Author: Money on the Left

Billy Saas and Rob Hawkes speak with Sheridan Kates, ecological economist, activist and, at present, Green Party candidate for Islington Council in North London in the May 2026 local election. In her academic and political work, Sheridan rejects both the economics and the language of austerity, and instead prioritises democratic, inclusive, and participatory institution building. Sheridan’s activism extends into a commitment to public economics education via her work with Modern Money Lab UK, which held a series of public workshops in London and then a 2-day anti-austerity conference in Bristol in 2025. As a signatory to the Greens Organise ‘Pledge to Oppose Austerity in Local Government’, Sheridan both welcomes the gathering momentum behind campaigns for a UK wealth tax and argues that they do not go far enough. Amidst a new wave of excitement surrounding green politics in the UK, especially since Zack Polanski’s election as Green Party Leader in September 2025, Sheridan looks to a future where our economies are redesigned democratically to put people and the planet before profit.

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Music by Nahneen Kula: www.nahneenkula.com

Transcript forthcoming …

* Thank you to Zachary Nosbisch for the episode graphic, Nahneen Kula for the theme tune, and Thomas Chaplin for the transcript. 

We speak with Ely Fair, who studies structural inequality and poverty in urban geographies from a heterodox perspective. Fair holds a Ph.D. in Economics from University of Missouri, Kansas City and is presently a visiting instructor in Economics at Knox College. 

Examining the institutions responsible for social valuation, maintenance, and transformation at the neighborhood level, Fair focuses especially on the role of housing policy in the racialization of U.S. cities. During our conversation, Fair not only spells out important discoveries in this critical research, but also outlines several positive policy solutions designed to remediate the unjust development of urban geographies.

In doing so, Fair explicates his work on the legal history of complementary currencies in the United States, emphasizing the generative role they can play today in advancing housing justice, empowering municipal governments to mobilize labor to create and maintain safe and affordable housing.

Lastly, Fair relays his findings about The Freedman’s Savings Bank. Specifically, he contends that the bank’s collapse was a result of the federal government’s “negligent paternalism,” creating a moral and equitable obligation for the U.S. government to finally restore the outstanding deposits. From here, Fair proposes a targeted program of restitution that leverages digitized archival records to identify and compensate approximately half a million Black American descendants.

Visit our Patreon page here: https://www.patreon.com/MoLsuperstructure

Music by Nahneen Kula: www.nahneenkula.com

Transcript

This transcript has been edited for readability.

Billy Saas

Ely Fair, welcome to Money on the Left.

Ely Fair

Thanks. Glad to be here.

Billy Saas

Would you kick us off by just telling us a little bit about yourself and your background, how you came to the sort of questions that you’re asking in your research?

Ely Fair

Yeah. My name’s Ely Fair. I have a PhD in Economics from University of Missouri, Kansas City. I’m currently teaching at Knox College in Galesburg, Illinois. Most of my research is motivated by structural inequality and poverty. I got quite interested, while living in Kansas City, in the racialization of cities, how cities intervene in housing policy and the history of the landscape within Kansas City, which is characterized by starkly divided race and income and therefore also neighborhood quality.

It’s actually a strange town because it was built going south and then about 50 years later, they white-flighted it going south. So there’s a race line that runs directly through town, and on one side you have housing stock that was built at exactly the same time and for the same group of people, which were mostly like white, middle-class people. So on both sides, it’s the same housing stock historically. But then for the last 50 years, one side has been over 90% black and the other side has been over 90% white. This identical housing stock has then evolved through the maintenance decisions of people and the capacity of people to maintain their homes and their neighborhoods such that now, many of the neighborhoods on the black side of Kansas City are completely destitute.

There’s like lots of abandoned properties, lots of properties that have been removed. So you get this kind of widespread abandonment phenomena and coupled with that, then a lot of childhood asthma problems, childhood lead poisoning, all these kinds of social diseases that come from concentrated poverty. So I got curious about how this dynamic evolves and looking at how municipalities attempt to intervene in neighborhood change to create stable living environments and stable neighbor environments.

Some of my work then is around housing maintenance, neighborhood stability, and some of the work is then on local currencies and how cities can go about bringing the labor resources, which are in the community, there’s like lots of unemployment to bear on this question of safe and affordable housing for the neighborhood.

Scott Ferguson

Correct me if I’m wrong, this is a kind of institutional orientation or maybe even commitment of the UMKC (University of Missouri Kansas City) econ department or social science Ph.D. to the community and to the city. Right? There’s all kinds of local research that’s done by PhD students all the time. At least that’s my memory of when I visited years ago.

Ely Fair

I mean, yeah, absolutely. I mentioned things like concentrated lead poisoning or asthma, the only reason I know about them is because other PhD students have done epidemiology work on Kansas City, looking at how housing and poverty and disease are concentrated. There is a lot of work done like that in Kansas City.

The most recent study I did was looking at the way that your neighbors’ maintenance level – how your neighbor upkeeps their home, and how that affects your price. The reason I have data on maintenance level is that for 13 years UMKC sent grad students out to catalog external qualities of homes in Kansas City.

I think 250,000 parcels were observed with 15 different characteristics, so there’s this very rich data set on what these houses look like from the outside; both the houses themselves and the grounds and then the sidewalks and other kinds of municipal infrastructure, which then I was able to use to make these little micro markets and ask questions like, “when you’re in a neighborhood that is declining because people are not maintaining their homes how does that impact your own sale price?” Then if it brings down the price of your home, then that will also affect your likelihood of maintaining your home, right? Because when we maintain our homes, we get that money back when we sell the home. Right? But if all the houses are decreasing in price, then you can get this kind of group negative group dynamic in which one person under maintaining brings down your house price, which makes you under maintain, which brings down their house price, and you get progressive decline.

That’s the kind of thing that cities can intervene in and have a lot of legal authority to intervene in, but they have to figure it out. We as economists want to identify how those dynamics unfold so that we can inform urban planning.

Scott Ferguson

So you take a different approach to the problem than mainstream neoclassical economists typically would write, maybe you can walk us through how you do the way the approach works for the mainstream and what it is that you’re doing that’s different.

Ely Fair

The primary worldview that – what we call – “new urban economics” is working within is one that assumes that the housing market is going to be a perfect market. So there’s no transaction costs, there’s perfect information, perfect competition across the market and that would mean that the market should allocate resources correctly. The economic theory says if everyone knows everything, nothing costs anything, everything happens simultaneously, then you can have perfect allocation. If that’s true, then cities should not intervene either through zoning or through code enforcement, etc., etc., because if someone wants to purchase a poorly built house that’s cheaper, you should let them purchase that house. That’s a revealed preference of theirs to purchase a house that, for instance, has black mold in the walls,

So when the city says you can’t have black mold in your walls, the city is also saying that the consumer has to bear the cost and new urban economics would say that that’s unjustifiable, that the cost is unjustifiable. Of course, the problem in housing is a long-lived built-environment.

We can’t change it. We can’t move it around. We basically know nothing about houses as consumers, which is why we hire realtors and the transaction costs are really large, right? If you have a new neighbor that you don’t like, you don’t move out of your house. That’s not what happens. It’s hugely expensive to move and because of that, you can get areas of concentrated behavior. For instance, for my research, there are areas of concentrated under-maintenance where you have a group of people that either don’t want to but probably because of the money issue, just can’t maintain their homes like they would like to to keep them safe.

Because they can’t, they cause their neighborhood to progressively decline. So the other big change in how I’m looking at that compared to the mainstream is that mainstream economics tends to do what we call comparative statics, where you look at a snapshot of the the city and you say, “let’s assume that what’s happening in the city right now is what people want, and that price is correlated with desire today,” and then you take another snapshot in the future. The problem then is you can confuse current prices with past development. So it’s like, is your home expensive because you bought it because it’s next to a school? Or is there a school next to your home because your home was already expensive and you were already living in a nice neighborhood that the city wanted to invest in?

So if price and neighborhood investment are interrelated over time, then it doesn’t make sense for us to look at snapshots in time. We want to look at evolutionary processes and then for a city they want to figure out, “okay, is this evolution that’s happening in the neighborhood going to lead to a healthy, stable neighborhood or a neighborhood that is in some kind of decline that requires serious intervention,” and you want to identify it early enough at the right moment to pivot the social dynamics.

Scott Ferguson

Something that you brought up in our pre-recording conversation was something about the specificity of the United States in the ways that municipalities, and especially cities, are empowered to make all kinds of decisions, presumably because of our federalist structure, and how that really informs your work. Maybe you can speak to how a real appreciation for the law and legal history shapes the way you pose questions and how you respond to them.

Ely Fair

We have an interesting set up because municipalities are the ones primarily charged with determining how things are built – so codes – and where things are built – which is zoning – and also how things are maintained. How things are maintained has been traditionally done through building codes and now some cities are starting to break that off into its own kind of maintenance code space.

The actual structure of the cities is legally bound within the municipality, and they can take really extreme measures. On the one side, you can have zoning that says like, “nowhere in this city can there be an industrial park.” On the other side, you could be like, “Actually, you can put things wherever you want. It doesn’t matter if it’s next to a school, you can still build an oil refinery.” Right? So with regard to where things are placed, the city has extreme latitude. And also this applies to what is built. So, the city can say, “oh, this building can’t be more than four stories tall.” It can also say “there has to be a plug on every wall, every six feet.”

As they dictate what gets constructed, how it’s constructed, they also dictate the cost of construction, right? When the city says you can’t just build a shack in someone’s backyard and have someone live in it, they also say that  the cheapest housing that we could make and put over someone’s head is not legally allowed.

I think we actually see a lot of conflict around this right now with the rise of homelessness and encampments and the Supreme Court ruling saying that you’re allowed to displace people for being in public spaces means that there is actually this municipal conflict over whether or not cities should allow informal, uncoded and unzoned housing.

How permanent is that housing allowed to be? If you’ve been in California at all in the last 15 years, this is very pressing. One of the decisions that a lot of those municipalities have made is like, “we’ll allow you to be housed in informal ways that are not legal as long as it’s not very permanent.”

As long as we can come and tear it down every six weeks and you move to another place, that is fine. This kind of inhibits people from upgrading that informal housing. I don’t want to sound like I’m going to say there’s a good reason to chase people around from encampment to encampment. I think there’s good reason for municipalities to want to have laws that control what is built. Historically, the reason we have code enforcement is there were slums and the slums had slum fires, and people died. You were like, “oh, Chicago burned to the ground. We should probably have thought differently about where the houses were and how the houses were constructed.”

But over time, that has resulted in rising housing quality across the United States, but also rising housing burden as wages haven’t kept up with the quality increase in houses since the 1970s. So housing is increasing in quality, but still with these very concentrated pockets of low quality housing, called the ghettoization process.

Billy Saas

So maybe you can help us parse and account more clearly for the distinction between the kind of neoclassical, mainstream approach to these problems and the way that they observe the rise in homelessness on that side and propose (or don’t) solutions to that problem, with your own more heterodox, kind of institutionally backed, MMT-informed approach. How do they see it? What’s their solution? And, and I guess, in a word, why are they so wrong?

Ely Fair

I don’t want to make a puppet of large and diverse literature.

Billy Saas

We can be nuanced, but they’re wrong.

Ely Fair

Oh, I will make them a puppet. At the most extreme people with regard to homelessness, people will say, the reason we have homelessness is that we have refused to allow people to purchase homes of a quality that they can afford. We’ve done that by changing socially what we consider to be habitable homes. The warrant of habitability, which is like a legal doctrine that comes in the 60s, but it’s heavily debated in the 60s and 70s, it says, like, “municipalities can just tell you what is habitable.” When they set that bar, that becomes the legal bar within the municipality. So we have eliminated a lot of housing that I think we all would agree is not dignified for people living in such a wealthy society and a society in which we believe in, at least theoretically, some kind of intergenerational mobility. A person has a right to be born into a safe place, live in a safe place, it’s not going to make them sick, and that’s going to enable them to prosper as a human right. This is kind of the individualist democracy ideal. 

On the more – I would say – conservative neoclassical side, people would say, “look, poor people simply don’t have enough money. They should be allowed to live in the housing that they want to buy and can afford to buy and it should not be the role of the government to inhibit that housing.” I would say that we live in a weird techno dystopia. We are like science-fiction rich compared to 100 years ago. If we can’t figure out how to distribute resources in a way that people can live with what we would socially consider to be dignity, that’s a distributional problem.

That is a problem of lack of government intervention and not a problem of too much government intervention. I also think, yes, the city has broad power to call forth resources. If a city wants to have housing that we think is safe and stable, cities also have a lot of tools at their disposal to support communities in producing and maintaining that kind of housing and, right now, partly because of what economists have been telling them, that when they intervene in the market, they just mess everything up.

Cities have been wary of driving the direction of resource allocation within the municipality in order to create safe and stable housing. Part of that is being wary of making mistakes, recognizing that urban planning has made some pretty heavy mistakes in the past, and part of that is that they don’t have a lot of data-informed work coming out of econ about how: given the fact that cities are not currency issuers in general, how do they use relatively limited financial resources to make pretty hard decisions about how to create community stability?

I think that’s the work of economists. That’s that stuff we should be telling them. We should say, “oh, we evaluated this policy, we evaluated this neighborhood change. It turns out if ten years ago, the municipality had come in and supported this community in these ways, then we would expect to see a very different outcome now.” Some kind of like an evolutionary outlook on the city.

Scott Ferguson

So how would the worst caricature of the worst conservative neoclassical urban economists explain the Chicago Fire? Is that just an externality? Is it an act of God? Is it a market correction? How does that get explained away?

Ely Fair

I mean, if you say the market would work if we had perfect information, zero transaction costs, perfect liquidity, etc., then if you have a market failure, it’s one of those problems. One of those things didn’t happen. So it becomes the role of the state to probably create better information. So then the state makes the market work better by recognizing that people have imperfect information and providing more perfect information.

This is like the kind of mainstream argument for something like the FDA. It’s not that they should regulate the thing, they shouldn’t regulate what the food is, but they should tell us what the food is so that people don’t lie to us about what’s in the food anymore. The market was lying to us about what was in the food, and we had all these market failures.

For instance, with the fire in New York City just a few years ago that killed a bunch of immigrants because the fire doors weren’t maintained properly. You could get two solutions. You could say that was a risk and these people dying was within the distribution of risk that they accepted and that’s what they paid for. They paid for this distribution of risk. Or you could say they weren’t aware of the true distribution of risk, so the role of the city shouldn’t have been to enforce the codes around fire safety. It should have been to more effectively inform those people about the true distribution of risk, so that they could either pay more money to get the fire doors fixed, or or accept the potential risk that they took on in regards to their families dying.

It’s rarely stated so callously. One thing that I found quite appalling when I first got into urban econ is a pretty consistent finding that black women heads of households in the United States do not prefer to purchase as much housing as their white counterparts. So after controlling for income, you still find that black female heads of households do not purchase as high quality of housing as their white counterparts. If you can’t say, “oh, what we found was some kind of structural racism,” then you have to say, “oh, there is some kind of cultural feature in which it turns out that black mothers just don’t care as much about the quality of housing that they put their children in as white mothers,” which to me doesn’t pass the smell test at all.

If you have a study that finds that, what you say is, “oh, I have found some kind of structural racism.” It is obviously untrue that any group of mothers cares less about their children than any other group of mothers, right? That’s obviously untrue. I must have found some kind of other problem.

But, the mainstream can’t really accept that it in its most extreme forms anyways.

Scott Ferguson

Right? So they default to this kind of Moynihan culture of poverty.

Ely Fair

Yeah. You’re just like, “well, we have “black” as a control signifier. It shows less purchasing for housing. We have discovered some kind of cultural feature right.” The cultural feature, for whatever reason, is that black mothers just don’t prioritize safe housing in the same way that white mothers do.

And I’m like, “that’s that sounds like a weird racist thing to say.” If you just said it to someone at a grocery store, you might get slapped, right? 

Scott Ferguson

That’s why you put it in an econ journal.

Ely Fair

For me, it is quite clear in Kansas City – this is true of much of the United States – but Kansas City has highly segregated housing. That the neighborhood-decline there is not about not really caring about having your yard not have trash in it or not really caring about whether you have gutters on your house. It’s a manifestation of a concentration of poverty, which we know creates all kinds of social diseases. It is also just like a lack of income. 

I’ve had this pushback from other economists, “why study under maintained housing? Isn’t it clear that what people need is better paying jobs? So shouldn’t we just be talking about the labor market?” I think there’s legitimacy to that. On the other side, I think that we could use the power of municipalities to activate our communities to make a safer housing environment that was more stable without also needing to figure out how to get people better paying jobs.

We can put more than one pan on the fire, maybe, right?

Scott Ferguson

Yeah, yeah. So maybe before we get into some of your policy proposals, your potential solutions, maybe we can get a little snapshot of just some of the more fine grained findings that came out of these evolutionary housing studies at this really intensely micro level.What did you learn? What are the tendencies, at least in the areas that you studied from this data set from UMKC.

Ely Fair

In Kansas City’s core, I use street level observation of homes. So we have 250,000 of these parcels that have been observed and sales from 2010 to 2020. Okay, can we predict the sale price of your home just looking at the kind of micro market of the maintenance around your home?

When someone’s looking to buy your house and you walk out the front door and you’re like, I like this house and you look out at the neighborhood, what is the neighborhood that you see? So let’s call that the micro market of the house. How does people’s visual perception of the upkeep of that neighborhood affect the price?

I took a little sliver of the front of every parcel that was sold, and I made a little bubble. I basically included your micro market as all of the homes that are within 60ft of the front door of your house. What I found in Kansas City was that, after controlling through your own quality of your home, that just that feature explains or predicts, let’s say, because this is actually what the statistics are doing, predicts about 20% of the price of your home.

Not knowing anything else about the features of your home, just how well-maintained your neighbors are, after accounting for your own maintenance, accounts for about 20%. If we think of this as like a common pool resource problem, like, tragedy of the commons, I don’t know how to say this right. If my neighbor’s maintenance brings down my price, then I’m going to tend to also bring down my maintenance level, because when you’re looking to sell your home and you think maybe I’ll renovate my kitchen, it’s going to cost me $25,000, and you think I could get that $25,000 back when I sell the house. The house is going to be worth $25,000 more, right?

Then you renovate your kitchen and then the house is upkept. Or you repaint the house. Right? If the house is in a market that is compressed and you’re on the low end of the market, you’re not going to get $25,000 out of the house. In Kansas City, it’s becoming more expensive, but you can buy a house for $50,000, which means that renovating the kitchen is only going to give you a couple thousand dollars.

You’re never going to just add $25,000 to the house. The house is only worth $50,000. In that market, no one’s going to renovate their kitchens because you can’t get the money back. So as that price comes down, your return on maintenance comes down and so if my neighbors decrease my price by 20%, then – if we think it’s linear – I decrease my maintenance level by 20%. That in turn decreases their price, that decreases their maintenance level. It just comes back and forth. Then we have a situation in which the individual decision to under maintain is actually harming your neighbors, and that is in turn causing them to make individual decisions that harm you. So if we take an atomized view of the world – which is what the mainstream within economics would do, each individual is making their rational decision – you still get downward dynamics in which the neighborhood falls apart. This is some of the work I’m doing right now, one of the things that the city wants to kind of figure out is like, “okay, we figured out that under maintenance at the municipal level at these micro market levels is causing neighborhood decline.”

How does the city intervene? Does the city make some kind of rotating fund that helps people invest that stops that process? Then you still need to figure out when the process is about to start. You need to figure out how much that rotating fund would need to be. And this is an idea I think is underused and potentially powerful. Cities can give you $25,000 to fix your house and be like, “give me the $25,000 back when you sell your house right.”

The primary method we’ve used for helping neighborhoods maintain is usually through HUD grants. They’ll target a neighborhood, and they provide micro grants for maintenance. If you’re a homeowner, you can get a little bit of money. The problem is the money does not seem to be enough. The density of investment does not seem to be enough.

So if you offer someone $5,000 you can’t paint your house for $5,000. So if I was in a situation where I didn’t have the money to reroof my house, $5,000 isn’t going to do it. I need most of the money to reroof my house, or maybe all of it.

A municipality then runs into this problem. Are they paying for that with US dollars? If they are, they need to get those US dollars from somewhere. How do they get those resources? Right now, most of that money is coming from the federal government through block grants. It’s just simply not dense enough.

So this is kind of some of the work I want to look at next. How do we identify these downward spirals? How do we identify these tipping points when neighborhoods start to decline? How much maintenance investment support do we need to stop the decline such that the process of decline just never happens and the homes maintain their value? The black-white wealth gap in the United States is 20 to 1, so white families have about 20 times the wealth of black families. It is much larger than the income gap. Part of that is because of the history of racialized neighborhoods and the fact that black concentrated neighborhoods are perceived as declining in value.

Because of the income gap, they are also more likely to be under maintained and to end up in a situation in which you have under maintenance -> under priced -> under maintenance -> under priced cycle, then there are a lot of black families that own homes, but those homes do not appreciate at the same rate as the average white home.

This is where the wealth gap has been created. We concentrated poverty and we concentrated black communities and then those homes slowly depreciated in value, while white homes appreciated. If we want to reverse that kind of process, we want to figure out how to stop the neighborhood from declining in the first place.

Scott Ferguson

Yeah, I assume that there’s all kinds of factors that we have already talked about, unemployment and underemployment, which of course disproportionately affects black communities. But also, I would imagine banking and financial instruments like home equity loans impact it as well. If you’re if you’re making very little because you’re unemployed or underemployed or just…

Ely Fair

…or intermittent unemployed, right?

Scott Ferguson

Right. When you don’t have financial security, I’m assuming a bank isn’t going to give you a home equity loan.

Ely Fair

We do have an income gap. A white-black income gap has been persistent, but the income gap is not nearly as large as the wealth gap. Because wealth in the United States is predominantly houses, that’s the channel to target.

Whether it’s under banking, whether it’s downward maintenance price dynamics, whether it’s some kind of crowding effect, housing is the wealth that’s being lost. There is an ownership gap too between white and black families, but it’s not, at least in Kansas City, as dramatic as one would think, considering how dramatic the wealth gap is.

It’s about the homes that black families end up owning and what their appreciation is compared to white families. 

Scott Ferguson

Yeah. This is Sandy Darity’s point, all the time

Ely Fair

All the time. Right. Yeah.

Scott Ferguson

You’ve already begun to broach the topic, but concerning some of the mixed policy responses, what are some of the challenges of coming up with active public policy at the municipal level to treat these issues?

And then all of this is teeing up what we really want to talk about as well which is your work on complementary currencies, where they fit in in your work and and the legal history that you’ve done around that. But let’s not get ahead of ourselves. So let’s start with the housing policies themselves.

Ely Fair

Yeah. I mean, it’s difficult for cities because maintenance is a cost. So, when you force certain kinds of outcomes at the neighborhood level, you create expense. One of the things that’s interesting about code enforcement is the legal space is huge, so no city enforces the codes that are on the books because it would be too burdensome.

It’s recognized as being a burden. The city could come into your house right now and be like, “oh, it turns out, since this house was built, we change these codes, so all of this stuff has to happen.” Because they know that, what cities have done is try to train code enforcers to employ a lot of discretion and latitude to assess the likely ability of the person to pay and then ask for some kind of mitigation based on the ability to pay, which, as near as I can tell, has not been abused as much as we might expect.

I’m always very suspicious of someone who is essentially a cop being told, like, “we know that you could do anything you want, just decide what’s best.” Chicago started doing a thing where they used code enforcers to evict homes that the police department doesn’t like, because the code enforcer can knock on your door and come in, whereas the police cannot.

It’s not considered a search by the courts. Cities could do everything. The question is, “What do you do?” How do you facilitate a situation in which you get people into a position where they can actually help themselves stabilize their own housing? And so you have a couple of problems.

One is obviously, landlords are in a really different position than owner occupiers. A thing that Kansas City has done, which I think is smart, is they started making landlords pay a fee every year. I think it’s $45 right now to register the rental. That money pays for randomized code enforcement checks that just happen because one of the problems in rental properties is if I call and I say, like, “my toilet’s leaking black water into the basement,” the city will come and inspect it and be like, “this is not habitable. This must be fixed.” 

My landlord knows it was me. There’s no denying it. No one else knew that my toilet was leaking into the basement except for me. So then you get either rent hikes or eviction, right? So there’s a lot of danger for poor tenants. So one thing cities are trying to do is make a mix where you may be enforced differently on different kinds of people, whether they’re a tenant or a landlord or owner occupier. 

Also different municipalities are treating code enforcement really differently depending on what they think the problem is, which is part of the work I’ve been trying to intervene in. So in Miriam, Kansas – a suburb of Kansas City –  if your house needs a new roof, they put a sign in your front yard that says, we’re going to fix this roof in two weeks. We’re going to pay someone to do it and then they put that onto your tax bill. If you don’t pay your tax bill in three years, they seize your home and they sell it at a tax auction. That’s what happens when you don’t pay your taxes. They seize your home and they sell it at a tax auction.

So the logic there is coming directly out of the econ literature. It says, “if the home is worth maintaining, then the market would allocate the home to someone who is willing to pay the price of the home, plus the maintenance. If the home is currently occupied by someone who is not willing to pay the price plus the maintenance, it should be reallocated.”

So then it must be some kind of a market failure, right? The person is unwilling to move out of the home to sell the home and move into something that’s affordable to them. It’s an evaluation of what the problem is, which I don’t think is very accurate to what the problem actually is.

My work and the work of urban studies and urban economists then is to be like, “how do we evaluate this really complicated market in order to understand what the problems are so that you can provide solutions?” This is entirely speculative, one of the problems I think that we saw in places like Kansas City is: the white flight happened in the 60s and 70s, right?

We had industrial working class, middle class families. Black families get access to neighborhoods in Kansas City that they previously didn’t have access to and buy into these very nice homes. The housing stock is beautiful. It was built around the turn of the century. There’s a lot of very nice housing stock.

They bought into these homes and they never probably really had money to pay someone for maintenance. But it didn’t really matter because they had a family unit that could provide maintenance for themselves. You have people get on their ladder and clean their gutters. They’re not ever probably paying someone to do that.

So you roll forward. They’re in their 40s. When this happens, you roll forward 40 years. They’re all in their 70s and 80s. They can’t get on a ladder. And then ten years after that, you’re like, “oh, well, these gutters haven’t been cleaned, which means your siding is rotting and your house needs to be condemned.” If the city had seen that transition of labor, that the labor being provided by the family towards support of the unit was no longer able to be provided at that time, they probably, for not very much money, could have actually intervened and been like, “all you really need is some kid that needs a little bit of work to come by and get on a ladder for you because you can’t do it anymore. It’s not safe.” But if you think that the market’s going to just reallocate those homes, you don’t make that intervention. And if you think like, “oh, actually, housing is a social good, it’s pretty complicated how and why it gets maintained and how and why it looks the way it does,” then you try to make community based solutions to provide those labor resources. 

Scott Ferguson

So what are some of those that you have thought through that you would advocate.

Ely Fair

One of the things that’s interesting about housing is, in general, most of the cost is labor, and the materials are reasonably cheap and most of the skills are reasonably easy to acquire compared to lots of other kinds of things.

Compared to even just fixing your car, it’s like, “oh, it’s actually just easier to fix your leaking sink.” It takes 20 minutes on a YouTube channel and you save yourself a couple hundred dollars, you know. So, one thing I would like to see in a city like Kansas City doing something where they say, “okay, we’re going to rent this warehouse and we’re going to buy basic housing supplies like sheetrock and studs and whatever, and have a tool library and if you want to come in, we will, teach you to do the basic kind of repair that you need to do. And then you can get permission to rent tools and to purchase materials from us at cost.” It’s really expensive to have someone come in and reseat your toilet when it starts leaking into your basement.

It costs more than the toilet, but it’s actually pretty straightforward. In the neighborhoods that are under maintained, we also have a ton of slack labor. This is one of the paradoxes of capitalism. The places that there’s the most to do, there’s the most underutilized labor. Is it possible for not that much money to upskill this community such that they can actually provide these services for themselves?

I think the answer is probably yes. All of those families in their 70s and 80s have some niece or nephew or some friend of another family who could definitely have done that work if the person just had a 30ft ladder or was able to go to a class and learn how to reseat a toilet.

So I think that those are the kinds of solutions, in part because cities are so cash strapped. Maybe this is an opportunity to think about complementary currencies, but cities could also incentivize this kind of work.

Scott Ferguson

You can imagine a municipal job guarantee or at least public works program where you’re expanding this so that it’s not just about a pooled set of resources and a pedagogical center, but the city’s paying people to go out and do this work at a living wage for little to no money.

Ely Fair

There is a lot of legal space for municipal complementary currencies that are tax driven. Interestingly, they’re very rare. Municipal currencies used to be less uncommon. Tax driven ones, I don’t know of any example, actually. Which is a little unfortunate.

It does, of course, get complicated because a lot of the designs that I tend to be more reluctant or skeptical about would be able to allocate a lot of resources, part of how they do that is they make a complementary currency that’s tax driven through taxes that are already being collected by the city.

And because cities are always so cash strapped, it becomes really dangerous for the city. So municipalities tend to be quite risk averse about this because; one, the city really doesn’t want to end up in a constitutional battle. They’re not trying to go to the Supreme Court to say like,” oh, this is not widely distributed enough to be considered competitive with the US dollar,” like all of these weird legal rulings we’ve had. So they have to be avoidant of that. They have to make sure that the currency is clearly, for the purposes of the federal government, not competitive with the U.S. dollar. But they also, they can’t do anything with the currency when they bring it in as taxes. But they do stuff with U.S. dollars when they bring them in as taxes. They spend them as US dollars. But when they bring back the currency that they spend, that is their local funny money, it doesn’t provide anything to them. It’s hard to figure out a good design that really – and I know you all have been working on this, and thinking about it a lot in places like New York City – can provide an increased labor pool that’s far short of a job guarantee that also doesn’t necessarily put the city at risk. 

So, like in my municipal currency paper, one of the things I propose is some kind of direct labor tax rate. I’m from Lawrence, Kansas. I was working on trying to convince some people in Lawrence to do this, and it turns out everything is always complicated. In Kansas, taxes have to be approved by the state. So the city can’t issue a thing called a tax, but also taxes are collected by the county. I actually got the county to agree to accept the local currency in taxes. He was like, “I don’t know why we wouldn’t, I guess, but it’s weird, you know?” But maybe something could be designed where it’s not called a tax, and then maybe the state wouldn’t care.

Scott Ferguson

That’s actually one of the things, thinking about this, theorizing it, writing about it, talking to people about it, even trying to consult and advise leaders about it, so much of it is about language.

Ely Fair

Yeah, you’re a rhetoric person, right?

Scott Ferguson

You can call it one thing in one meeting and it doesn’t go over well and you switch it to another thing, another term and then somehow it’s fine. I just wanted to add that in there.

Ely Fair

Yeah, yeah. Complimentary is potentially very powerful, actually, because one of the things that the courts have been very clear on in the history of, what I would call, nonfederal currencies, is that they cannot compete with the US dollar. So, the contracts clause of the Constitution, they’re like, “no, no competition with the US dollar.”

So there’s actually an interesting recent case in which an Austrian economist, internet guy was like, “the US dollar is not real. It is not backed by anything. It is fake money. This is why we always see inflation. What we need is a real currency that we can really transact in.” He started printing gold coins for the explicit purpose of creating an exchangeable commodity that would replace the US dollar. The circulation was basically non-existent. He is in jail. He was arrested by the FBI. They were like, “this is not acceptable.” The big thing wasn’t that they were made out of gold, that they look like the US dollar or anything. It was just that he was saying the point is to replace the U.S. dollar and they are not into it.

Interestingly, the courts have been very accepting of nonfederal currencies that are not designed to circulate broadly, usually defined as specific geographies or specific commodity targets. So like, if, for instance, New York City issued a currency that was pegged to the MTA rideshare where you’re just like, “one of these is worth a rideshare.”

That probably would be totally fine because how they’re conceiving of what money is something that’s universally convertible across any amount of space. The monetary theory in the courts is often a little weird sometimes. A thing that was a problem is subdivisions of the currency, so currencies that have not been subdivided for the purpose of wide circulation or for easy use. But this is a strange thing now because you use digital wallets, they’re infinitely subdivided. Missouri got into a bunch of trouble because they issued a currency that was tax driven. You could pay taxes with it. You could pay ferry rides, you could buy salt from the state with it.

They also paid state workers with it. They also gave micro loans or startup loans for businesses with it. One of the big problems for the Supreme Court was that the currency was denominated like the US dollar, so that it was easy to use in day to day interactions and they were like, “no, this is designed to be current. Currently this currency is designed to be current. It is intended for everyday use.” So probably you could avoid these kinds of problems if you’re like “oh no, it’s only a digital wallet. It’s just a digital protocol. It’s only good in New York City or it’s only pegged to an hour of labor or something.” The thing I was trying to work on in Lawrence and, ultimately, got sidetracked with grad school was to say, “okay, everyone over 16 who lives in town owes the city ten hours of labor a year.” The city will set a sale price on these things. So if you want to buy one from the city, you can buy one from the city at $20. Okay. Then you set a maximum exchange rate with the US dollar, but you don’t defend a minimum, because if the city agrees to buy these things for U.S. dollars, then it puts itself at some kind of risk, right?

It has to defend the exchange rate. So you’re just like, “no, I’m only going to defend one side of the exchange rate because I can always provide these for you if you want to give me $20.” This means that the currency couldn’t accidentally explode. It’s going to float somewhere below $20, and then you just provide these things to nonprofit services. If you wanted to do something like a housing renovation project, then you could be like, “oh, it turns out, actually there’s already nonprofits in Lawrence working on this stuff, right? There’s already Habitat for Humanity.” Then a person could call Habitat and be like, “hey, I have this problem in my home, and I fall within some kind of means test or whatever,” and people come over from, you know, any random person comes over who’s been trained to do the work or a little team and they do the work and they get their currency and then the currency is just taxed away. If someone wants to work for Habitat for Humanity all the time, then the city can just facilitate an exchange.

The person knows that they might get paid up to $20 an hour for this work because someone else is going to not work for the city and is going to need it to pay the tax, but that it’s going to float somewhere underneath there. Then the city could target the low end and say like, “oh, we’ll never issue more than this many so that we try to float it near $20 an hour.”

What you’re going to get then is wealth redistribution from people that don’t want to work for the city towards people who want to work, and you’re going to increase the labor utilization. So it’s not a job guarantee, but it is a job guarantee-light in a way that could meet some pretty targeted labor distribution goals.

It becomes, I think, more difficult if you want to utilize all of the slack labor. How do you tax away all of the slack labor without putting the city at some kind of exchange rate risk?

Billy Saas

Can we just do a quick sidebar on the constraints, the legal constraints on complementary community currencies? It’s fascinating to hear about the cases that you shared. I wondered if you could maybe help us better understand through an example of a case, maybe the weird Austrian guy with the gold coins is case enough, but it seems to me very clear that there are – in the space of cryptocurrencies – several pretenders to the throne who would very much like to and have avowedly, I guess in different ways, said that they aspire to become something to rival or displace bank money, which is US dollars. How, if these smaller municipal cases are litigated at the highest level, how is it the case or how could it be the case that things like Bitcoin, Ethereum and all the rest are permitted to continue to exist and flourish?

Ely Fair

Yeah. I mean, with regard to cryptocurrencies, they were categorized as commodities by the federal government. Once they’re a commodity then it’s just like trading any other financial commodity. They might say that they intend to be current and they tend to circulate as money: they don’t. I think the government has not felt like that was potentially threatening. I don’t think that there is a case, not that I know of any legal cases, in which any federal government has been like, “this thing is not an illegal kind of taking of our power.”

Scott Ferguson

Correct me if I’m wrong, but it seems like the opposite has happened. This is what the whole turn to stablecoins has been about, if I understand correctly, which is about fully integrating these speculative assets into the banking system and now we have President Shit Coin and Chief who is all about it, so there’s no competition at all.

Ely Fair

It’s not clear what the difference is between what a stablecoin is and a contemporary bank deposit, except that the bank deposit is a stablecoin issued by the bank and therefore regulated within the banking system as a depository institution and the stablecoin is issued by some programmer somewhere. If it is pegged to the dollar, if it exchanges to the dollar, unless you start accepting that for debts owed to the government, unless you start accepting that for taxes, it can’t replace the dollar, it operates through the dollar.

Scott Ferguson

I think there are some states who are accepting crypto through taxes.

Ely Fair

In the United States?

Scott Ferguson

I think so?

Ely Fair

I know some foreign governments have done that. We could go off on the weird things people are trying to do with crypto. I do think that those technologies could be very useful for producing tax driven local complementary currencies because they enable secondary exchange.

It is cheap and, technically, rather simple for a city to be like, “everyone in this city will have an account on this simple ledger protocol, and that means you can log in to the website, which is hosted at Coinbase or something and sell and buy our local currency and when we issue it, we issue it to your wallet and when we tax it, we just tax it from your wallet.” Because those protocols exist, they make some exciting space for local currencies because one of the problems has been that local currencies are cumbersome. People don’t really like operating in multiple currencies, particularly if they’re not exactly equivalent. But if your local currency is pegged to the dollar, who’s defending the exchange rate? Right. Does the city take on that and is willing to buy the local currency for US dollars? In Lawrence, we had a non-tax driven currency for a while, when I was growing up. It was annoying. Is this other money? It was 1 to 1 with the dollar but it’s like a different bill. You got to put it somewhere different.

Billy Saas

It’s one more thing to think about.

Ely Fair

You have to put it somewhere different in the register. People took it, but they didn’t really want to take it. One of the advantages of some of the open source work that happened with the Bristol Pound, and that is it’s an interesting case because the Bristol pound went digital and then died.

But I think that they were on to something there. Credit card transaction fees cost 3.5%. There are open source versions of those protocols. You could have a debit card that quite easily had two accounts in it. You go to Europe, you swipe your card, they’re like, “do you want to pay in euros or dollars?” They just click the button and there’s just a conversion.

Scott Ferguson

South America, too.

Ely Fair

Those digital technologies could enable a local currency to defend an exchange rate. You can be like, these are 1 to 1 but when you take U.S. dollars from the debit card, we charge you the 3.5% fee. When you take the local currency, we don’t. There’s an incentive for the business to take the local currency that doesn’t require income and actually maybe produces income for the local currency, because then the local currency gets these 3.5% fees, then they can actually buy these things back maybe sometimes.

So I think there’s a lot of interesting opportunities there.

Scott Ferguson

I guess I just want to highlight a meta point here, which is that there’s not just one kind of complimentary currency and even what you call it, is it a parallel currency is, is it just another form of credit that’s regional, right? What we call it, how we design it, what its material features are, what its functionality is?

All these things are up for grabs. You know this. I’m just saying this for our listeners. It’s totally a design problem. It’s going to be unique in different situations.

Ely Fair

And to get back then to Billy’s question about some of these legal cases, how do they get to the Supreme Court about what’s happened? I think we can illustrate some of this thing that you’re saying, Scott, about design problems is like, so with the Articles of Confederation, right? The first government of the United States, states issued their own currency.

One of the great failings of the Articles of Confederation was that states were issuing their own currencies, they were competing with exchange rates, and they were competing with trade. They were doing things like beggar thy neighbor policies to attack each other around currency exchange rates. So one of the first things in the Constitution, in article four, I think, is a clause.

It actually says states may not issue debt instruments at all. This is weird because they immediately decided that states need to issue bonds, but the contract clause then has been, over the course of time, litigated to mean that less-than federal entities may not issue currencies designed to monies designed to compete with the federal money.

For instance, like I mentioned earlier, the Missouri case, there’s other states that also issued currencies in the 1800s that were deemed legal because they were chunky. So I think Kentucky did one where it was like only $500,000 bills, basically. Because they could only be used for very specialized transactions without some kind of secondary instrument, the courts deemed that they weren’t competitive. But in the 1800s, there were a lot of problems with this in the United States because a lot of places didn’t have sufficient currency in circulation from the US government. Banks issued their own paper money that were good on deposits. This is part of what the Federal Reserve actually comes about to try to solve, that is banks were issuing all this paper money good on deposits. But then how does one bank know to accept another bank’s money? And will they actually accept it or not?

Scott Ferguson

And at what rate?

Ely Fair

That was the kind of the preponderance of money in the 1800s, there was like a lot of this.

One thing that the federal government did when they decided they didn’t want any more bank money, the courts decided that the contract clause did not apply to non governmental entities in general. So, if the bank is part of the state, the bank can’t issue money that looks like federal money.

If the bank is not part of the state, it was allowed to. So even the Bank of Arkansas, which was wholly owned by Arkansas, was allowed to issue currency that basically looked like the federal dollar was pegged to the US dollar because they weren’t part of the state of Arkansas. There’s a Supreme Court case about that. Some really weird little differentiations.

But, one thing that is interesting is that the federal government basically taxed away bank issued currency by passing a law that made it so that there was a fee every time the thing was issued. So every time the bank put it back out, they had to pay a fee, which made it so that they couldn’t defend their own money as being worth the same amount as the US dollar.

That law expired in the 60s or 70s. At the time, someone at the Treasury Department was like, “it doesn’t really matter that it’s expired because it would be illegal for banks to do this anyways.” It’s not actually clear that it would be. There is no law that would make it so a bank could not just start issuing paper money again. The way that we got all of that out of circulation is gone. So, the municipality could then work with a local bank to issue a complementary currency and actually maybe kind of shield itself. Then these design questions become really important in the courts for whatever reason.

If it looks like the US dollar, they don’t like it. If it’s called a dollar, they don’t really like it. If it says like “this thing is good for services provided within Manhattan,” they’re like, “this is cool. This is fine.” Services are not the same thing. There are these weird technical design problems that I think make no sense, but for whatever reason, in the past, the courts decided made a lot of sense. These days there’s not that much litigation around it because complementary currencies aren’t that common anymore. But all through the 1800s into the early 1900s, both bank money and state and local money were quite common and so determining the space for them was really important in the courts.

Billy Saas

Well, it seems like one easy trick would be to present your community currency or complementary currency as a commodity and you’re good to go.

Ely Fair

Yeah. Or exchangeable commodities. There’s a court ruling that says that something is not money because it is exchangeable only explicitly for commodities.

Billy Saas

So, paradoxically, tax driven chartalist but also barter forward.

Ely Fair

Yeah. In company towns where the currency would be almost exclusively issued by the company and goods or goods at the company store, those have all been deemed legal, right? Because they’re only good for goods and not for, I don’t know, the other thing that we do with money as a debt instrument.

For us, it’s money. It’s the same. But, in the past, that wasn’t deemed to be the case.

Scott Ferguson

Some municipalities and states took company scrip as taxes, which is wild, right? 

Ely Fair

Totally. So I mean, they were current. They were exchangeable. They were used in everyday transactions to keep track of debt. But for whatever reason, the courts have been interesting about it. So one thing we issued after the war, there was a brief period when there was some military money issued that was good on train rides.

It was just issued as part of a payment to military personnel. You got paid in train rides.

Scott Ferguson

We could call those vouchers and then are they a currency? There are functional differences. There are. Of course there are. And there are design differences. But I also think that moneyness is a multifaceted thing. At what point is one system a set of debt instruments and at what point is it a voucher system? Anyway, I interrupted you. Go ahead.

Ely Fair

No, no it’s fine. I think for us, then of course in our thinking about how to design things, we want to think about what latent resources or underutilized things, whether it’s labor, or is it seats on the metro that are like underutilized that we could we could push utilization through some kind of tax driven currency and then we have to be careful because, yeah, municipalities are relatively weak compared to the federal government.

They can’t afford really expensive mistakes. I think this is part of the trick for us as people that are thinking about this and talking to municipal governments about it is like, is there an easy stage to kind of structure something that is easy to buy into, relatively cheap to begin, logical.

This is part of the thing I really liked about the idea of some kind of community service. Everyone knows what a community service hour is. You could just hand someone a piece of paper that says Community Service Hour on it. They’re like, “I know what this is.” It presents very little risk for the city because that is a new tax.

You wouldn’t even have to call it a tax, right? People wouldn’t necessarily even think that it is a tax. You could just say everyone in the town’s required to do ten hours of service for a year.

Scott Ferguson

Social responsibility – which is – what is a tax?

Ely Fair

Right. Social responsibility. That design is really convenient in that it doesn’t present a lot of threat to the municipality. It is potentially inconvenient in that it may not be very scalable. You may not get to a point where you’re like, by not defending a stable exchange rate the bill will probably never be circulated as a money instrument, because it’s not clear what it’s worth compared to the US dollar. If you peg an exchange rate, you can get a lot more circulation of the money, but in some way you have to defend your exchange rate. So you take on exchange rate risk.

So it’s like, hopefully we would be coming up with clever little designs where we’re like, “oh, there’s like a little toy version of this. It’s easy for a city to do and cheap and kind of understandable,” that then if it works, we can kind of progressively take on other features that would enable more resource utilization.

Scott Ferguson

Yeah. I mean, one of the things that I’ve been talking to Jakob Feinig a lot about is, using the multiple understood crediting system in our public education system. That might be a way of mobilizing labor and community service from very young and have it just be part of a kind of civic pedagogy and participation so that could be one thing. I want to bring up one more thing as long as we’re just kind of, I don’t know, this is really cool. This feels like a seminar, right? Like this isn’t like our usual interviews where we’re – okay. I’m enjoying this. So on the one hand, it seems like there’s an imperative to design, in multiple senses, semantically, rhetorically, legally, technically, technically, materially to design systems that are maximally legible to the public, which means that they have to somehow resemble or plug into the US dollar psychologically, ideologically with relative ease. Yet at the same time, you have to cover your ass legally and know the history of the law and realize there are certain buzzwords or certain design choices you have to avoid.

It seems like the trick is to somehow go maximally in both directions at once and find the right mixture. But, you know, I think about things all the time, this is more like when my kids are in elementary school, but when my kids are in elementary school, it’s the holiday season and it’s time to get their teachers some little gift.

And it’s like, stop at Starbucks on the way to school and you pick up a $10 or a $20 Starbucks gift card. Right? And nobody thinks twice about that. Right? It’s this massive complimentary currency or whatever we want to call it, that is narrowly receivable and yet widely receivable, because there’s Starbucks all around the country, if not the world.

You’re locking in your liquidity, right? You’re restricting your liquidity and it’s not denominated in like, this is 7.3 Starbucks. There’s not weird denominations and we don’t even call it something else. We just say it’s $20 in Starbucks. The amount of psychosocial, ideological machinery that goes into just making that feel smooth is fascinating to me and I kind of want to conjure that ethos in designing a public currency that is not just feeding a multinational corporation.

Ely Fair

Totally. Like I was saying earlier about the community service hours scheme, one of the things I really like about it is it creates wealth redistribution from people that don’t want to work towards people that do, but how that happens is you allow the currency to float, right? It sacrifices this other thing.

Another thing, when I was working with some folks in Lawrence is, do we peg this thing instead to like bus rides.” Our buses are highly underutilized, right? The city’s constantly like, “should they be free for people that need them?” 

Scott Ferguson

They’re spending money on advertising campaigns.

Ely Fair

If you make the bus ride a known conversion. You’re like, “oh, a bus ride is a dollar,” then when I buy bus rides then you’re like, “I work for bus rides.” Theoretically, more people would take bus rides because they’re like, “well, I have all these bus rides on this weird card.”

You could probably exchange them sometimes too. Maybe not as much as we might want because it’s not just a dollar.With the Starbucks dollars, it’s the same. If you went to sell your $20 gift card. What would you get for it? Not 20 bucks. I know you can’t sell SNAP, but when you sell SNAP, you don’t get par. Starbucks will not defend the exchange rate. They will only sell the thing at the exchange rate. We kind of want the city to defend the exchange rate in order to make it really work.

But it’s tricky to figure out how to actually have them do that. One thing I was thinking about, also in Lawrence, there’s a pretty strong downtown community or downtown business association. The Downtown Business Association would do gift cards that would be good within the Downtown Business Association area. They could deal with distributing the US dollars later among the group of them, and they could probably actually sell those at a discount, knowing that the money is held right.

They could drive people into kind of a local currency scheme being like, okay, you give us 90 bucks, we’ll give you $100 worth of downtown credit, basically. Then that downtown credit becomes widely used within the downtown area. It drives local economic development and you get some discount, but then you only get one aspect of the policy, then you get more local economic development and you’re like, “oh, that’s cool,” but you don’t get labor utilization.

Scott Ferguson

Ben Wilson has been really big on property taxes. I don’t know if you have thoughts about that. Then there’s a demand at the level of landlords, right.

They need this local currency to meet their tax obligation and it can be structured in lots of ways as we’ve been saying. It could be a discount on your extant tax bill or it could be in excess. Not on this proposal, but in your labor hours proposal, you’re suggesting not a discount because that creates the so-called dollar drain, instead, it’s an additional obligation.

Ely Fair

That’s the danger, that you create a dollar drain, you create a liability. The city doesn’t want their funny money. They have no need for it.

Scott Ferguson

If you don’t do a discount, if you do an additional obligation. I mean, you know, that’s politics.

Ely Fair

Totally. And then it’s a question of, do you defend the exchange rate? What resources are you hoping to utilize? And how do you make it feel fair and equitable? You could, for instance, have the tax, like I was saying in Kansas City, there’s a fee for being a landlord that they use to do these maintenance checks.

You could also have a fee on landlords. You could be like, “landlords, you have to accept some of these Ithaca Hours.” Maybe you tax everybody in Ithaca Hours, and then you say, like, “everyone needs to give us ten Ithaca Hours a year, but for being a landlord, you have to give us another ten and if your tenant is unable to find work at the rate, they could always work for the city to pay you this thing which you will accept in exchange for rent, because it’s as good as rent to you.” Right? How do you drive it? It’s tricky. I think part of it is an imagination problem.

Scott Ferguson

Nobody’s on this beat. Yeah.

Ely Fair

We’re not accustomed. And it’s interesting because, when you look at the history of it, people in the United States were quite accustomed.

Scott Ferguson

I mean, that’s what Jacob Feinig’s book is all about. Yeah.

Ely Fair

Every term I take my intro macro students to our archives at Knox College and we look at all this old money. We have a lot of cool, old money, we have Cuneiform tablets and Roman coins and whatever. We have a lot of stuff from the Confederacy and stuff from the colonies and whatever.

There’s also Bank of Galesburg money in there. There’s just like a $10 bill. It looks like a $10 bill. It just says Galesburg across the front of the face of the president, you know, and people are always like, “what is this?” And I’m like, “People took that. That was used. People took that here. People accepted that money.” I think we need to design for ease. We need to design, like you said, we don’t even call Starbucks dollars anything else but dollars. We need to design for, somehow, our intuition about it and then hopefully also in a way that makes it so that we can expand the function of these things as time goes. I also think there could be a lot to do, but not that much.

Kansas City is like, I mean, the metro area is like 3 million people or something, just about, 2.8 or something like this. It’s a lot of labor service hours. Could we stabilize neighborhoods with those labor service hours?

Absolutely. What is needed for someone to get their yard cleaned up? It’s time.  It doesn’t really cost almost anything. It’s a crew that’ll show up and help get all the trash in the dumpster. So there’s a lot I think there for the quality of life. There’s like a lot of opportunity for us to move resources towards increasing our quality of life in our built environment without having to think too big. It can become intuitive initially without being like, “this is a local job guarantee,” in the sense of like an employer of last resort, right? Which would be awesome.

Scott Ferguson

But you can do like a neoliberal frame Trojan horse. It’s like, “We’re just going to pilot this program. We’ll test it.”

I don’t want to let you go without asking you about this other aspect of your work, that, I mean, everything’s connected, but it doesn’t exactly fall into the discussion that we’ve been having so far in a narrow sense, which is, you’ve done some pretty serious historical research about the rise and fall and injustice of the Freedman’s Bank that was established after the Civil War for freed slaves and black people in the United States.

We can probably do a whole episode about this, but maybe you could just give us a little teaser, and then we’ll link to the paper in the show notes, but maybe you can just tell us about what you discovered and what you’re advocating for.

Ely Fair

This is like, yeah, another history project. Right after the Civil War, black Americans, recently freed, black Americans were very underbanked and so there was a unique chartered bank, the Freedman’s Bank, that was not under standard banking regulation, it was the only an inner state depository institution at the time and was chartered directly by Congress and was supposed to be overseen by Congress.

The purpose was to bank formerly enslaved black Americans. This was the idea, right? So it was supposed to be really conservative. They were like, “we’re only going to put our money into us bonds and in AAA securities,” a very conservative investment portfolio so that it would be like a secure depository institution, because this is for deposit insurance, for instance, Congress is supposed to oversee the bank. They didn’t. It rapidly expanded to over 30 branches across the south with millions of dollars worth of deposits from formerly enslaved people and then just kind of widespread fraud and capture. By 1873, it went bankrupt.

It turns out when it goes under that there was fraud at every kind of level you could imagine. But at the board level, they had not invested the portfolio in the way that they said they were going to or that they were required to by law, and instead they’d invested it in a bunch of speculative railroad bonds and also mining bonds.

For those history buffs, the one that might be listening, this is the Grant administration. We have the1873 financial crisis is actually about mining and railroad speculation bubble and basically invested all the money there and they just lost everything. So over the course of the next 15 years, depositors are able to get a little bit of their money back, but most of the money is just gone. At the time, there’s an inquiry in Congress, they’re like, “this was fraud. We were supposed to oversee this bank. We didn’t. We should get the money back.” The president’s like, “we should give the money back,” the comptrollers was like, “we should just allocate the money.” That kind of continues, actually, until the 19-teens that people are like, “oh, yeah, remember how we should give all those people back this money that they were defrauded of under the nose of Congress.” Then it never happens, right? Of course, there’s like a lot of racist pushback about allocating money towards black people, etc., etc., etc., a lot of vitriol, but also recognition that it was the duty of Congress to oversee this bank. They failed to do it. So, a lot of that history has been told.

One of the things I did then was to be like, “okay, if we assume that this bank didn’t go bankrupt and instead they had held the money in these conservative portfolios that they were supposed to hold the money in, but no one was just able to get it until now. How much money would there be?”

So one of the problems with doing this kind of historical restitution work, and part of the reason people in the United States broadly are so opposed to reparations is there’s this question of like, “who gets the money? Who do you give the money to? Like, why this random black person and not this other random black person should have? Should a black person have to have had enslaved ancestors? What if this person had more enslaved ancestors? Do they get more reparations? Why do we not give reparations to poor white immigrants who were also, disenfranchized?”

This kind of equity debate is constant. So I was trying to avoid that and say, “no, we have most of the books, the account books.”

We know the exact amount of money held by the people. We know how much money they got back. So that means if we can decide on what is a reasonable investment portfolio across this time period, we can tell you how much money would be in the account today if the account existed. Then, actually, the Freedman’s Bank deposit books are this treasure trove of genealogical information for Black America.

They’ve been digitized, and people have been using them to trace their ancestry. Then we get this kind of fun project where you say, “oh, there is money we restored in this bank account to its exact penny.” Given this portfolio decision, whose money is it? And then you get this kind of fun project of being like, “oh, I could do genealogical work, and I could find an ancestor of this person and be like, ‘oh, do you know that you have $10,000 in the bank account?’”

I did this estimation and was like, can this be reasonably done? The answer is yes. And now I’m going to pull it up and it turns out if it was just 100% long term US Treasury bonds, it’s about $1 billion and that’s about $2,200 per account. If it’s like 70% US bonds and 30% the S&P index, that’s like $5.8 billion, or about $12,000, $13,000 per account.

For context, in the US budget, $6 billion is a kind of normal pork barrel. It’s pretty big for some senator to win for their state, but it’s the kind of thing that is won for senators’ votes: $6 billion. This is also convenient compared to reparations. We’re talking about maybe $14 trillion, $6 billion is not very much money for the US government at this point.

For the average black family, $12,000 is actually quite a lot of wealth. In some ways, trying to use a historical injustice to make a very discrete claim for restitution that is not politically infeasible from a budgeting perspective and wouldn’t be earth shattering, but certainly would be a nice injection for the families that were kind of debunked when the US Congress committed this fraud 150 years ago.

Scott Ferguson

There’s also a collective memory project in multiple senses. What was this bank and what did the government do? I mean, all of these things would be part of it, in addition to thinking about genealogy for just the sake of genealogy and then genealogy for the sake of what is owed.

Ely Fair

Yeah, totally. It’s just a little project. I mean, we see this in full force now with Project 2025, but one of the things that the more kind of conservative, or I would say, regressive elements of our society have done very well is they have done these little research projects and then from them built model legislation that makes it really easy for people to be like, “oh, also this.”

Scott Ferguson

Yeah, right. Plug and play.

Ely Fair

Plug and play. Part of my hope in doing this work is that the project has been justified and kind of operationalized and there’s a scope and it’ll take like one person who’s like, “this seems like a cool pet project I could maybe get reelected in my district on,” who’s also on the Appropriations Committee to be like, I’d like this to go into the omnibus package and it would just happen. That background work has to occur before you can get that. I think there is a lot of space for us to do this kind of work of making easy wins for people that would also like to win in the way that we think winning looks like.

Billy Saas

Well Ely, this has been a great conversation. Thank you so much for joining us on Money on the Left.

Ely Fair

Thank you so much.

* Thank you to Zachary Nosbisch for the episode graphic, Nahneen Kula for the theme tune, and Thomas Chaplin for the transcript.