Though the full costs have yet to be determined, the protests which erupted after the death of George Floyd in Minneapolis in May have already been the most expensive in U.S. history.
Axios reports that the protests which took place across 20 U.S. states from May 26- June 8, 2020, alone, cost between between $1 billion and $2 billion dollars, possibly more.
Of particular note in the above statistic is the date sample- a mere two-weeks- and the vast difference between one billion and two billion dollars U.S.
Before 2020, the most expensive period of civil unrest in U.S. history was April 29, 1992, through May 4, 1992, during the Rodney King riots in Los Angeles. This event is estimated to have cost $775 million dollars in damages, which would be closer to $1.42 billion in today’s dollars.
Before the riots in 1992, the most expensive period of civil unrest in history was August 11 — August 17, 1965 in Los Angeles which cost $44 million, or $357 million adjusted to 2020 standards for comparison.
The civil unrest of the past four months has been quite different from other periods in the past, and not just in terms of economic damage and insurance claims. The previous record holders both mostly took place in a single city- Los Angeles- and both were relatively short in duration.
Protests sparked by the death of George Floyd have taken place all across the country. In 20 states, in 140 cities, riots, arson, and looting has taken place. The protests, and the violence, still hasn’t stopped.
“Yes, but,” left-leaning Axios is kind enough to progressive sensibilities to point out, “these losses are small compared with those stemming from natural disasters like hurricanes and the wildfires that are consuming the U.S. West.”
“Hurricane Isaias,” Axios assures us, “cost $3 billion — $5 billion in insurance losses.”
Precious few people are likely to take solace in the fact that two weeks of the 2020 protests did as much property damage as a hurricane. Careful observers will have likely noticed the protests extended past two weeks.
“It’s going to take a bit of time for the insurance industry to understand the full implication of this,” an insurance industry executive remarked in June. “In the U.S., there has been no precedent for a riot catastrophe like this,” said Tom Johansmeyer, head of Verisk’s Property Claim Services, in September.
Bits of data are trickling in, however, and the picture beginning to emerge is sobering.
According to Minneapolis officials in June, 1,025 properties were damaged, burned, or destroyed during the riots. Rioters set fire to 90% of the businesses along the Lake Street corridor. “It’s going to take a long time to get a number,” said one Minneapolis city official. Damage is expected to far exceed the $25 million dollar mark.
In September, Kenosha News reported: “Damage due to rioting, unrest in Kenosha tops $50 million; 2,000 Gaurd assisted here.” Minneapolis and Kenosha are far from alone.
Then, of course, there are the long-term consequences, the least of which might be Democratic losses in November. Researchers have spent the past decades carefully analyzing the impact the 1960’s riots have had on the areas in which they took place.
“The riots not only destroyed many homes and businesses, resulting in about $50 million in property damage in Detroit alone, but far more significantly, they also depressed inner-city incomes and property values for decades,” the New York Times wrote in 2004, summarizing the conclusions of two distinguished professors studying the long-term impact of the 1960’s riots.
Long-term unemployment, a drop in Black home-ownership, and other troubling declines were noted by the researchers.
“This effect could work through any number of the channels that feed into the net benefit stream: personal and property risk might seem higher; insurance premiums might rise; taxes for redistribution or more police and fire protection might increase, and municipal bonds may be more difficult to place; retail outlets might close; businesses and employment opportunities might relocate; friends and family might move away; burned-out buildings might be an eyesore; and so on.” — Professors Robert Margo and William Collins, “The Labor Market Effects of the 1960’s Riots” and “The Economic Aftermath of the 1960’s Riots: Evidence from Property Values”
There is also the question of legal liability. Baltimore business owners are suing city officials for failure to protect property during the 2015 riots following the death of Freddie Gray.
Seattle business owners are already bringing similar suits against Seattle Mayor Jenny Durken for abandoning a 6-block area of Seattle’s Capitol Hill district- including a police precinct. Some business owners who aren’t filing suit are simply leaving with no intention of returning to downtown Seattle.
Minneapolis business owners may soon be following suit. In addition to the massive costs they incurred from losses sustained during the protests themselves, Minneapolis business owners are now being required by the city to pay for the demolition of their damaged buildings.
Business in all these places will be facing compounding losses in the years to come. Professor Victor Matheson has been studying the long-term effects of the Rodney King riots in 1992.
“Economic activity in the areas affected didn’t return for at least 10 years,” according to Matheson. He estimated the riots cost $5 billion in lost sales over 10-years. “If people don’t feel safe where their businesses are, then they don’t feel a need to rebuild.”
Progressive activists excusing the looting with reminders that most commercial property is insured against riots and looting aren’t helping. Not only are they wrong, in that many small businesses aren’t covered by expansive commercial insurance policies, they are also demonstrating an embarrassing lack of understanding about basic economic principles.
Insurance companies don’t just eat losses; they pass those losses along to their customers by raising premiums. Those businesses paying higher commercial insurance premiums don’t eat the losses, either. They must raise prices to recoup the difference in order to stay competitive and keep their doors open.
Not that insurers are likely to come out of this ahead. Which is why many major insurers will likely reconsider covering rioting and looting in the future, especially in areas where local authorities have proven themselves unable or unwilling to protect businesses and property.
One incalculable cost has been the rise in violent crime which has accompanied these protests. After two decades of decline, violent crime has been steadily and alarmingly rising in major cities, and in smaller cities which have experienced rioting.
There is another incalculable but painfully high cost to the looting, rioting and arson: The damage these activities have done to the protests, only 7% of which have been declared violent.
The cost of this violence will be determined at some point in dollars. The damage to the just cause of civil rights, may never be fully known.
(contributing writer, Brooke Bell)