Money  /  Book Review

Bond Villains

Municipal governments today hold around $4 trillion in outstanding debt. The growing costs of simply servicing their debt is cannibalizing their annual budgets.

Municipal bonds represent a key point of capital transfer between the market, the state, and the people.

And the field of urban history is all the worse for this gap. While groundbreaking work has been published on the role of the government in enacting and enforcing racial segregation, these narratives have, over time, etched themselves as deep grooves in the field’s terrain. Being confined to what Michael Katz calls the “master narratives” of urban history as public failure can, at times, foreclose a deeper engagement with other, less immediately visible concepts. Big-ticket ideas—the racist state, deindustrialization, white flight—are seen as the major drivers of inequality, with other objects of study, like the municipal bond market, being forced to take on a supporting role, if given one at all.

Thankfully, Destin Jenkins’s book The Bonds of Inequality: Debt and the Making of the American City (2021) offers an essential, overlooked story. Municipal bonds, the book reveals, represent a key point of capital transfer between the market, the state, and the people. When put under the microscope by Jenkins, we can see the myriad of daily mechanisms that give shape to such transfers. An interest rate on a given city’s bond may appear as the colorblind manifestation of a free market function: banks bid it up or down, and at some point, this process results in the sale of the bonds at a certain rate. In reality, the interest rate outcome was fabricated from an aggregation of racialized data points. Inputs like a neighborhood’s property tax levy, unemployment rate, and median income come together to inform the market in a sleight of hand sociologist Davon Norris recently dubbed “embedding racism.”

The Bonds of Inequality gives us a long, local, textured account of this process of embedding—and in doing so, rewrites our shopworn, largely outdated narratives of urban political history.

The book centers the municipal bond market of a postwar San Francisco and follows it until into the late 1980s. Its genius lies in its narrative detail. Jenkins tells the story of San Francisco’s development machine from the inside out, following particular banks and particular bankers, particular borrowers and particular bonds. In the growing body of literature on racial capitalism—the study, broadly, of the relationship between racial inequalities and the market economy—Jenkins’s book is among the most successful in infiltrating and translating capital’s own discourse: the language spoken in the meeting rooms, credit ratings reports, and bond issuances that make up the system.