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Listen Up, Budget Cutters. Austerity Can Lead to Blood on the Streets, Even in America

Researchers find statistical evidence that austerity policies are linked to explosive unrest.

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Squeeze and push. Punish and strain. Since the global financial crisis of 2008, elites across the world have been on a tear against ordinary citizens, promoting austerity policies that strip hard-working people of their jobs, their security, and their dignity.  In many places, people have pushed back — violently.  Maybe you’ve been wondering if it could happen here, too.

In some corners of America, plutocrats seem to be experimenting to find out. In North Carolina, discount store tycoon Art Pope, a close ally of the Brothers Koch, is installed in the office of State Budget Director, where he has placed his boot firmly on the neck of the public with regressive policies, including the denial of Medicaid expansion to 500,000 of the needy, slashes in unemployment benefits to 170,000 people, devastating cuts to education, and voter suppression to make sure it all sticks.

These actions have led to protests across the state, most prominent among them the Moral Monday demonstrations led by Rev. William Barber. Do a quick Google search of the terms “North Carolina” and “unrest”, and you find plentiful headlines testifying to an increasingly jittery population. The police have even resorted to sending undercover agents to church gatherings to collect information on presumed “anarchists” among the protesters.

So far, U.S. protests have been remarkably peaceful.  What conditions have to happen before things get really ugly?

The work of Jacopo Ponticelli and Hans-Joachim Voth may help us find out. They are economists at Universitat Pompeu Fabra in Spain, the scene of massive —and often violent — anti-austerity demonstrations since the global financial crisis of 2008.

For a long time, academics have tried to understand which factors are involved in creating explosive social environments. For example, economist Ed Glaeser, who studied race riots in the U.S., found that you typically need two ingredients to spark racial violence: racially mixed neighborhoods and unemployment. Hard times alone weren’t enough do it.

Ponticelli and Voth decided to look closely over the history of Europe from 1919 to 2009, examining such events as riots, demonstrations, political assassinations, government crises, and attempted revolutions. Researching everything from minor civil disturbances to full-blown attempts to overthrow the established political order, the economists studied the conditions that attended explosive outbreaks of anger and dissatisfaction.

You might think that poverty would be enough of a catalyst to drive people to the streets.  You would be wrong.

Hard times + austerity = chaos

Ponticelli and Voth found that the countries in their European study have an average of 1.5 incidents of civil unrest per year. But during times where the government is implementing austerity policies, that number goes up. When those cuts reach 1 percent or more of GDP, the number of events goes up by a third compared to periods of expanding budgets.

What’s more, the number of disturbances rises as cuts intensify. “Once austerity measures involve expenditure reductions by 5% or more,” write Ponticelli and Voth, “there are more than 3 events per year and country -- twice as many as in times of expenditure increases.”

In other words, economic shocks alone are not enough to cause people to flip out. It’s the way governments respond to them that sets the stage for blood in the streets.

After looking at Europe, the authors collected data on South America, and found the same connection: When governments pursue budgets cuts during economic downturns, all hell often breaks loose. “From Argentina in 2001 to Greece in 2010-11,” note the authors, “austerity measures have often created a wave of violent protests and massive civil unrest.”