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The lingering cost of rioting

David Weinberg Nov 26, 2014
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As Ferguson, Missouri, begins to quiet, there is a lot of work to be done to rebuild trust between citizens and law enforcement and to physically rebuild businesses that were damaged in the protests.

When those businesses reopen, some questions will linger: Will life in Ferguson ever be the same? How will these months of civil unrest and anger affect the area’s economy, not just during this holiday shopping season but a year from now, five years, 10 years from now.

On a recent morning, I stopped by a park in South Central Los Angeles, a neighborhood that has its own history of unrest. It was just after sunrise when I met Fred Tarvin. He was starting his shift as a security guard at the Watts Towers, an otherworldly sculpture made of ornate spires that shoot up nearly 100 feet into the sky.

Tarvin grew up in this neighborhood.

“When I first saw the towers, being a young man fresh out of the service, I thought it was just a piece of junk,” he remembers. Today he has a different opinion. He calls these spires a mighty work.

But most people familiar with the name Watts know it not because of these towers, but because of riots that burned much of the area nearly 50 years ago.

“A lot of people didn’t want to come over because they figured Watts is just bad, because it’s got a bad name,” Tarvin says.

Watts struggled to recover economically after the riots, and it wasn’t alone. Severe rioting erupted in poor black neighborhoods in Newark, Detroit, Washington, D.C. and other cities in the 1960s.

Two economic historians, William Collins and Robert Margo, studied owner-occupied housing data to see how much of those cities’ economic declines could be attributed specifically to riots.

In places where severe rioting occurred, property values fell, Collins says, “by about 10 percent relative to where we think they would have been in absence of a riot, or in comparison to places with that had much less severe or no riots.” Property owned by blacks saw values drop by as much as 15 percent.

But what was most surprising was that these losses lasted through the 20 years they studied. Some cities still haven’t recovered.

“So a question that is especially relevant in the wake of an event like a riot,” Collins says, “is ‘Does a place bounce back quickly from this, and if it doesn’t bounce back quickly, why not?'”

The reasons are complex. Many of these neighborhoods were poor before the riots, and each place has its own circumstances. But there are some common experiences after a riot. Insurance rates go up, cities tend to spend more on police and fire protection, and people who can afford to move away often do.

“So if your tax base is being diminished at the same time that you’re increasing demands for police and fire, this is the sort of stuff investors might think of as potentially weakening the fiscal position of cities,” Collins says. This makes it harder for to raise money for revitalization projects. It’s harder to attract businesses and developers, and news coverage can paint a negative picture of a place.

The 1960s riots were dramatic and catastrophic.

“The events in Ferguson don’t rise to the same level of severity that we saw in the 1960s,” says Margo, “so that would lead you to suspect that they wouldn’t have any long-run effect.”

On the other hand the riots of the 1960s lasted only days, Margo points out, while the unrest in Ferguson has gone on for months.

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