I don't know that it is blind trust in institutions.

I think the problem is primarily what you wrote about "outgroups", where once it is the "other" that is targeted, then people support it. They just don't do the math about how that is happening, what institutions are doing it, or how those policies and methods could eventually be turned against them.

And yeah, there's Fundamental Attribution Error at work. Still, I think there's some more narcissism-spectrum-related logic at work where people don't have the self-reflection to consider that conditions they impose on others could wind up getting imposed on them.