yet the feeling of scarcity is rare in these stories. Two tin cups for two sisters is enough.

Once upon a time, when people owned three outfits, they would take the rest of their money and invest in their future. Which of us could say the same?

It is perhaps no coincidence that one of the most massive investment booms this country has ever had took place in the late 19th century. I am not talking about the stock market specifically, though the capital markets of that time provide some fascinating stories, but the investment in things that would bear on one’s descendants. At a national level, there was the building of the railroads across the country and the thousands of individual decisions to move west and hold on to a claim. In Seattle, we had the building of the ship canal and the Denny Regrade.

Interestingly, this was not a low interest rate environment. In many cases, even secured personal loans (for instance, a mortgage on a farm) ran at 15%. Capital markets were relatively illiquid with much higher frictional costs than today, and yet, people invested. They invested in every way, time and money, not because capital was cheap but because they had hope. They recognized market risk, but they trusted the fundamental integrity of their institutions, both public and private.

Perhaps the greatest loss of this recession is the loss of our faith in government and in the private sector to invest our money for our future gain. What else could provoke a political discourse where “big government” is generally vilified, while the 99% have also lost all faith in the private sector? If we don’t believe in either of these institutions, than what mechanism do we have left through which to invest? We are reduced to making small, personal choices that are difficult to align into true systemic change, or we pour our money into our own private sphere, using it to buy houses and fill them with stuff. How do we rebuild institutions that are worthy of our faith and our investment?

Perhaps we need to shore them up with fewer rules. It sounds like a paradox, but maybe it isn’t. The proliferation of rules, particularly in a litigious society (and we are one) can make people think that the rules are all that matter. If you haven’t broken a rule, you aren’t doing anything wrong. We have so many rules that we dissolve our focus on outcomes. Our rules also make us less nimble and responsive to emerging ideas for good or for bad. This is true across both government and in the private sector.

Complex systems of rules can lead us away from the discussion of what we are actually trying to do. Even worse, they can be a barrier to innovation and even social equity. Think about whether Sarbanes Oxley is really engendering better corporate citizenship or just more barriers to entrepreneurialism.

The more rules we pile on, the less we look to personal judgment or common sense. Are we really well served by a Seattle land use code that has 49 chapters and over 700 pages? Do the bankers in London really need more rules to know that it’s a bad idea to skew their LIBOR rate reports?

Perhaps the way forward, the way to find our investment hearts again, is to dump a whole lot of rules out the window and focus once again on outcomes: simple rules like “thou shall not lie to or mislead your investors.”

We need to go back and articulate why our institutions exist in the first place and what we can expect if we give these institutions our money, in trust. Then, we need to evaluate them – and their leaders – not on whether they follow some detailed set of rules, but on how well they serve our society.