Riots and budgetary austerity

From the liturgy of disturbing reading in the past days, I’ve picked out two pieces — and, no, I don’t include David Cameron’s predictable characterisation of underclass youth as mindless looters while, in the heart of London, super-rich casino bankers and tax dodgers continue to rob us of vastly greater sums. The bad news I’m talking about concerns the parlous state of the European and US economies.

One piece (also mentioned on Duncan’s blog)[1] is written by Prof. Nicholas Bloom at Stanford University in California arguing that financial market volatility stemming from Eurozone contagion, fiscal retrenchment in the EU (including Britain) and growing political paralysis in both Europe and the United States will lead to a double-dip recession in the US towards the end of this year.[2] The index of stock market fear has jumped to levels not seen since 2008. If he is correct, more recession in the US will compound the problems on this side of the Atlantic, and number-crunchers at both the Bank of England and the Office of Budget Responsibility, who have already revised their UK growth estimates downward to around 1.3% for 2011, will revise them closer to zero as the year ends.

Even more worrying is a new working paper from the Universitat Pompeu Fabra in Barcelona which looks at nearly 100 years of data to test for any relationship between budget cuts and political unrest—whether rioting, demonstrations or attempted revolution. The authors conclude:

As expenditure cuts start to bite, the number of anti-government demonstrations, riots, general strikes, attempts to overthrow the established order, and political assassinations increases dramatically.[3]

For those who would dismiss such work as the usual academic star-gazing, let me leave you with a quote from one of the best journalistic commentaries I’ve read on the on the London riots.

“Working at street level in London, over a number of years, many of us have been concerned about large groups of young adults creating their own parallel antisocial communities with different rules. The individual is responsible for their own survival because the established community is perceived to provide nothing. Acquisition of goods through violence is justified in neighbourhoods where the notion of dog eat dog pervades and the top dog survives the best.[4]

Remember the above when next you hear some right-winger pontificating about the importance of family values and individual responsibility.
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[1] http://duncanseconomicblog.wordpress.com/2011/08/10/uncertainty-recession/
[2] See http://www.voxeu.org/index.php?q=node/6846
[3] See http://www.voxeu.org/index.php?q=node/6851
[4] See http://www.independent.co.uk/opinion/commentators/camila-batmanghelidjh-caring-costs-ndash-but-so-do-riots-2333991.html

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