Record Unemployment And Shutdowns Are A Recipe For Social Unrest

Pandemic-Related Unemployment And Shutdowns Are A Recipe For Social Unrest

 J.D.Tuccille

Could the stalled economy we've inflicted on ourselves in our frantic efforts to battle the COVID-19 pandemic lead to civil disorder? History suggests that's a real danger.

Around the world, high unemployment and stagnant economic activity tend to lead to social unrest, including demonstrations, strikes, and other forms of potentially violent disruptions. That's a huge concern as forecasters expect the U.S. unemployment rate in the months to come to surpass that seen during the depths of the Great Depression.

"We're putting this initial number at 30 percent; that's a 30 percent unemployment rate" in the second quarter of this year as a result of the planned economic shutdowns, Federal Reserve Bank of St. Louis President James Bullard told Bloomberg News on March 22. Gross Domestic Product, he adds, is expected to drop by 50 percent.

Unlike most bouts of economic malaise, this is a self-inflicted wound meant to counter a serious public health crisis. But, whatever the reasons, it means businesses shuttered and people without jobs and incomes. That's risky.

"Results from the empirical analysis indicate that economic growth and the unemployment rate are the two most important determinants of social unrest," notes the International Labour Organisation (ILO), a United Nations agency that maintains a Social Unrest Index in an attempt to predict civil disorder based, in part, on economic trends. "For example, a one standard deviation increase in unemployment raises social unrest by 0.39 standard deviations, while a one standard deviation increase in GDP growth reduces social unrest by 0.19 standard deviations."

Why would economic shutdowns lead to social unrest? Because, contrary to the airy dismissals of some members of the political class and many ivory-tower types, commerce isn't a grubby embarrassment to be tolerated and avoided—it's the life's blood of a society. Jobs and businesses keep people alive. They represent the activities that meet demand for food, clothing, shelter—and that develop and distribute the medicine and medical supplies we need to battle COVID-19.

"I am deeply concerned that the social, economic and public health consequences of this near total meltdown of normal life—schools and businesses closed, gatherings banned—will be long lasting and calamitous, possibly graver than the direct toll of the virus itself," wrote David L. Katz, former director of Yale University's Yale-Griffin Prevention Research Center, in The New York Times last week.

"The stock market will bounce back in time, but many businesses never will. The unemployment, impoverishment and despair likely to result will be public health scourges of the first order."

Unemployment, impoverishment, and despair are frightening outcomes in themselves. They're also a recipe for social unrest that will afflict even those of us who weather both the pandemic and the accompanying economic storm.