The Economics of Rioting

This week, I discovered the Freaknomics podcast. I read the book in one of two economics classes I took in college and, though I disliked the teacher who assigned the book quite a bit, I absolutely fell in love with economics in general and the book itself as well. The cold, strictly fact-based analysis of the world through the lens of economic principles appeals to me, even as I’ve become somewhat of a bleeding heart liberal in the last few years.

This is also why I got so excited to read this analysis of the London Riots from The Globe and Mail. I think like everyone else, I was blown away but what happened in the UK and unable to make sense of it. But this cynical approach seems right on to me:

Too many riots were bad for business, they allowed, but so were too few – a sign that government had become soft and inefficient. Prudent government squeezed until the mob rebelled, then increased spending just enough to prevent extensive property damage. Optimal social policy was a matter of dialing in the appropriate frequency of riots.


The Riot Index permits no adjustment for ideology or morality. It seeks no causes and is indifferent to explanations. What it does do, however, is to accept without question that liberal social policies quell social unrest.

According to its logic, the fact that Britons are now struggling to make sense of good old-fashioned mob violence only proves that liberalism has gone too far – that the mob has been a stranger too long. The conclusion may be distasteful, but the underlying premise – that austerity causes riots and spending forestalls them – is well supported by historical evidence.

I love that idea of British society not recognizing a mob when it sees one because it’s simply been too long. And I also love that the author points to the vehemence of British politicians denying their austerity programs caused the violence “makes it more obvious”.

Economic principles dictate that humans are, by and large, rational. Rational used to mean strictly logical, but now also applies to an internal logic; humans make choices that are rational to them, based on the data they are reviewing, even if those choices don’t seem rational to others. The rioters aren’t animals or sub-human without any thought behind their actions; these kids of riots, in fact, required organization. Once in a while you get truly irrational people who just like to watch things burn, but not thousands acting in concert.

I also read on this quiet, muggy Sunday morning a column from the Washington Post explaining why, though the same anger present around the world exists in the US, people are not rioting:

although movements carry anger, anger doesn’t make a movement — organizers do. Anger helps, of course; it’s a resource that organizers can stoke, channel and exploit.

The key word in that sentence is channel; the author argues,

James Madison, the genius behind the Constitution, envisioned a system of government that would embrace dissent and offer malcontents the hope, however distant, that they can get what they want by working through it. Protesters who start in the streets envision themselves, or at least their causes, entering the halls of power.

I’ll admit: I’m a sucker for early American history, and this rings true for me. Above all the anger, Americans have this deep seated belief that, ultimately, change is made, if not best made, within the system.

I suppose that means the problem today, according to many and maybe myself, is that the system has been corrupted so that belief isn’t well-founded. If that’s the case, only when more Americans understand exactly what kind of laws and policies are in place that prevent the system from truly working for them, will they riot. But more likely, I think, they’ll simply work to eliminate those broken pieces of the system.