The Impact of Riots on the Economy
Alexa Starich
This year has been unprecedented: a global outbreak, threats of a third world war, civil unrest, murder hornets and raging wildfires -- all parts of a much more extensive list of events. All of these events have had some sort of toll on our society; in particular, the riots will impact the economy much through the next decade. VOA News reports that businesses and neighborhoods where civil protests have turned violent will have to deal with not just the aftermath of the protests, but with multiple exasperating factors that will make economic recovery much more difficult. These factors include pushing businesses to the edge, substantial insured property losses with decreased property values, and a decline in overall economic activity.
The image above (courtesy of PCS and the Claims Journal) shows how the civil disturbance that started in Minneapolis after the killing by police of George Floyd has spread to over 21 other major metropolitan areas. Janet Ruiz, director of strategic communications for the Insurance Information Institute, said that “riot losses will surpass the previous record for civil unrest damages that was set in 1992 (the Rodney King riots in LA)...insured losses from that event reached $775 million, or about $1.4 billion in 2020 dollars.” PCS said the rioting in Minneapolis could reach $25 million in damages for Minnesota alone. The company has not yet updated the total amount of estimated insured losses; however, the Wall Street Journal currently estimates more than $50 million in damage nationwide.
It’s difficult to predict how much damage civil unrest can do to the economy, but historically it is significant and entails far more than the damage to the capital stock of buildings and vehicles. In fact, the effects are much more long term and quite possibly permanent. William Collins and Robert Margo, economists who studied the effect of the riots after the assassination of Martin Luther King Jr. found that in areas most affected by the destruction, property values were still economically depressed in the years immediately following the riots and remained so for the next 20 years. Moreover, another study looked into the neighborhoods that were affected. The study, by Marcus Casey and Bradley Hardy, found two main consequences. First, in the years following the riots, all of the affected neighborhoods were “declining on a number of quality-of-life indicators that were substantial.” Second, the “riot-affected neighborhoods remain among the most economically challenged”, which shows how stunted the economic growth and development in those areas became. Also, this increased the scarcity of jobs and opportunities in those areas.
It is important to highlight that the vast majority of protests this year have been peaceful, in fact, CNN reports that 93% of Black Lives Matter related protests indicated no signs of violence. However, a poll also done by CNN shows that the vast majority of Americans choose not to engage in areas where a protest has taken place. This is mainly due to the media in showcasing the 7% of protests that engage in violence, ultimately to create fear among the public. A major result of this is a decrease in economic activity in areas where a protest has occurred. VOA News states how many businesses are struggling with the coronavirus shutdown and with low employment. Adding in low economic activity as a result of protests has caused businesses that were holding on by a thread to be cut.
In all, the Black Lives Matter protests have unintentionally created more negative uproar in both our society and our economy. Even though civil protests are a natural part of advancing society, as Victor Matheson, professor of economics at College of the Holy Cross, puts it, “People rebuild from hurricanes and can prepare for them... Social problems seem a lot harder for the country to grapple with.” Why people are hesitant to solve social problems -- especially when they create more problems as seen here with the economy -- who knows. In the end, understanding the consequences of our actions can help prevent major setbacks in our society and economy.
Works Cited
“Economically, Riots Endure.” Marketplace, 4 June 2020, www.marketplace.org/2020/06/01/riots-lasting-economic-impact/.
Garver, Rob. “Economic Damage From Civil Unrest May Persist for Decades.” Voice of America, 2 June 2020, www.voanews.com/usa/nation-turmoil-george-floyd-protests/economic-damage-civil-unrest-may-persist-decades.
Kaur, Harmeet. “About 93% of Racial Justice Protests in the US Have Been Peaceful, a New Report Finds.” CNN, Cable News Network, 4 Sept. 2020, www.cnn.com/2020/09/04/us/blm-protests-peaceful-report-trnd/index.html.
Polumbo, Brad. “The Problem With The Argument That Riots Are 'Just Property Damage': Brad Polumbo.” FEE Freeman Article, Foundation for Economic Education, 30 July 2020, fee.org/articles/vandalism-is-violence-destructive-riots-are-not-just-property-damage/.
Sams, Jim. “Insurers May Rethink Property Risk After Unprecedented Losses From Riots.” Claims Journal, 13 July 2020, www.claimsjournal.com/news/national/2020/07/06/298012.htm.
I am absolutely astounded by the fact that the civil unrest damages have surpassed the 1992 Rodney King riots, it’s almost unbelievable that lengths people will go to, just to create unrest in the community. While protesting starts our docile, those who chose to create damage and chaos, thus creating riots, those people seem to be so incredibly infuriated that they are ready and willing to put the economy at risk; especially the small businesses that were largely affected by these riots.
ReplyDeleteI specifically loved the graphic Alexa used to present to the reader what states have been affected most by the protests. Another statistic I thought was very important to bring up which she did, was the peaceful protest percentages. A bad name has been put on the Black Lives Matter protests due to the media only showing the negatives from it all. Great piece.
ReplyDeleteI like how you made connections to the protests after the Rodney King incident and those lasting effects. I also wonder, does the actual location of these protests factor into their ability to bounce back from destruction of property from the riots? They’re in mainly metropolitan areas, so I’d think that they have a bit more economic stability than if it were in small farm towns. At the same time, are these happening in poorer and/or more segregated neighborhoods that are already affected by income inequality? I think it would be interesting to see if there’s a correlation between the city’s ability to “bounce back” and the neighborhoods they’re in, especially since systemic racism, predatory financing, and other societal factors are some the things that BLM protesters are fighting in these places.
ReplyDeleteI really love this piece you illustrated multiple points of views. I completely agree that the media puts a filter on what we see. We see what they decide and it's up to everyone to actually do their own research. People that are apart of the Black Lives Matter movement receive a "bad reputation" when in fact not all protests are violent and the vast majority are peaceful.
ReplyDeleteAfter reading this article about how riots have impacted the economy, I agree that it is affecting the economy in many different ways. For example, when Alexa stated “It is important to highlight that the vast majority of protests this year have been peaceful, in fact, CNN reports that 93% of Black Lives Matter related protests indicated no signs of violence. However, a poll also done by CNN shows that the vast majority of Americans choose not to engage in areas where a protest has taken place. This is mainly due to the media in showcasing the 7% of protests that engage in violence.” I think her piece has more relevance once this was added to show that even though the news is highlighting all the bad situations that there still are good ones. I think that this topic of riots is directly connected to the black lives matter motto that has been created to show support for black individuals. Today you see this motto everywhere so I think it was important that she highlighted this.
ReplyDeleteI really liked the part about CNN specifically. There needs to be some light on the truth and whats really happening instead of CNN and other bad news companies clipping out parts that make some people look really bad and some people look really good ruining some peoples careers. If there was some light on the truth people would see the real damage being dont to people and businesses and would maybe knock some sense into them
ReplyDeleteThis is a really good piece of writing, Alexa. Something that stuck out to me was in the second to last paragraph, you stated that 93% of Black Lives Matter protests have been peaceful, yet due to the media that consists of almost entirely the riots and violence that have broken out, many people have steered clear of the areas known to hold protests. In addition, it is important to note how the rep of Black Lives Matter has been tarnished, which is making an impact on people's perception of the movement itself, as well as the ideologies behind it, thus causing a greater economic and societal uproar. Do you think any of what the media is choosing to cover is intentional to maybe cause greater disturbances than necessary?
ReplyDeleteTo start off, I thought that it was very interesting on how you compared the riots that happened in 1992 to the riots that are happening right now and to see how these protests are more civil than the one that happened in the 90s. I also liked how you compared the amount of damages that happened during that time and how it was a lot more damages in the 90s. Another thing that I found interesting about your post was that you were talking about how most of the protest that are going on right now are more civil and non violent and I think that the media just wants to make it seem like their is a lot of violence going on right now when it really isn't that violent. Overall, I thought that your piece was very informative on how the economy will be affected and really gave a good incite on what is going on right now in America.
ReplyDeleteI really appreciated the fact that you dove into the predicted economic impact of riots by providing statistics about the cost of damage in previous riots and how the areas endured a decrease in property value. It demonstrated your understanding of the severity of these riots and how they impact the economy. Aside from the economic aspect, you addressed the media's skewed coverage of these riots. It’s important to address the fact that only 7% of the protests are violent, but they get the most attention.
ReplyDeleteEven seeing on the news how much damage has been caused by the rioting it never seemed it would cause the amount of damage some people are suspecting. Minnesota had been hit the hardest with rioting and reported damages so far caused by the rioting. I never expected in Minnesota alone there would be even close to 25 million dollars worth of damages. Also when you mentioned how hard it is for riot affected communities and neighborhoods to regain their economies and development. It makes sense how it takes time for those areas to regrow and restrengthen their economies, but it is surprising how long it can take for them to get back “to normal.”
ReplyDeleteBased on the current events of this horrible year and the media spreading fear only reporting on the violent riots we can learn from our mistakes. Like the professor said “People rebuild from hurricanes and can prepare for them... Social problems seem a lot harder for the country to grapple with.” The country as a whole can learn from what happened in 2020 to be able to handle social problems in the future like we can prepare for hurricanes.
ReplyDeleteI really enjoyed reading your blog piece. This is a very relevant topic in the US today and is something that is always being talked about both in the news and amongst people in everyday conversations. The battle for social justice is something that needs to be continued, however I like how you brought up the adverse side of it that people don’t always focus on which was the economic perspective, and long term effects that these riots will have on our economy. Although the riots were “successful” in getting attention and voicing the need for change, they also damaged a lot more than they repaired which in someways, counteracted the who idea for a protest. Great blog and way to bring up both sides of the argument as well as showing the side of the argument that not many people talk about which is the economic factors that are now being impacted due to the riots.
ReplyDeleteI think that this synopsis of the riots and how it affected the U.S. economy was very well put. It is very troublesome to see people rioting the streets and tearing apart cities that they have lived in for years. Small businesses that have just managed to scrape by the tragedy of COVID-19 now have to tread the dangerous waters of riots and “peaceful” protests. It is weird to see how our country goes through an economic crisis due to COVID-19, and now it is almost going through a second one due to the riots that are occurring. $25 million dollars for the riots seems like an insane amount of money. I think that a lot of the people involved in these riots just want free stuff and to make a scene, and that they lose sight of what they are protesting. Finally, the media's role in all of this seems quite strange. Most people do not realize that the media is privatized, meaning that they can pretty much release whatever they want and exclude, or exaggerate scenarios. This would however affect their credibility, so they try to hint at biases or just not mention certain things. This can only be used to persuade the public opinion. This is why it is important to be weary of information spreading. The riots are horrible events that have had really bad impacts on the economy in total, and it is important to learn more about.
ReplyDeleteIt is interesting to think about all of the protests that have occurred over the past several months and about how they have impacted their surrounding economies. Although Pewaukee wasn’t affected with civil unrest, surrounding neighborhoods such as Madison, and Milwaukee were all impacted greatly. From the news I learned about the riots occurring on State Street, in Madison. During those broadcasts I found it interesting that it was stated that the large businesses would recover because they have their stores heavily insured, but on the other hand the small businesses would struggle in the upcoming years. The blog stated that “the rioting in Minneapolis could reach $25 million in damages for Minnesota alone”, which is a crazy amount for only the last several months. One thing to consider is how much of the damage is covered by insurance? Hopefully these areas will be able to receive the help they need to get back on their feet quickly. In the lower income areas how do they plan to rebuild their stores and economy with having little to no resources or help? In addition, I like how the blog connected the riots to other current events such as the loss of jobs because of COVID. It will be interesting to see how the riots and peaceful protests will continue during this time.
ReplyDeleteI do wonder at what point a protest becomes a riot, how many people have to be causing damage for the situation to be defined at a riot.
ReplyDeleteI really like how you provided multiple perspectives in your argument and you do state valid points. The media does indeed control what they show and I think that's something people need to pay attention too when building their own argument.
ReplyDeleteI agree, it's really frustrating how the news portrays protest content because not only does it harm movements (that should happen) but it also severely harms local business in areas of potential conflict. This plus the current climate of the election and covid doesn't help either.
ReplyDeleteI enjoyed reading your blog, I think you gave a good overview of the topic and what it means for the nation as a whole. Also,something I thought about while reading your blog was that the neighborhoods most negatively affected economically by the protests are often also the poorest neighborhoods, creating an even harsher negative economic environment in those neighborhoods.
ReplyDeleteI really enjoyed reading the article. I never really thought about protests from the economic standpoint and its effect on people going to purchase goods, and how it could have a lasting effect. I am curious, though, exactly how much the protests are affecting the economy of the cities today, as most were already in a state of quarantine during the riots and physical store shopping was already low. Based on historical evidence, the protests would definitely accentuate the effect, but I wonder if it’s actually possible that sanitary protests actually could’ve helped cities stay in quarantine and maintain lower numbers of cases because even less people were going to casual social events. Considering the definite increase in online shopping since quarantine as well, I wonder if the protests gave a push towards fully-digital shopping as well.
ReplyDeleteIt's interesting how even decades after civil unrest, areas are still experiencing lower property values. There is also the fact that insurance companies don't always include riot insurance, so when the riots happen, many people lose everything. Even watching videos of the riots, you can see business owners and families just crying because their entire life has just been burned to the ground in front of them.
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