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. 

Both 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 may not currently be experiencing a bank run, you may fear that it could, and rush to withdraw your money while you still 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 US Capitol attack. Both systems rely on faith, hope, and trust, and when these erode, the consequences can be swift, sweeping, and deeply destabilizing.