When growth falls below 3% social cohesion breaks down research shows.
In the mid-2000s, Benjamin Friedman, a professor of economics at Harvard University, published a book, the "The Moral Consequences of Economic Growth." At the time the book generated attention for its basic premise: When economic growth is positive, social stresses reduce and are minimized. But when growth lags, racial and social discord increases.
That is, there is a moral component to maintaining economic growth. Friedman's research found that when economic growth is above 3% annually populations feel optimisic, there is a general "tolerance of diversity, social mobility, commitment to fairness and dedication to democracy." When a broad segment of the population feels they are getting ahead economically social cohesion is higher; racial discord subsists; nations tend to liberalize; rights are extended to more people; benefits for the needy are expanded.
But when economic growth lags and broad swathes of the population begin to feel as if they are falling behind, things begin to fall apart rather quickly. Citing a wealth of evidence Friedman found that when growth rates fall to 1 and 2%, economies stagnate. The stagnation eroded tolerance, fairness falls by the wayside, democratic institutions begin to wither. Institutions tip toward authoritarianism. Friedman found a strong correlation between lagging growth rates and periods in the story of America when racial tensions and social unrest emerge. The major periods of social and racial unrest in America can be traced to periods when economic growth rates lagged to under 3%, basically.
So perhaps it is no wonder to witness the current events of the day. For the six years since the Great Recession of 2008 the American economy has been lagging, growth has been slow and sluggish. The cost of everyday living has expanded. The American job market is only now recovering. The population has forgotten the optimism of the late 1990s. The old positive outlook has been replaced by a fraught anxiousness. These are the ingredients thought Friedman that lead to the kind of social unrest bubbling up in places like Ferguson, Missouri, today.
Riots have been ongoing for almost a week now. And while the outbreak of violence is tied to the shooting of a young unarmed black man, to Friedman’s way of thinking, the ground had been prepared for this kind of social discord by the struggling economy, which has made daily life tougher for many. Jobs are insecure. Well-paid manufacturing jobs are gone. The service industry jobs that replaced those do not pay a living wage. Employment is tenuous. Populations are feeling restless, are beginning to act out as is the nature of human behaviou. Such are the moral consequences of economic growth. The deep correlations between economy and culture are playing out in real-time in Ferguson, Missouri.