Anarchy and Austerity: Why London Won't Be the Last City to Burn

The Great Recession gave birth to a lost generation across the world, where youth unemployment rates stretch into the 20s, 30s and even 40s. Those millions have responded with violence.

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REUTERS

The riots and fires consuming London are a story about senseless violence and crime. They are also a story about urban politics, race relations, education inequality, and British culture and society. But underneath all of that, they are part of an economic story that is universal.

For the last year, Great Britain has embraced austerity to a degree that would make some American conservatives blush. The purpose of shrinking government was to reduce debt. But the effect has been to kill the economy. With the UK tottering on the razor's edge of recession, consumer confidence is at a record low, unemployment is rising, and even the most optimistic economists predict one-percent expansion for the rest of the year.

For 100 years, across the world, more cuts have led to more crime.

The scourge of young restlessness growing in this noxious petri dish is potent enough to have a nickname. The British call them the NEETs, as in "Not in Education, Employment, or Training." Last year, British Employment Minister Chris Grayling called chronic youth unemployment a "ticking time bomb." That bomb is way past ticking.

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.

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"Educated youth have been in the vanguard of rebellions against authority certainly since the French Revolution and in some cases even earlier," Jack A. Goldstone, a sociologist at George Mason University School of Public Policy, told journalist Peter Coy in February. If that's true, we are only in the first chapter of a worldwide rebellion against lost opportunities for the young. In North Africa and the Middle East, people aged 15-29 make up the largest share of the population ever. In Iran, they account for a third of the country. In Jordan, Egypt and Morocco, they make up 30 percent.

What about us? One in five Americans are between 15 and 29-years old. And one in five of those Americans are unemployed. For minorities and the under-educated, the picture is much worse. Black teenagers have an unemployment rate of 44 percent, twice the rate for white teens.

And yet, somewhat miraculously, crime has fallen in the U.S. through the Great Recession. James Q. Wilson offered four explanations: (1) More criminals in prison; (2) Better police tactics for finding and patrolling crime hotspots; (3) Better home security technology; and (4) Fewer drugs, including lead in our blood and cocaine. The long decline of American crime is one of the quiet miracles of the last 40 years. We're about to find out if it can hold up to American-style austerity.

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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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