New Study Informs Burning London That Austerity Breeds Social Unrest

The title of this post could just have easily been “Study Supports What we Already Know,” but that was probably a little too vague. Of course austerity breeds social unrest, that’s a bit like saying smoking cigarettes often leads to lung cancer. Perhaps it’s to be expected that researchers take a bit longer, in this case almost a century, to demonstrate what common sense already leads one to believe.

A new 30-page study released this month entitled, Austerity and Anarchy: Budget Cuts and Social Unrest in Europe, 1919-2009 (PDF), out of the Centre for Economic Policy Research in London, looks at a number of countries over nearly a hundred years and finds that “societies become unstable after budget cuts.” Go figure. (Note: Whether or not the use of the word “anarchy” in the study’s title makes sense to us is another matter entirely.)

Here’s some discussion on the paper from The Atlantic:

“The theft and violence and street crime and lawlessness in London is shocking. But it’s not unique. Around the world, the burden of unemployment falls hardest on the young, who often respond with violence. The average jobless rate between 18-29 years was nearly 20% last year in OECD countries, the Wall Street Journal has reported. High unemployment was a factor in protests in Spain, uprisings in the Middle East and North Africa.

“The connection between joblessness and violence comes to life in a timely August research paper Austerity and Anarchy: Budget Cuts and Social Unrest in Europe, 1919-2009, which found ‘a clear positive correlation between fiscal retrenchment and instability.’ Authors Jacopo Ponticelli and Hans-Joachim Voth examined the relationship between spending cuts and a measure of instability they termed CHAOS — ‘the sum of demonstrations, riots, strikes, assassinations, and attempted revolutions in a single year in each country.’

“Their conclusion: Austerity breeds anarchy. More cuts, more crime. This clickable graph helps to tell the story.

“‘Educated youth have been in the vanguard of rebellions against authority certainly since the French Revolution and in some cases even earlier,’ Jack A. Goldstone, a sociologist at George Mason University School of Public Policy, told journalist Peter Coy in February. If that’s true, we are only in the first chapter of a worldwide rebellion against lost opportunities for the young.”

The study highlights a few of its own limitations, such as the economic climate potentially driving both budget cuts and unrest at the same time, rather than the former causing the latter. Alongside the limitations proposed in the research, we would also question whether or not the budget cuts themselves are actually the real problem. The problem could be getting underway long before budget cuts, when the politicians originally promise services that the government simply won’t have the future means to deliver.

Politicians promise all sorts of handouts to get elected… sometimes even before citizens think to ask for them. Yet, those still in office when those promises come due should be forewarned. The fact that prior promises could have been highly unrealistic — and often simply impossible to keep — does little to calm the outrage of a citizenry suddenly thrust into austerity.

You can read more details in The Atlantic’s coverage of why London won’t be the last city to burn.


Rocky Vega,
The Daily Reckoning