December 2, 2021
Destin K. Jenkins, Stanford University
Let me begin by thanking JustMoney and the Law and Political Economy Blog for hosting this exciting conversation and convening such a terrific and kind group of respondents. Part of my goal in writing The Bonds of Inequality was to help direct our scholarly and political attention to the ‘problems’ of municipal debt, as well as to the reasons why scholars and citizens have rarely considered the municipal bond market and municipal indebtedness as essential to our histories of democracy and inequality. I also hoped to motivate alternative ways of providing the basic infrastructure on which all American cities rely. The contributors to this roundtable have produced remarkable—and challenging—essays that confirm the importance of interdisciplinary, theoretical, and historical work on the politics of municipal debt, and the benefits of conversing with activists working mightily to ensure safe housing, clean drinking water, paved streets, and quality schools for the most marginalized.
With the limited space of this response, I cannot possibly respond individually to each of the contributors’ insightful interventions. In what follows, I have decided to reflect upon the respondents’ choice of metaphors and analogies, and what these choices reveal about how they understand some of the processes I discuss in the book. I also consider some of the policy alternatives discussed in the symposium. I think John Robinson strikes at the nexus of language and politics when he asks, “What new language might we cultivate to better speak to the values we see as worth defending and the future we regard as worth envisioning?” To my mind, any effective political strategy vis-à-vis municipal debt must be able to translate the highly technical language of finance into everyday terms and must rest on a conceptual foundation strong and nimble enough to anticipate the tensions and slippages that may arise during the fight for a worthwhile future.
Metaphors & Analogies
Muscles and arteries. Hammers and parasites. Addictions and complexes. These are just a few of the ways discussants have described municipal bond finance. Evocative metaphors and analogies are not just the gloss; they signal how people understand social phenomena. And these rhetorical strategies have implications for political organizing. If we are talking about the “guts” of the system, how are we to perform an operation? If we are confronting municipal “addiction” on bonds, as NJ Ramos writes, what are the tensions and consequences of different forms of treatment? Are municipal bonds fundamentally “toxic,” as Brittany Alston declares, or, as Monica Prasad suggests, are bonds “hammers,” mere instruments to be used in progressive directions? Language is political, and the language we use to interpret racial capitalism, the political economy of credit, money, governance, and public welfare in the modern United States have implications for base-building and coalition politics, among other tactical considerations essential to redressing the inequities produced and reinforced through the municipal bond market.
Monica Prasad begins her response from the presumption that municipal bond finance is “an important technology.” In so doing, she draws from the tendency among some economic sociologists to describe capitalism through mechanical metaphors, an assemblage of tools, vehicles, and market devices. From there, she asks whether municipal bond finance is more like a hammer or an automobile. To say that municipal bond finance is like a hammer is to suggest that it reflects “pre-existing racism but does not create a new world of racial possibilities on its own.” If it is more like an automobile, bond funding “reshapes our ideas of space and time and perhaps our very identities.”
Prasad’s choice of metaphor says as much about her understanding of racism as it does her comprehension of municipal bond finance. Indeed, across different political traditions, it is not uncommon to read accounts that treat racism as an input or externality summoned by the bosses to divide and conquer. More than that, the choice between hammer and automobile threatens to mislead. The municipal bond market and the use of borrowed funds reflected and reinforced the kinds of inequities rooted in the U.S. housing market. Borrowing, buying, selling, and rating debt was also an arena through which resources were distributed in ways that reshaped racialized, class, and gendered group identities. In this sense, bond funding was both the hammer and the vehicle, rendering false the choice between metaphors. And if it is both, what’s the utility of these metaphors? Indeed, what is gained by viewing municipal bond finance as a technology?
Stacy Seichnaydre directs our attention to the subtle but important question of how to describe the municipal bond market. Should we think about the range of activities, seen and unseen, as amounting to a “municipal bond industrial complex”? To do so is to identify the many different actors involved in perpetuating inequality, and to reject the fiction that bond market transactions are reducible to laws of supply and demand. But we also must consider what we gain from reasoning by analogy and what it means for folks to think about the municipal bond market as analogous to the prison- and military-industrial complexes. Does this socioeconomic concept better equip people to identify the essential similarities and differences in ways that will contribute to effective movement organizing and institutional redesign, as Joy Milligan has encouraged us to consider?
In contrast to hammers and complexes, Abbye Atkinson and John Robinson invoke biological metaphors to explain how public goods are undermined through bond finance. They each place emphasis on different parts of the “municipal ecosystem.” For Atkinson, public debt can “function like an invasive species.” For Robinson, it is the financial sector’s “profiteers” who infiltrate and contaminate. This way of describing bonds brought me back to 10th grade biology. And scenes of “unnatural selection,” satiated appetites, and “scraps” left behind certainly provide a more dramatic flair than mechanical metaphors.
Relatedly, N.J. Ramos and Brittany Alston find epidemiology useful in thinking about the undemocratic and life-threatening consequences of municipal debt. Ramos describes the turn by local governments to the municipal bond market as an “addiction,” one nourished, if not introduced, by New Deal and Great Society liberalism. And by describing the ongoing battles against “toxic debt deals,” Alston draws a connection between our present borrowing arrangements and the toxins inside discolored water flowing through corroding pipes and ingested by the residents of Flint, Michigan.
Whether hammer or invasive species, industrial complex or municipal ecosystem, the choice of metaphor and analogy should be judged by the extent to which they deepen the understandings of municipal bonds among everyday folks, help people develop dynamic power-mapping, and base-build across political scale.
This does not mean, however, that evocative descriptions, colorful metaphors and analogies should do the primary ‘work’ of explanation. I take Dedrick Asante-Muhammad’s point about the importance of describing “the gritty reality of Black economic enfranchisement.” But I don’t agree that my book gets “bogged down in details of finance.” As the history of municipal bond finance shows, financial literacy is key to political struggle. If we are to develop persuasive rhetorical strategies to put our cities on a firmer financial footing, we must be willing to delve into the details.
Given these competing understandings of municipal bonds, let me offer an admittedly rough sketch of the historical links between how different groups understood municipal debt and how those understandings animated political pursuits. My point is not to provide a robust intellectual history of the meaning of municipal bonds. Rather, I want to historicize contemporary metaphors and analogies to stress the political implications of our choices.
John Joseph Wallis has shown how the economic depression and attendant bond defaults of the 1840s initiated the passage of strict limits on state indebtedness. Local governments increasingly picked up the slack. Whereas the state’s share of government debt fell from 86 percent to 10 percent between 1838 and 1890, the local share rose from 12.5 to 40 percent during those same years. This political economic shift affected how different groups—from aspiring political parties to real property owners—perceived municipal bonds. Presenting themselves as the “fiscal savior[s]” of San Francisco, political parties and movements throughout the late nineteenth century argued against the corrupting powers of debt. During the 1870s, southern states and municipal governments repudiated debt on the racist grounds that “ignorant negroes” and “unscrupulous whites” had invalidly issued municipal bonds. Others countered that it was the so-called native sons who threatened to make the United States a “nation of rascals.” As these examples suggest, municipal bonds were more than financial instruments. They were ways of discussing questions of political rule—who should manage the purse? Who would govern in the most honorable of ways? Would a nation torn apart by Civil War fulfill its promises to creditors? Tales told about municipal bonds helped animate retrenchment and the overthrow of Reconstruction.
During the late nineteenth century, local governments taxed wealthy owners of real property to service debt. This inspired those who could not quickly morph land and real estate into intangible assets come assessment time to see municipal bonds as a “menace.” For the Bankers’ Magazine, municipal bonds were “evils in all their aspects,” responsible for increased taxes, which depressed real estate prices. The San Francisco Chronicle later concurred that the issuance of municipal bonds was “a distinct menace” that drove “the property-holder out of existence.” Of course, before the economic depression of the 1870s, Boss Tweed’s Tammany Hall and allied New York City landowners and builders were well aware of how municipal debt improved property values. It is fair to say that the position of the wealthy on municipal debt shifted depending on the state of economy and the types of capital they held.
Not everyone agreed that municipal bonds constituted a distinct evil, a thing to be avoided because of its corrupting influences and plundering effects. For William N. Coler, counselor-at-law, municipal bonds, and the public purposes for which they were issued, were ways “to care for the poor, the insane,” and they provided that “the doors of the school be open to all classes without distinction or discrimination.” Municipal bonds helped “to repel invasion, suppress insurrection, or defend the State in time of war,” and, as a means of financing canals, turnpikes, and such, advanced the needs of the nation state. This way of understanding municipal bonds, as a tool of progress, inspired political movements. In James D. Phelan’s bid for mayor of San Francisco in 1896, for instance, he argued that any great city spent “vast sums for drainage, for streets, for the protection of life and property, for schools, for museums, for galleries, for parks.” Municipal debt, he reasoned, would transform San Francisco into “a well equipped exposition, or market, or emporium.”
It is important to remember that racial segregation was not incidental to Progressive Era promises of public ownership of utilities or the expansion of public facilities. As Khalil Gibran Muhammad has persuasively argued, “liberal social scientists of the Progressive era were rejecting racial determinism in favor of a new language of racial inequality.” For our purposes, the use of debt as a tool of progress furnished Jim Crow infrastructure. Indeed, Jim Crow and the municipal bond market grew up alongside one another. State and local government borrowers issued millions of dollars in debt each year to accommodate the infrastructural needs of industrialization. Indeed, “every ten years brought practically a doubling” in municipal debt between 1903 and 1932, by which time some $18 billion in state and local municipal debt stood outstanding. The doctrine of separate-but-equal guided borrowing, buying, and selling bonds. It mediated thetransformation of credit into physical infrastructure that separated black from white.
It is interesting that none of the contributors to this roundtable described municipal bonds as odious. (Brittany Alston comes closest when she describes state and local government debt as toxic). This elision speaks to the gulf between the 1920s and our present moment. The interwar years witnessed a theory of, and movement against, odious debt. In the years since, repudiation has fallen out of favor as a viable response to debt, and we are left with limited means available for dealing with the inequality of debt. I think it also speaks to the consensus around viewing municipal bonds as tools of progress and key to civic improvements. In that sense, the “hammer” that Prasad invokes is consistent with the general pattern of thought elaborated by local governments at least since the end of World War II, if not earlier.
And yet, the competing metaphors and analogies invoked in this roundtable suggests a breakdown in this general understanding of what municipal bonds represent. Moreover, if the terms used to describe municipal debt reflects a much wider breach (opened, no doubt, by the Debt Collective, among other organizers against debt), the terms of discussion suggest considerable tensions.
Readers have drawn different conclusions from my book on the question of whether the problem is municipal debt, per se, or how debt is used. Are municipal bonds necessarily a mechanism of inequality and mode of extractive, racist governance, or is it possible to use such debt in ways that unlock fair and just infrastructural futures? Although I am still unsure where I land on this question, I am thankful to the respondents for mapping out the coordinates.
N.J. Ramos seems to fall in the first camp. Ramos notes the “seemingly intractable quality of anti-Black racism in private bond financing” and points to “an inherently flawed system.” One question is whether this dynamic is inherent to debt itself, or rooted in, and produced by “the United States’s structures of domination,” which continues to reinforce “a fundamental bind between anti-blackness and finance” and “cannot be reformed.” The implication here is that even if you direct borrowing in anti-racist directions, given the existing systems, structures, and relations of domination, we are still likely to see anti-Black racism flourish in and through debt. Britany Alston states plainly that the “current municipal finance system is racist and inherently flawed.” Nevertheless, she leaves room for redemption. Whereas for Ramos an anti-racist mode of public finance is not possible within existing institutions, Alston holds space for a reconfigured central bank “with the latent power to restructure the entire municipal finance system,” presumably along anti-racist lines. I agree with Alston on this point about the centrality of harnessing federal financial power, as do several contributors.
By contrast, David Stein makes productive use of Ruth Wilson Gilmore’s observation that, because debt repayment “is a political decision…The problem is not, then, debt, but rather the uses to which public borrowing is put.” It is a point that Stacy Seicshnaydre affirms, noting that “municipal debt is not inherently harmful for cities and their most marginalized residents.”
These differences are fascinating. Despite our collective commitments to reparative public goods and re-municipalism, and our opposition to predatory forms of structural dependence, we remain divided about whether the fundamental problem is the municipal bond market and the structural dependence of cities on that market, or municipal bonds and indebtedness itself. How to explain these divergences? Is it rooted in in different intellectual and political traditions from which we draw (I’m thinking, here, of the discourse around “future surplus” that David Stein invokes)? Does it reflect greater familiarity with comparative contexts? Does it arise from a certain type of racial literacy in general, partially the residue of the prevailing insistence that racism has underwritten this nation’s institutions?
And what to do about the problem to which Brian Highsmith alerts us, namely, the ways in which the dependency of cities on the bond market is part and parcel of other forms of dependency within the system of fiscal federalism and racial capitalism? Even if we were to agree on the problem, how do we translate this understanding into accessible language? Which metaphors are most generative for understanding the particularity of the bond market, for considering that particularity in relation to other mechanisms of inequality, for empowering the federal government to enforce the equity impact statement articulated by Stacy Seicshnaydre, or for pursuing the institutional redesign of fiscal federalism along the lines expressed by Brian Highsmith and Joy Milligan?
These are massive questions, and I am honored and humbled that my book has given rise to such provocations. I look forward to being in community with those committed to tackling such questions and pondering whether, as the conveners of this roundtable have poignantly asked, there is “a politics that can reimagine the operation of capital in the modern political economy.”
 See GENS for a critique of scholarship that focuses on singular logics, economic models, and conversion devices. https://culanth.org/fieldsights/gens-a-feminist-manifesto-for-the-study-of-capitalism.
 Claims of odious debt were most often articulated around state sovereign debt. Nevertheless, in the 1920s white southerners tested a proto-theory of odious debt around municipal indebtedness. For more on “odious” debts, see Odette Lienau, Rethinking Sovereign Debt: Politics, Reputation, and Legitimacy in Modern Finance (2014); Peter James Hudson, Bankers and Empire: How Wall Street Colonized the Caribbean (2017); Jenkins, “Ghosts of the Past.”