Neil H. Buchanan

High Unemployment and Political Extremism: How Much Worse Might Political Conditions Become if the Job Market Remains Depressed?

Thursday, April 8, 2010

In recent weeks, there has been understandable concern about the rise of politically-motivated violence in the United States. There have been numerous reports of threatening phone calls to members of Congress, as well as some worrisome actions, including bricks being thrown through the windows of the offices of some Democrats who voted for the health care bill. Nonpartisan media still refer to these events as "isolated instances of violence," even though it is difficult not to see this as a growing problem that can be traced back to the general election campaign of 2008.

Isolated or not, however, the threat of political violence has recently led to some arrests, including those resulting from a successful FBI operation that brought in nine members of a militia group in Michigan that had planned a series of acts of domestic terrorism. Also, earlier this week, a man's repeated phone calls to Senator Patty Murray's office in Seattle led to his arrest for threatening to kill the Senator.

These incidents understandably garner news coverage, because it seems at least possible that they are the leading edge of a wave of violence that might be in the offing. With talk radio and Fox News making a practice of stirring up anger among an increasingly agitated (though still quite small) group of citizens, and with Republican leaders trying to blame Democrats for supposedly fanning the very flames of extremism that are bringing fury upon the Democrats, law enforcement officials (and nonviolent Americans more generally) would be irresponsible not to suspect that such anger might lead to more violent outbursts.

Although it certainly is important to confront and eliminate imminent threats of violence, there is another important aspect of growing political extremism that is getting much less attention. In the midst of our most severe economic crisis – both in depth and in length –since the Great Depression, we are not just facing the prospect of politically-motivated physical violence. We also find ourselves on the most fertile ground since the 1930's for the rapid growth of political extremism.

According to standard economic analysis, unemployment carries with it a number of distinct harms. Among those harms is the hard-to-define concept of "social unrest." Although economists have generally downplayed social unrest as a harm of unemployment, it is clear that today's social and political atmosphere is alive with the possibility of wrenching political change, including radical changes in the nature of our constitutional democracy. These dangers make it all the more important for policymakers to redouble their efforts to reduce unemployment – and to do so as quickly as possible.

Unemployment Today: High, Chronic, and Damaging

The current unemployment situation is, in a word, dire. The measured unemployment rate – which ignores those who have given up looking for jobs, as well as those who are working part-time involuntarily – rose into the 10% range last year, where it is expected to remain through the end of 2011, if not longer. Unemployed workers are suffering record-setting spells of joblessness; and Congress has been forced several times already to extend unemployment benefits, to prevent citizens from being left without any support in an economy with bleak prospects for job-seekers.

The direct harm to the unemployed and their families as their incomes shrink or disappear is formidable, and disturbing. Separately, however, what do we know about the costs to society of unemployment? During my days as an economics professor, the students in my macroeconomics courses would always be surprised when I asked them, "Why is unemployment bad?" Unemployment seems so intuitively bad that it almost seemed ridiculous to ask why that is so. Because we were in an academic enterprise, however, it was important for us to think systematically about the consequences of unemployment.

I followed up by asking the question more provocatively: Are we sure that unemployment is really bad? And then I led the students through a systematic discussion of the costs of unemployment.

That analysis would typically proceed along the following lines:

1. Lost Output: While the pain of unemployment is felt most acutely by those who cannot find work, the economic impact of an unemployed worker is the loss to society of the goods and services that he or she would have helped to produce. Of course, not being able to produce also means not earning income, so the further danger is that lost economic output will get worse when reduced spending leads to still further layoffs.

2. Increased Crime: While most unemployed workers are able to weather the storm and continue to be law-abiding members of society, one can confidently predict that any increase in unemployment will be associated with an increase in various types of crime. Property crimes are the most obvious, with people who find that they cannot earn money through legal means turning to illegal means to support themselves and their families. Of course, property crime can all too easily tip into violent crime, and we do see increases in murders and other violent crimes, as well, during episodes of high unemployment.

3. Harms to Individuals and Families: Sadly, the psychological toll of unemployment can lead to other types of harms – many of which are themselves crimes, but which happen within a household and are not directly associated with economically-motivated crimes. Suicides rise during periods of unemployment, as does the abuse of alcohol and drugs. Unsurprisingly, the toxic combination of self-hatred, anger, and mind-altering substances also leads to child abuse, spousal abuse, and the break-up of families.

4. Social Unrest: The final category of harms is social unrest, the amorphous but explosive possibility that increased unemployment can expand into full-blown social and political upheaval – and it is this category that is the focus of this column.

Social Unrest and Unemployment: If We Cannot Measure It, Is It Real?

Before continuing our discussion of social unrest as a result of unemployment, however, it is important to note two points. First, my approach to teaching the harms of unemployment is hardly unique or idiosyncratic. I adapted my approach from the teaching notes that the Harvard Economics Department provided to all of its graduate student instructors at the time that I started teaching the basic economics course. This way of approaching the subject, in turn, was based on an approach that was common to nearly all textbooks at the time; and that basic approach has not changed in the years since – although, tellingly, the standard textbook treatment of unemployment has been scaled back in favor of more technical material.

Second, the order in which I listed the costs of unemployment is not mere happenstance. Because economists are most comfortable with concepts that can be quantified, the "lost output" harm is clearly the place to begin. Multiply the number of idled workers by their average productivity, and we have an estimate of lost GDP due to an increase in unemployment.

Property crimes, violent crimes, and harms to families are also quantifiable (although there might be some professional discomfort among economists with the idea of quoting the work of "mere" sociologists, criminologists, and political scientists, whose work economists frequently demean as being less quantitative and rigorous). These possible harms are all at least open to statistical testing and verification.

Considering the Costs of Social Unrest: Historical Examples

By contrast, the "social unrest" category sits uncomfortably at the end of that list. What, after all, are we really talking about? I usually began the discussion by describing the political upheavals that have been associated with economic cataclysms in other countries. The most vivid and dramatic example is the rise of the Nazis in Germany in the post-WWI period, when the victorious nations imposed economically crippling conditions on a country that had already suffered huge losses to its economic capacity, both through massive loss of life (potential workers) and destruction of factories.

In my experience, however, students found that example powerful, yet somewhat overwrought. Any example based on the Nazis, of course, is so emotionally potent that one risks appearing to have overreached merely at its mention. Hitler's rise, moreover, must surely have been caused by something more than a bad economy. Even if economics played a large part, the seeds of such extreme social pathology must require more than just a run of bad economic numbers.

In light of those concerns, students were perhaps understandably more moved by discussions of U.S. politics during the Great Depression. The 1930's saw the rise of all kinds of political extremism, with nativists, racists, and other groups growing around the country – some responding to radio talk show hosts like Father Coughlin, others to charismatic politicians like Governor Huey Long of Louisiana. There was, for example, a surprising amount of fascist sympathizing at the time. Moreover, the American Communist Party and its offshoots had more members during the 1930's than at any other time in the country's history, before or since.

The threat, therefore, came from both the left and the right. The common feature of the threat was not merely that people wanted to change some policies in ways that might not have been thinkable before the Great Depression. Rather, it was that growing numbers of people were openly considering whether our system of government should even continue to exist.

How Dangerous Is Today's Political Unrest?

The difficulty of measuring so vague a concept as "unrest" – to say nothing of statistically correlating unrest to something like the "probability of systemic political change" – would understandably give any social scientist pause. It has, therefore, been common for economics professors to suggest that while the other harms of unemployment show up to varying degrees even at low rates of unemployment, social unrest would only arise if the economy experienced an epoch-making disaster. Because such disasters are impossible to predict and (by definition) rare, it is usually safe to focus students' attention on lost economic output, suicides, burglaries, and so on as the costs of unemployment – and to put the potential harm of social unrest aside.

But is today different? We could not have predicted even two years ago that the economy would suffer such an extreme and prolonged period of pain. Even so, here we are. The economy is unlikely to expand rapidly any time soon, and the political firestorm that accompanied last year's stimulus bill has apparently scared the Obama Administration and its allies away from proposing broad, decisive action to further reduce unemployment. They have, thankfully, been pushing a series of smaller bills to address the problem from various angles. Even so, the Administration's own forecasts suggest that any improvement in the employment situation will be excruciatingly slow.

While we wait, laid-off workers with nothing to do have several choices. On one hand, they can busy themselves with efforts to improve their job skills, or perhaps pursue long-delayed personal interests, or devote more time to their families. On the other hand, as a recent news report discussed, many of these angry and disillusioned citizens – who have nothing but time on their hands – are getting involved with groups that challenge the legitimacy of the government itself. Even if those groups never resort to violence, they still have the potential to change the political system in ways that the country has long viewed as being "on the fringe."

In extremely bad times, the potential for extreme change grows. Politicians should not presume that there is no serious risk of a political upheaval arising from the anger of idled workers, especially when there are powerful forces trying to harness that anger to foment hatred and extremism.

Politicians are often accused, cynically, of being interested in little more than self-preservation. This is an instance in which we should all hope that they understand just how much danger they – and, not coincidentally, the American system of government as a whole – might be in.

Neil H. Buchanan, J.D. Ph. D. (economics), is a Visiting Scholar at Cornell Law School, an Associate Professor at The George Washington University Law School, and a former economics professor.

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