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Recent federal immigration raids have ignited immigration protests across the United States. But beneath the headlines lies a deeper question: What are the economics of protests?
Bank runs and immigration protests share a common logic. In bank runs, people rush to withdraw their deposits when they see others in line to withdraw theirs. A run on a bank can cause the bank to fail, even if it is solvent. Likewise, when people witness their neighbors participating in protests, they are more likely to participate in protests themselves. When enough people fear that their community is under threat, they mobilize, which can trigger the very crackdown they fear. In both cases, the fear becomes self-fulfilling, and perception becomes reality.
Bank runs and protests are examples of collective actions that occur under conditions of uncertainty. Individuals must make decisions based on incomplete information and on how they think others will act. Early movers, whether they are the first few people to withdraw funds or the first few to protest, can tip the balance, creating a feedback loop that can escalate quickly.
Contagion is another shared trait. A bank run at one bank can spread to other banks, even if they are financially sound. Even though your bank might not currently have a bank run, you might fear that it could and run to get your money while you can. Similarly, a protest in one city can spark demonstrations in other parts of the country, especially when media coverage or government responses amplify the message. What begins as a local event can quickly spread through the whole system, whether financial or political.
The consequences are also systemic. A bank run can destabilize the financial system. Mass protests, especially when met with repression, can destabilize political systems, polarize societies and challenge the legitimacy of institutions. Of course, there are differences. Bank runs are typically instances where individuals act to protect their own assets. Protests are collective efforts where groups of people cooperate to demand change.
Although the actors, goals and mechanisms differ, both reflect a breakdown in trust, whether in financial institutions or government. Just as the financial system must build trust to prevent financial panic, governments must foster social trust and legitimacy to prevent unrest, whether it takes the form of immigration protests or the U.S. Capitol attack. Both systems rely on faith, hope and trust, and when these erode, the consequences can be swift, sweeping and deeply destabilizing.•
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Bohanon and Horowitz are professors of economics at Ball State University. Send comments to [email protected].
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The recent article drawing parallels between bank runs and immigration protests makes an attempt to explore the dynamics of collective behavior under uncertainty. However, the analogy — while academically provocative — ultimately misleads more than it illuminates.
Bank runs are driven by fear and self-interest. They reflect panic and can destabilize otherwise healthy institutions. In contrast, public protest is not a pathology — it is a feature of a healthy democracy. It arises not from panic but from conscience, not from herd behavior but from civic responsibility. Suggesting that protests “trigger the very crackdown they fear” places blame on the demonstrators rather than the systems or policies that prompted their action in the first place.
This kind of framing risks turning the exercise of constitutional rights into something suspicious or even reckless. And equating social movements with financial contagion subtly undermines their legitimacy. Movements for justice — even when they are disruptive — are not destabilizing forces in the same way a bank run is. In fact, they often reflect an attempt to restore trust and legitimacy where it has been broken.
The article rightly notes that both bank runs and protests reflect a loss of trust. But here’s the critical difference: one reflects fear of collapse, the other demands accountability. That’s not a difference of degree — it’s a difference of principle.
Very well said John P. Alarmed reading this thought exercise. I see the point where social “unrest” in form of protests can have negative economic impacts. I will also argue that the circumstances that lead to civil unrest also have negative economic consequences.
Thank you ChatGPT.