Do Budget Cuts Cause More Riots?

Photo: william_79

The UK riots continue as PM David Cameron and the Metropolitan police flood London with 16,000 officers in hopes of calming the civil unrest.

Critics have suggested that this is the behavior of a generation that’s been ignored by the establishment. The anarchy on the streets of London has been attributed to high unemployment and disaffected youth, combined with a trigger event — the death of Mark Duggan, shot by police last Saturday.

A couple weeks ago, Jacopo Ponticelli and Hans-Joachim Voth put out their working paper “Austerity and Anarchy: Budget Cuts and Social Unrest in Europe, 1919-2009.” It uses cross-country data in the 90-year period to examine whether riots and civil unrest increase as governments cut spending. They found a positive correlation between social instability and budget cuts. With regard to the recent riots, Voth writes on his blog:

Once you cut expenditure by more than 2% of GDP, instability increases rapidly in all dimensions, and especially in terms of riots and demonstrations.

We also use some additional, more detailed data on the causes of each demonstration to confirm our hypothesis that the link is causal.

So, if you ever found yourself reading papers by Alesina and co-authors arguing that i. budget cuts can be good for growth ii. there is no punishment at the polls for governments cutting expenditure, and wondering why governments don’t engage in more austerity – maybe here is your answer. Even if (and it’s a big if, given the IMF’s latest research) Alesina et al. are right, and growth can follow cuts, the pain may be concentrated amongst some groups. If these become massively unhappy… it can start to look pretty ugly out there in the streets, and I doubt that that’ll be good for growth.

The Guardian’s Datablog has a map of all the spending cuts made to local councils in the UK last year. Thirty-six councils got the maximum cut of 8.9%, with a 4.4% average across the total 350 councils. Former London Mayor Ken Livingstone has already jumped on the “spending cuts = riots” explanation, to much criticism.

(HT: Jonathan Hersh)

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  1. Eric M. Jones. says:

    The U.S. labors under the illusion that 3/4 of us are middle class and that the rich somehow do something to make our lives better. In the UK they have no such illusion. 3/4 of them believe they are “working class” and that the rich (and “royalty”) are crushing them.

    This rioting could drift to the US…and once it starts, lock your doors.

    ‘Religion is what that keeps the poor from eating the rich.’
    –(More or less Napolean)

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    • Rosario says:

      Er… actually, a YouGov poll last year found 2/3 of British people identify as middle class.
      http://www.telegraph.co.uk/news/politics/7121291/Posh-is-finished-as-two-thirds-identify-as-middle-class.html

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      • Eric M. Jones says:

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      • Rosario says:

        What you said was that ’3/4 of them believe they are “working class”‘, and no, they don’t. I actually kind of agree with your general point about attitudes, but pulling “stats” our of your arse is just annoying.

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      • Donnie says:

        Rosario’s right the working class in the UK’s shrunk over the last 50 years, most people are now middle class. But Eric has a good point in that the UK has less belief than the US in the morality of free markets – ie you are worth what you earn etc. On the other hand, the UK’s way behind a lot of other european countries, particularly the Scandinavians.

        Merely a silly Brit next to the Americans idiot..

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    • James says:

      Err… So what exactly is the difference between middle class and working class? Seems to me they’re just British and American terms for the same thing, as with petrol vs gas.

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      • James says:

        PS: And from news accounts and my own experience of Britain, it seems that the ones doing the rioting are members of the NON-working class.

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  2. Diego says:

    It’s inaccurate to label citizens who protest AGAINST government costs anarchists. Anarchy is an ideology that espouses total absence from government. Therefore, how does it make sense to dub protesters against reducing government anarchists? It is a non sequitor.

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    • Donnie says:

      Diego, they’re not protesting against cuts. A few were protesting against police brutality, then it spiraled into looting for its own sake.

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  3. Denny says:

    It’s questionable how much of the cuts have actually happened yet, rather than simply being planned. The cuts are over many years and tended to be more at the back end of the government’s plan, while tax rises were frontloaded and have already happened. I don’t believe these rioters will be reading enough to know when and where cuts are going to happen, so unless there’s a tangible effect of the cuts on the ground then I doubt the cuts are to blame. I would say it’s quite unlikely they’re feeling the effects of cuts yet, but it’s a good excuse to throw about.

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  4. Currymeister says:

    Hello…Good post!

    Well, I would think this is something that would happen systematically. Governments create wealth too easily for people to enjoy, a false paradise if you will. And when this incessant and unnecessary amount of government spending becomes noticeably too high and bothersome then the austerity measures proposed will never be taken likely.

    A BIG example to use is Greece. Once people are living off too much EXCLUSIVE Government grants then the pampered populace will eventually never want to return to austerity measures or hard work.

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    • Themistocles says:

      My, what ignorance…

      I’m a Greek living and working in Greece (scratch that – fired months ago). Everyone who knows something about Greece, something more than the Mirror gives them, knows that the huge majority of the state ‘grants’ lined the pockets of the very, very few; that the Greeks work longer hours than most (if not all?) of their European colleagues; that they do that for the lowest wages; and with the highest prices.

      Definitely NOT a good method to get your facts, the front pages of tabloids.

      Riots here are taking place because people are starting to lack the means to pay for their food, medications or education, not because they’re denied vacations in Honolulu.

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  5. Louise Alker says:

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    • Denny says:

      So basically give them money OR ELSE? As many of the rioters and looters were teenagers, I very much doubt benefits – which they could not claim – would be a motivating issue. The images on the street do not show people worried about paying their electric bill or their mortgage, but selfish teenagers wanting the latest Nike trainers or HDTVs. As for university, I don’t want to derail this topic with a full explanation, but the rise in student fees in no way stops anybody – poor or rich – going to university, as it’s not real debt (like a mortgage or a credit card) and nobody has to pay anything back if they can’t afford to do so.

      The last thing this, or any other government, should do is pander to those causing the damage. The government should be stood right behind those doing the right thing, those whose homes or livelihoods have been destroyed by this epidemic of greed and lawlessness.

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    • steve says:

      In times of depression, austerity arrives regardless of whether the government wants it or not.

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    • Marty Rosenberg says:

      Ha! once again excuses.
      Well I live in Tottenham and a lot of these kids wouldn’t touch work even if placed in their hands. Why there are no surveys regarding willingness to work of this bunch? Its easy to cry and blame others but would those kids be willing to work, attend the youth clubs? I doubt that.
      That by no means was a protest when destroying own neighborhood/community.

      Social actions/protest at least have points, reasons and goals. this was just madness.
      Stating that these people have nothing to do, no work etc is just a speculation, NOT a FACT. As previously asked, would they work if they were given jobs?? What percent of that group would bother goin to work?

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  6. Pascual says:

    Well, if you match expenditure cuts to reports of incidents in this page: http://www.guardian.co.uk/news/datablog/2011/aug/09/uk-riots-incident-listed-mapped, and then calculate the number of incidents per zone (local authority) , you get this:
    https://docs.google.com/uc?export=download&id=0B5R3O3atNaCgem5KTUZxcCtwZjZ0QzJYamtwNXZhWlluK3U0PQ&revision=true

    Of course, despite the clear relation between bigger cuts and more incidents, one may argue that there are many omitted variables that may explain this pattern, so it is hard to give this a causal interpretation without more controls.

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  7. Mike Lemmer says:

    Is there a similar correlation between government austerity & rioting? Take a country that consistently spent 10% GDP: would it have fewer riots than a country that spent 20% GDP, then cut it down to 15% GDP? I’d like to know whether the root problem is “government spent too little” or “government promised too much”.

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