Destin Jenkins is Assistant Professor of History at the University of Chicago and author of “The Links of Inequality: Debt and the Building of the American City. I was so taken with the book, which presents the post-war history of the San Francisco municipal bond market, and that Ireviewed on April 9, which I followed with him, first to ask him how he came to write about municipal bonds, but also to bring his story to the present. The interview, conducted by email, has been edited for length and clarity.
JM: Why is the municipal bond market “critical and under-researched”, as you call it?
DJ: Let me address the “under-researched” part of the question since your readers will be well aware of the importance of the bond market in financing what makes cities recognizable.
Since the 2008 financial crisis, historians have focused on creating all kinds of markets. But I have a feeling that even this great job in the real estate market, the stock market or, for that matter, the treasury bill market is ruled by the assumption that these are the areas that have most directly affected life. Americans. In other words, these markets have become means of talking about the racial wealth gap, retirement savings, IPOs, inflation, and interest rates. It turns out that the municipal bond market is also a powerful mechanism for wealth, infrastructure, consumption, and more.
JM: How did your peers react to your fight against munis?
DJ: I would jump into a colorful story first about how munis unlocked all kinds of processes, only to be interrupted by the question, “But what is a link?” Many of my peers understood stocks, but not bonds, let alone municipal bonds. Others wondered why I wasn’t studying “the people,” even though financiers and municipal bond assessors are also people whose activities have shaped the quality of infrastructure life for millions of Americans. Basically, the veiled world of municipal bond finance and the disciplinary ideologies of history meant that I really had to work to show that municipal finance was absolutely essential to issues near and dear to most historians (change over time, inequality, democracy, race).
Because my peers were ready to understand the consequences of a debt arrangement, I realized that I had to frame my work first in terms of Detroit Bankruptcy and Puerto Rico Insolvency, and then work backwards to explain. the operation of municipal bond financing.
JM: The “infrastructural investment in whiteness” that you cite in your book – is it still going on?
DJ: That’s a very good question. What I describe in the book as “the infrastructural investment in whiteness” is not a transhistoric and eternal relationship between cities, markets and Americans. It refers to a specific crystallization of intra-racial (white) investment in and across class lines over the roughly 30 years since WWII. I coined the term to focus on an arrangement whereby white workers in separate building trades literally built the infrastructure through which middle-class white Americans consumed, and which was ultimately funded by investment. white upper class bonds. It refers to the distribution of a “segregated cake” largely in the form of wages, consumption activities and wealth for the white working, middle and upper classes, respectively.
But the subject of the white male middle class is no longer at the center of local urban economic growth, in part because of the collapse of the middle class in America. The building trades are not as separate as they once were. And wealthy white investors, who relied on tax-exempt municipal bonds to protect their capital from high federal marginal tax rates, have many more opportunities, nationally and globally, to do so. To be clear, this does not imply that we are in a post-racial world. On the contrary, the class dimensions of whiteness and bond financing intersect in very different ways. (For example, borrowing to adapt urban space to increasingly affluent people or to invest in the police).
JM: Has the bankruptcy of Detroit and the insolvency of Puerto Rico weakened “bond supremacy” or is it still a factor?
DJ: The supremacy of bondholders is marked, in part, by ways of understanding the world. Unchallenged promises to bondholders; treating bond ratings and income projections as objective, transparent and non-political readings of budgets; Ideas rooted in fiscal responsibility and appropriate spending levels – all of this is proof of the supremacy of bondholders in articulating how cities, territories and other political units should be governed. These common sense views are always a factor.
JM: You ask why evaluators should have so much influence on our collective social well-being. Is this still the case?
DJ: The point is that waste management systems, water supply, recreation spaces, among other aspects of modern life, are provided by state power and the municipal bond market. It is not a simple matter of efficiency (i.e. the claim that private markets are more efficient than other financing mechanisms in providing services and resources). It is a question of power. The country’s communities remain structurally dependent on the activities and lending conditions of market players. We must ask ourselves whether demands for market efficiency should take precedence over substantive democracy.
JM: How did (American) cities survive the 1970s?
DJ: Cities are a paradox, both deeply dynamic and remarkably sustainable. So what was at stake in the 1970s was not so much whether cities, as large, sustainable structures, would survive, but the fortunes, fate and reach of governing coalitions, political regimes (especially the urban liberalism) and the dreams of freedom of marginalized populations. .
On the one hand, cities have turned to downsizing. On the other hand, it was also during the 1970s that affirmative action policies and increased spending in the public sector created new opportunities for African Americans. Black women in particular have found a foothold in the public sectors of health and hospitals, educational services, federal and local public administration, and social and religious services. These are the people who have made the city run. You could say they were the “essential workers” of the decade.
(Joe Mysak is a municipal market columnist writing for Bloomberg. His views do not necessarily reflect those of Bloomberg LP and its owner, and his comments are not intended to be investment advice.)