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Infrastructure Financing and the Bonds of Inequality

Rachel Weber reviews historian Destin Jenkins’ new book, The Bonds of Inequality: Debt and the Making of the American City, which shows how decisions about infrastructure financing reinforce preexisting racial inequalities and hierarchies.

Reviewed: Destin Jenkins, The Bonds of Inequality: Debt and the Making of the American City, Chicago, Chicago University Press, 2021, 320 pp.

As the United States awaits a massive federal stimulus in the depths of the 2021 pandemic, it is easy to become spellbound by the possibilities of infrastructure. [1] We think that public things—sewers, schools, roads, public housing—will save us, that they will reduce inequality, jumpstart the economy, and rekindle our democratic sensibilities (Honig 2017).

But you don’t have to go back to Robert Moses’ low-hanging bridges to expose the fetish of infrastructure. These physical structures are tainted by inequality, long before the bulldozers and cranes appear. Infrastructures materialize as the result of antidemocratic decision-making by private financial markets responsive not to users but to those intermediaries, government administrators, and elected officials who control their means of their production. New schools are sited and sewer systems are upgraded in white, high-income, and politically connected neighborhoods. Public transit and highways link those places to commercial centers with gleaming office towers. Meanwhile, infrastructurally deprived environments are vulnerable to flooding, economic isolation, and poor-quality schooling.

Historian Destin Jenkins’ engaging new book, The Bonds of Inequality: Debt and the Making of the American City, reveals how decisions about infrastructure financing reinforce preexisting inequalities and hierarchies. More important than their material consequences, however, he examines the changing politics of municipal debt, which controls the spigot allowing for their production. Infrastructure is too expensive and long-lived to be paid for in cash in the present. Moreover, federal cuts and state-taxpayer revolts have forced local governments to borrow to fund capital projects. Producing infrastructure then becomes a question of which public things and users are worthy of debt.

Even within the last century, municipal debt has had different receptions. Jenkins tracks the changing political alliances surrounding debt in the second half of the 20th century: how it went from a favored tool of progressive city-builders to being viewed as a drag on the economy and scourge of neoliberals. Key to this about-face was race.

Jenkins joins the growing ranks of scholars fixing a racial-politics lens on the transition from Keynesianism to neoliberalism in the United States (Katznelson 2005; Taylor 2012; Roberts and Mahtani 2010; Spence 2015). He argues that the Keynesian consensus of the New Deal and immediate postwar era was an “infrastructural investment in whiteness” (p. 70). Tax-exempt bonds for white capital. Jobs for white construction workers and tradespeople. Homes, schools, highways, airports, and utility systems for middle-class white households. Infrastructural initiatives like the Works Progress Administration helped “remake the racial state and the welfare state into a racial welfare state extending white rights into the realm of consumption and investing in middle-class whiteness through infrastructure.” This cross-class compact was preserved by low interest rates and by a postwar growth spurt that delivered the necessary principal and interest payments to pay down the bonds and keep the whole system afloat.

When debt produced infrastructure for white people and places, residents accepted their tax burdens and voted in favor of ballot measures. The apparatus and ambit of the local state grew more expansive in response. However, this compact began to unravel in the late 1960s, over a decade before Ronald Reagan and Margaret Thatcher took office. Certainly, conservatives and libertarians attacked municipal bonding as part of their starve-the-state austerity agenda. But Jenkins shows how it was not just neoliberals who pushed back on the expanding state. At the local level, a complex racial politics emerged. Black populations revolted against the white welfare state, not only the infrastructural neglect but also the violent dispossession wrought by urban renewal and the indifference of bureaucrats delivering services. Community groups urged debt strikes and bond boycotts to raise awareness of racial disparities. As black people channeled their anger into the civil-rights movement and street protests, municipal officials and administrators began paying more attention to the infrastructural needs of black residents and neighborhoods. They cut backroom deals with community leaders who demanded better jobs and services in return for their support. They presented bond measures for school buildings, libraries, parks, and community centers in neighborhoods of color to voters and investors.

Unfortunately, these bond measures often were rejected. Affluent white urban and suburban voters were unwilling to service the bonds when the beneficiaries of indebted infrastructures were not white. Rejection of local bond measures “crystallized” the infrastructural advantages previously afforded to white residents. Meanwhile, inflation and rising interest rates repelled bondholders, who abandoned the public sector for higher-yielding investments. Borrowing at higher rates over shorter terms, cities already struggling with suburbanization were forced to devote a larger portion of their expenditures to interest payments and to shrink their temporal horizons. This, in turn, weakened their capacity to invest in bricks and mortar or programs for the urban residents left behind.

For Jenkins, the credit crunch of 1966 was a key inflection point. Just as black populations were gaining political power in cities, the bond market moved beyond their reach. This, he argues, created the urban “blight,” “investment strikes,” and “fear cities” with which we are all too familiar (see, for example, Phillips-Fein 2017). Jenkins raises a problematic counterfactual: if new bond measures had been approved and infrastructure sited in black neighborhoods, could the urban revolts of the late 1960s been prevented? If Jenkins had presented other municipalities that employed more equitable financing and infrastructure strategies and did not experience protests, looting, and property destruction at that time, I would be more convinced. Otherwise, given everything else going on at the time, blaming the bond market for the urban crises that followed seems unsubstantiated.

The book is a detailed history of debt politics in a single case city: San Francisco. San Francisco is not a city that most would associate with urban crisis; today it is one of the most expensive and exclusive in the United States. This makes Jenkins’ decision to dive deep into the city all the more provocative. Although he does not frame it as such, the book sheds light on the tumult and uneven development in the postwar period that paved the way for the San Francisco’s tech- and real estate–fueled comeback in the 1990s. The period bracketed by the 1960s and the 1980s is critical because it encompasses the turning point that Jenkins identifies as key to understanding the racial politics of debt as one changing from exclusion to predatory inclusion.

One of the strengths of the book is that it focuses on the specific actors and knowledge practices that helped to create the market for San Francisco’s municipal bonds. On the buy side, Jenkins describes the investment funds and banks whose fortunes depended on the infrastructural needs of the city’s residents and the tax treatment of bond interest. As the hometown powerhouse, Bank of America gets a lot of play, but other banks were just as eager to purchase bonds with the hope that municipal borrowers would also deposit their reserves and other funds with them. On the sell side, he spends time with the municipal finance officers and their professional organization, the Municipal Finance Officers’ Association (now the Government Finance Officers’ Association), who helped to modernize the practice of buying and selling municipal debt. The intermediaries and underwriting syndicates who brought these two sides together, established creditworthiness, and kept information flowing between them included bond counsel and ratings agencies. These middlemen engaged in processes of abstraction, converting select details about physical, social, and economic environments into numbers, images, and projections that were more readily compared to other investment opportunities and consumed by investors at a distance (Weber 2015).

Jenkins describes the occupational culture of these interlocking professionals, underscoring the Polanyian precept that markets—in this case the bond market—are socially embedded. White, educated men engaged in a process of professional socialization through rituals that reinforced their upper-class aspirations and obsession with prestige. Sexist and racist jokes, fraternity-like drinking binges, golf outings, and conferences in Las Vegas were all part of this exclusive network of bondsmen. The network served critical economic purposes. In the face of uncertainty and untested financial instruments, the personal relationships that this network comprised paved the way for bonds to emerge as safe and reliable investments. The network was also rife with conflicts of interest; those actors urging government officials and residents to approve bond measures and those underwriting the bond measures were often one and the same.

The relationships forged through these clubs helped to create both a national market for debt and, as opinions began to change in the 1960s, a consensus about how both the welfare state and urban protests needed to be kept in check. Noted one institutional investor after the uprisings of 1967, “I won’t buy any bonds of a city that’s had a riot” (p. 144).

This does not necessarily mean that investors were any more enthusiastic when it was whites revolting against the state. Shortly after white homeowners supported the property-tax limitations of Proposition 13 in 1978, the ratings agencies downgraded San Francisco. Prop. 13 increased the number of ballot measures that Californians have to vote on in order to approve bond issuances or tax hikes. (This makes the book potentially less generalizable as California is something of an outlier in terms of the frequency with which fiscal issues must go to the voters). The “incalculability of democracy” threatens repayment streams and makes the professional networks dependent on the pipeline of new bond issuances and refinancings nervous (p. 201).

Jenkins neglects to discuss some of the famous ways in which California municipalities circumvented Proposition 13, ballot measures, and other de facto debt limits to sustain the infrastructural investment in whiteness well after the 1960s. Since the 1950s, the state originated and has led the country in the use of Redevelopment Authorities (RDAs), which are separate governmental entities that float revenue bonds for “economic development” projects, including infrastructure. These quasi-public authorities typify the kind of backdoor and antidemocratic mechanisms that Jenkins argues financiers like. Their use increased around the same time the Keynesian welfare state was receding, signaling the start of a new era of municipal entrepreneurialism. In 2012, Governor Jerry Brown terminated the RDA program to shore up funding for K–12 education. Variants of RDAs have reemerged in recent years in the state; as Alberta Sbragia showed in her classic 1996 text, Debt Wish, public finance is notoriously creative.

Indeed, as the story gets closer to the contemporary period, Jenkins does a little more theorizing and imagining of the intent of bondholders and issuers and less demonstrating and providing evidence of their interests and influence. He may certainly be right, but without hearing from the actors themselves or finding corroborating documentation, we do not really know what was going on in their heads as they were adjusting to the more constrained and politicized landscape. This is an important omission when one is trying to make arguments about who benefits from debt and for whom infrastructures are intended. Today, we see many rejecting color-blind liberalism with arguments about how new infrastructures like parks and public buildings, even when built in neighborhoods of color, are “not for us.” To show how, “in the absence of explicitly racist rules and laws, resources still flow along white middle- and upper-class lines,” readers need better data to unpack these increasingly common tropes in increasingly complex environments (p. 136).

Part of the issue today is that debt and infrastructure have taken on yet another valence. Left-leaning critics of public infrastructures point out how their construction often hastens gentrification and increases rents and property values in places favored by capital (in something of a throwback to how Jenkins describes black property owners against San Francisco’s desire to redevelop Hunter’s Point; again, “it’s not for us”). To this can be added the growing opposition to the “financialization” of the state (i.e. that institutional investors, banks, and financial intermediaries profit from debtor states and the poor credit of local governments). Jenkins gestures at but does not resolve these contradictions in his book: approving bond measures, he notes, “while addressing some infrastructural needs, reroutes taxpayer dollars upward to bond holders who use municipal debt to shield their capital from federal taxes” (p. 3). We still are left wondering whether municipal debt is a savior, scourge, or necessary evil.


  • Honig, Bonnie. 2017. Public Things: Democracy in Disrepair, New York: Fordham University Press.
  • Katznelson, Ira. 2005. When Affirmative Action Was White: An Untold History of Racial Inequality in Twentieth-Century America, New York: W. W. Norton & Company.
  • Phillips-Fein, Kim. 2017. Fear City: New York’s Fiscal Crisis and the Rise of Austerity Politics, New York: Metropolitan Books.
  • Roberts, David J. and Mahtani, Minelle. 2010. “Neoliberalizing race, racing neoliberalism: Placing “race” in neoliberal discourses”, Antipode, vol. 42, no. 2, pp. 248–257.
  • Sbragia, Alberta M. 1996. Debt Wish: Entrepreneurial Cities, US Federalism, and Economic Development, Pittsburgh: University of Pittsburgh Press.
  • Spence, Lester K. 2015. Knocking the Hustle: Against the Neoliberal Turn in Black Politics, Santa Barbara: Punctum Books.
  • Taylor, Keeanga-Yamahtta. 2012. “Back story to the neoliberal moment: race taxes and the political economy of black urban housing in the 1960s”, Souls, vol. 14, nos. 3–4, pp. 185–206.
  • Weber, Rachel. 2015. From Boom to Bubble: How Finance Built the New Chicago, Chicago: University of Chicago Press.

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Rachel Weber, “Infrastructure Financing and the Bonds of Inequality”, Metropolitics, 19 October 2021. URL :

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