The Bonds of Inequality

The city of Detroit's bankruptcy in July 2013 reminded us that municipal debt shapes what cities can and cannot do. In The Bonds of Inequality, Destin Jenkins has written a groundbreaking history that puts debt crisis in long historical context. The book uncovers the role of the municipal bond market in deepening racial inequality in the twentieth century. Taking San Francisco as his focus, Jenkins joins historians such as N. D. B. Connolly and Keeanga-Yamahtta Taylor in exploring who profits from urban inequality. While scholarship has focused on inequities created by the mortgage market and federal policy, historians have missed the importance of municipal bonds. Jenkins's meticulously researched monograph offers a powerful corrective. Jenkins explores the “making of bondholder power” over the course of nine rich chapters (p. 3). In the aftermath of the Great Depression, bond financiers were understood as marginal and inefficient financiers. But Jenkins shows how they nonetheless became entrenched in San Francisco's government during the two decades after World War II, when low interest rates and tax exemptions created favorable borrowing conditions. Through the formation of professional networks and a shared culture, the small group of white male bond financiers became a powerful “fraternity” (p. 57). Jenkins's story takes a turn in 1966, when a credit crunch ended the era of low interest rates. At the same time, credit analysts worried that urban rebellions meant cities were not stable. By the late 1970s, given inflation and fears of a “financial contagion” such as New York City's, bankers became disinterested in purchasing San Francisco's debt (p. 176). In 1980, San Francisco's fiscal ratings were downgraded, and the city underwent a structural adjustment, cutting services. Like other cities, San Francisco became dependent on a “punitive market” that had “reconfigure[ed] the social contract between the state and the citizenry” (pp. 176, 190

Bankruptcy · Bond · Bond market · Context (archaeology · Debt · Economic history · Economic inequality · Economics · Great Depression · Inequality · Political economy · Political science · Finance · History · Housing, Finance, and Neoliberalism · Law