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.