Picking Winners: Citizenship, Central Banks, and Consumer Finance

Recurrent financial crises have rattled the US economy and contributed to inequalities that disproportionately afflict the working and middle classes and people of color. Central banks and, most prominently, the Federal Reserve Bank have become the handmaiden of capitalism, rushing to stabilize financial operations in the United States and steady large private firms teetering on bankruptcy. Many economists continue to treat central banks as neutral servants of the “public good.” This chapter by Lawrence Jacobs and Desmond King introduces an innovative theoretical framework to integrate the new comparative research in this volume. They demonstrate that central banks and financial regulators are swayed by highly resourced financial interests, the values and perspectives of capital over those of wage earners, and institutional designs that are biased to favor the already advantaged. More than central banks in Canada and Western Europe, the Federal Reserve is particularly deferential to finance and prone to delivering lopsided gains to the most affluent and best organized.