The Terrible Handling of the Economic Crisis Is a Cause of the Ferguson Riots


We noted 3 years ago that the terrible handling of the economic crisis would lead to civil unrest and riots.

We noted that:

A study this month by economists Hans-Joachim Voth and Jacopo Ponticelli showsthat – from 1919 to the present – austerity leads to violence and instability:

Does fiscal consolidation lead to social unrest? From the end of the Weimar Republic in Germany in the 1930s to anti-government demonstrations in Greece in 2010-11, austerity has tended to go hand in hand with politically motivated violence and social instability. In this paper, we assemble cross-country evidence for the period 1919 to the present, and examine the extent to which societies become unstable after budget cuts. The results show a clear positive correlation between fiscal retrenchment and instability. We test if the relationship simply reflects economic downturns, and conclude that this is not the key factor. We also analyse interactions with various economic and political variables. While autocracies and democracies show a broadly similar responses to budget cuts, countries with more constraints on the executive are less likely to see unrest as a result of austerity measures.

As CNN notes:

Studying instances of austerity and unrest in Europe between 1919 to 2009, Ponticelli and Voth conclude that there is a “clear link between the magnitude of expenditure cutbacks and increases in social unrest. With every additional percentage point of GDP in spending cuts, the risk of unrest increases.”

“Expenditure cuts carry a significant risk of increasing the frequency of riots, anti-government demonstrations, general strikes, political assassinations, and attempts at revolutionary overthrow of the established order. While these are low probability events in normal years, they become much more common as austerity measures are implemented.”

The looting and chaos in Ferguson, Missouri is not justifiable … but it’s largely caused and inspired by the looting on Wall Street.

As basketball great Kareem Abdul-Jabbar notes, this isn’t a race war … it’s a class war.  And corrupt government policy is largely to blame.

Category: Economy, Think Tank, War/Defense

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

7 Responses to “Bad Economic Policy Is Partly to Blame for Ferguson”

  1. milbank says:

    A police officer executing a man for Jaywalking is the cause of the riots in Ferguson.
    Anything else Is just subtext.

  2. ByteMe says:

    “…but it’s largely caused and inspired by the looting on Wall Street.”

    Correlation or causation?

    I call “BS” on the whole premise. If it were cold and snowing in Ferguson, far fewer people would be outside looting and causing chaos. So is weather the cause and inspiration? Or is it just an excuse for people to be a little evil for a little while?

    As for Wall Streeters, let’s put their terminals out on the street during the winter and see how much they can steal then.

  3. tigerlilac says:

    I intersect between private finance and media, on one hand working with institutional capital investing in communities across the US and on the other hand producing documentary films. I am currently producing a film based on an urban community just 9 miles from Ferguson. What drove me to make the film was the fact that one of the largest corporations in the US was holding back capital from a real estate redevelopment project and in doing so increasing its low-income housing tax benefits based IRR from around the 6% proforma range to four times that rate. At the same time, one of our country’s largest bank is charging the project high interest rates and refusing to restructure the loan despite the willingness of a private developer to put in millions to support deficits. Of course, any experienced individual would have spotted this deal as a poor investment upfront with a modicum of due diligence. So, why did the project go forward in the first place? The institutions had no real risk, because it was laid off in the US taxpayer and a patsy who signed a guarantee. A number of good, hard working individuals are slowly seeing their neighborhood deteriorate with public services diminished, grocery stores closing, and the reality becoming increasing clear that this redevelopment project was a farce from day one. Anyone who wants to lay this failure off on the residents is either a liar or an idiot.

  4. NoKidding says:

    “austerity leads to violence and instability”

    What Austerity? Never happened.

  5. S Brennan says:

    To: milbank – August 20, 2014 at 7:30 am; “A police officer executing a man for Jaywalking is the cause of the riots in Ferguson…Anything else Is just subtext.”

    Racists of the 1960′s agreed with your take “the causes of riots are isolated incidents, having no correlation to each other, no nation policy changes are needed”…but

    “President Lyndon Johnson formed an 11-member National Advisory Commission on Civil Disorders in July 1967 to explain the riots that plagued cities each summer since 1964 and to provide recommendations for the future.”

    Top recommendation was JOBS;

    “Chapter 17—Recommendations For National Action


    Pervasive unemployment and underemployment are the most persistent and serious grievances in minority areas. They are inextricably linked to the problem of civil disorder.

    Despite growing federal expenditures for manpower development and training programs, and sustained general economic prosperity and increasing demands for skilled workers, about two million—white and nonwhite—are permanently unemployed. About ten million are underemployed, of whom 6.5 million work full time for wages below the poverty line.

    The 500,000 “hard-core” unemployed in the central cities who lack a basic education and are unable to hold a steady job are made up in large part of Negro males between the ages of 18 and 25. In the riot cities which we surveyed, Negroes were three times as likely as white to hold unskilled jobs, which are often part time, seasonal, low-paying and “dead end.”

    Negro males between the ages of 15 and 25 predominated among the rioters. More than 20 percent of the rioters were unemployed, and many who were employed held intermittent, low status, unskilled jobs which they regarded as below their education and ability.

    The Commission recommends that the federal government:

    Undertake joint efforts with cities and states to consolidate existing manpower programs to avoid fragmentation and duplication.

    Take immediate action to create 2,000,000 new jobs over the next three years—one million in the public sector and one million in the private sector—to absorb the hard-core unemployed and materially reduce the level of underemployment for all workers, black and white. We propose 250,000 public sector and 300,000 private sector jobs in the first year.

    Provide on-the-job training by both public and private employers with reimbursement to private employers for the extra costs of training the hard-core unemployed, by contract or by tax credits.

    Provide tax and other incentives to investment in rural as well as urban poverty areas in order to offer to the rural poor an alternative to migration to urban centers.

    Take new and vigorous action to remove artificial barriers to employment and promotion, including not only racial discrimination but, in certain cases, arrest records or lack of a high school diploma. Strengthen those agencies such as the Equal Employment Opportunity Commission, charged with eliminating discriminatory practices, and provide full support for Title VI of the 1964 Civil Rights Act allowing federal grant-in-aid funds to be withheld from activities which discriminate on grounds of color or race.

    The Commission commends the recent public commitment of the National Council of the Building and Construction Trades Unions, AFL-CIO, to encourage and recruit Negro membership in apprenticeship programs. This commitment should be intensified and implemented.”

    Please note LBJ rejected the report. Johnson had already antagonized the monied interests by his historic 1964 Civil Rights legislation which increased the cost of labor by removing low cost workers. In an attempt to restore a cheap labor pool LBJ passed an open-ended immigration bill in 1965 which ensured the wealthy a steady stream of cheap labor to replace Negroes who were now entitled to equal pay.

    • milbank says:

      “Racists of the 1960′s agreed with your take “the causes of riots are isolated incidents, having no correlation to each other, no nation policy changes are needed”…but”

      Which particular “racists of the 1960′s agreed with [my] take” Who in particular are you quoting?

      Try this quote if you want to FACTUALLY quote me on something. . .
      “The Straw Man Fallacy is a manner of argument where the opponent’s position is misrepresented and, instead of attacking the opponents position, the misrepresentation is attacked.”

    • milbank says:

      If you want another good quote about blacks and succeeding in society, try this one from ~Dr. William Henry ‘Bill’ Cosby, Jr., Ed.

      They’re standing on the corner and they can’t speak English.

      I can’t even talk the way these people talk:

      Why you ain’t,

      Where you is,

      What he drive,

      Where he stay,

      Where he work,

      Who you be…

      And I blamed the kid until I heard the mother talk.

      And then I heard the father talk.

      Everybody knows it’s important to speak English except these knuckleheads. You can’t be a doctor with that kind of #$%$ coming out of your mouth.

      In fact you will never get any kind of job making a decent living #$%$.

      People marched and were hit in the face with rocks to get an Education, and now we’ve got these knuckleheads walking around.

      The lower economic people are not holding up their end in this deal.

      These people are not parenting. They are buying things for kids.

      $500 sneakers for what?

      And they won’t spend $200 for Hooked on Phonics.

      I am talking about these people who cry when their son is standing there in an orange suit.

      Where were you when he was 2?

      Where were you when he was 12?

      Where were you when he was 18 and how come you didn’t know that he had a pistol?

      And where is the father? Or who is his father?

      People putting their clothes on backward:

      Isn’t that a sign of something gone wrong?

      People with their hats on backward, pants down around the crack, isn’t that a sign of something?

      Isn’t it a sign of something when she has her dress all the way up and got all type of needles [piercing] going through her body?

      What part of Africa did this come from??

      We are not Africans. Those people are not Africans; they don’t know a thing about Africa …..

      I say this all of the time. It would be like white people saying they are European-American. That is totally stupid.

      I was born here, and so were my parents and grandparents and, very likely my great grandparents. I don’t have any connection to Africa, no more than white Americans have to Germany , Scotland , England , Ireland , or the Netherlands . The same applies to 99 percent of all the black Americans as regards to Africa . So stop, already! ! !

      With names like Shaniqua, Taliqua and Mohammed and all of that #$%$ ……… And all of them are in jail.

      Brown or black versus the Board of Education is no longer the white person’s problem.

      We have got to take the neighborhood back.

      People used to be ashamed. Today a woman has eight children with eight different ‘husbands’ — or men or whatever you call them now.

      We have millionaire football players who cannot read.

      We have million-dollar basketball players who can’t write two paragraphs. We, as black folks have to do a better job.

      Someone working at Wal-Mart with seven kids, you are hurting us.

      We have to start holding each other to a higher standard..

      We cannot blame the white people any longer.’”