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In "Anarchy
and Austerity: Why London Won't Be the Last City to Burn," The Atlantic's Derek Thompson touches upon what has been a key underlying
theme of my second book, Financial
Armageddon, and my third, When Giants Fall:
deteriorating economic circumstances go hand-in-hand with deteriorating
social conditions.
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.
Of course, if
our government had operated in a more honest and fiscally responsible
manner before now, we wouldn't be in the position of having to choose between
an austerity-fuelled eruption or a
hyperinflation-fuelled meltdown. But it's too late for that now.
Michael J. Panzner
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