Money  /  Book Review

Public Money without Public Goods

By documenting how public debt produced our present nightmare, Destin Jenkins allows us to dream about using public money to mend the ills of our era.

As Bonds of Inequality demonstrates, municipal debt was used to build a racial welfare state, to enrich mostly white bondholders, and to provide wages for mostly white workers in the segregated building trades. In this sense, it was a key component in consolidating what Nell Irvin Painter has highlighted as the third enlargement of whiteness, when Italians, Jews, and immigrants from Southern and Eastern Europe came to be understood as white. These spending choices did not simply reflect a changing concept of whiteness—they contributed to its refurbishment, solidifying the bloc of people who would not just believe themselves to be white, but benefit as such. The boundaries of whiteness were often written onto the redlined map. As Jenkins shows, being white in San Francisco meant not living in Hunters Point, and thus not being exposed to toxic land uses. Being white in San Francisco meant being part of what he emphasizes was a cross-class compact where bondmen in the city’s Bond Screening Committee developed the infrastructure they deemed needed, and white workers built it.

Bonds of Inequality underscores how the municipal bond market was shaped by actual people—the group that Jenkins dubs “the fraternity.” This was a group of men who, “develop[ed] trust through racism, elite white supremacy, rip-offs, and misogyny, [and in so doing, these] furthered their ability to act collectively to stitch together the municipal bond market.” Their decisions about which cities, which bonds, and at what interest rates shaped the lives and possibilities of whole communities. Although euphemisms were frequent, Jenkins shows how the perceived credit-worthiness of cities was wholly intertwined with racist assumptions. As a result of this financial architecture, cities have been structurally vulnerable to the whims of the municipal bond market, which is to say, the actual individuals who comprised this fraternity. And making matters more arduous, due to limits on their debt-bearing capacity, state and municipal budgets swing pro-cyclically with the business cycle, leaving cities at their most vulnerable during recessions and business downturns.

The racialized bond market has not been imposed without resistance. I first learned about the municipal bond market in 2006 under the tutelage of the late, great prison abolitionist and environmental justice activist, Rose Braz—the organizer Ruth Wilson Gilmore dubbed “the activist’s activist.” Braz, who had been a key organizer of that 1998 Critical Resistance (CR) conference, was in the midst of trying to halt a massive expansion of the California prison and jail system. The proposal, which would have utilized lease revenue bonds in order to avoid voter approval, would have steered upwards of $18 billion in public money to lenders. But Braz and her comrades in CR and the anti-prison coalition Californians United for a Responsible Budget sought to crash the fraternity’s party.