The Great Conspiracy

ELECTRICITY

Earlier this week, millions of households lost power in the face of a powerful snowstorm. While these numbers are unusual, they are not new—the US suffers among the most frequent power outages of any industrialized country, concentrated especially in rural areas and the South.

In a recent paper, ABBY SPINAK analyzes the political trajectory of America’s weak electrical infrastructure by comparing the underlying economic assumptions of the New Deal’s Rural Electrification Administration (REA) with those of the Ontario Hydro-Electric Power Commission in Canada.

From the paper:

“In the early twentieth century, experiments in electricity were experiments in statecraft. A malleable technology with significant financing and distribution challenges, electricity was a proxy through which budding welfare states could hash out their responsibilities to the public. Early public electrification efforts became sites of deliberation about balancing urban and rural needs, industrial development, and the public interest. Through electrification programs, policymakers in industrializing countries proposed and tested ideas of economic citizenship, the proper role for government, and the limits of private enterprise. Vibrant forums within and between industrializing nations intensely debated whether electricity was a right or a privilege—and where and for whom.

Why did REA power flow not quite so freely as it did in Ontario? With an explicit charter not to distinguish between private, municipal, or cooperative power companies for dispersal of loans, the REA focused on keeping rates low and distributing power to areas where it could encourage rapid economic growth. It only begrudgingly supported the use of federal loans in the construction of generating stations where power could not be purchased inexpensively enough through the private market. Despite the explicit connection of the REA to Dust Bowl mitigation efforts, its emphasis was less on protecting natural resources for the common good and more on ensuring the efficiency and sustainability of natural resources for national economic growth. In the latter case, who owned what mattered much less than how capably it would be put to use.”

Link to the piece.

• “Although REA programs were planned and administered in Washington, D.C., western residents rather than New Deal administrators initiated most of the region’s rural electrification projects.” Brian Q. Cannon on “Rural Electrical Cooperatives and the New Deal.” Link. & Carl Kitchens and Price Fishback examine “The Spatial Impact of the Rural Electrification Administration 1935-1940.” Link.
• “Africa is the most undersupplied region in the world when it comes to electricity, but its economies are utterly dependent on it.” David A. McDonald introduces a book of collected essays on inequality and electrification across the continent. (Also inside: river privatization and hydropower, nuclear energy in South Africa, corporate power in Uganda.) Link.
• Wuyuan Peng Jiahua Pan with a history of rural electrification in China. Link. And from Jonathan Coopersmith’s 2016 book: “Electrification transformed capital markets, the military, manufacturing, the spatial geography of cities, and many other facets of Russian life.” Link.

NEW RESEARCHERS

Cash Transfers in South Africa

PhD Candidate in Geography at UC Berkeley ERIN TORKELSON studies state-sponsored unconditional cash transfer programs in South Africa. A 2020 paper looks at the relationship between cash transfer programs, regimes of credit, and privately-operated financial inclusion tools.

From the paper:

“Theorizing from South Africa, I illustrate how relations of power work in and through technologies of ‘financially inclusive’ cash transfer to promote credit with minimal risk for lenders. South Africa provides non-contributory, unconditional, means-tested monthly stipends for 17.6 million people (30.8% of the population). And yet, to say South Africa provides these grants is a misstatement: while the program is government-funded, the material provision of grants was outsourced to a global financial technology firm. In 2012, the South African Social Security Agency contracted Cash Paymaster Services to distribute grants nationwide. Their parent company, Net1 UEPS Technologies (Net1), listed on the Johannesburg and NASDAQ stock exchanges, used subsidiaries to sell financial inclusion products to grantees, including loans, insurance, utilities, and payments. As a monopoly service provider, Net1 had unrestricted access to South African grantees both in person and via their electronic data. Net1 was well positioned to make grant payments, sell financial products, and extract repayments for these products without bearing any risk. There was no possibility for grantees to default on their debts because repayments no longer depended on consumer behavior. As loan repayments to Net1 whittled away the promised value of social entitlements, grantees turned to other formal and informal lenders, many of whom were also repaid early and automatically through this same financial system. Net1 reaped significant profits from social grant payment through their government contract and their sale of financial inclusion products. In fact, between 2015 and 2017, Net1 made more money from their financial inclusion products than from the distribution of social grants.”

Link to the paper, link to Torkelson’s website.

Each week we highlight great work from a graduate student, postdoc, or early-career professor. Have you read any excellent research recently that you’d like to see shared here? Send it our way: editorial@jainfamilyinstitute.org.

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• A new report by Laura Beamer and Eduard Nilaj, with support from Marshall Steinbaum, illustrates the many inequalities of the student debt crisis and the distributional effects of debt forgiveness. Link. And see the Millennial Student Debt Comparison Tool to examine data by state and congressional district level. Link.
• “Within their existing base, [communists and socialists] abandoned a conception of the party as a living feature of public life, shifting their efforts towards negotiating a seat at the governing table.” In Tribune, an essay on the European shift to neoliberalism by PW Editor Maya Adereth. Link.
• “Mitterrand shows that if the path of radical reformism is challenging and uncertain, the alternative has been disastrous.” An essay by Jonah Birch in “Market Economy, Market Society.” Link.
• JFI is pleased to welcome Claudia Sahm as Senior Fellow in Guaranteed Income and Friederike Schuur as Fellow in AI Ethics and Digital Governance, a joint position with UN Global Pulse.
• “I argue—contrary to Chetty et al.—that the $1,400 checks should go to everyone who received a $600 check.” A new brief by Senior Fellow Claudia Sahm. Link.
• “This study conceptualizes international monetary hierarchy by focusing on different mechanisms to supply emergency US-Dollar liquidity from the Federal Reserve to non-US central banks.” Steffen Murau, Fabian Pape and Tobias Pforr on swap lines, the FIMA repo facility, and Special Drawing Rights. Link.
• Lars Karlsson and Peter Hedberg on the impact of wars on bilateral trade flows from 1830 to 1913. Link.
• “We present a model of duopolistic competition with returns to loyalty and show under what conditions exogenous changes to state protection causes gangs to change governance levels.” By Christopher Blattman, Gustavo Duncan, Benjamin Lessing and Santiago Tobón. Link.
• Pablo Pérez Ahumada on the challenges to reforming collective labor law in Chile following the Pinochet dictatorship. Link.
• “Using a novel database of regional trade flows between 267 European regions for 2013, this paper examines how government quality affects trade between European Union (EU) regions.” By Javier Barbero, Giovanni Mandras, Ernesto Rodríguez Crespo, and Andrés Rodríguez Pose. Link.
• Christina Kinane analyzes “deliberate inaction” through vacancies in presidential appointments from 1977 to 2016. Link.
• “This article analyses data on British millionaires, collected by the Inland Revenue (IR) from the late 1920s to the early 1930s, especially a unique individual-level dataset of millionaires for the 1928/9 tax year, based on an IR list of all incomes in excess of £50,000—equivalent to a capitalized value of £1 million. In common with earlier studies, traditional landed wealth is found to be in decline. However, this study shows that by 1928 millionaire wealth was dominated not only by business incomes, but by ‘businesspeople’ who played an active role in the management of their firms. Many of their enterprises had experienced rapid growth in sales and, especially, profits since 1914, on account of cartelization and/or amalgamation, together with high barriers to domestic competition and imports. ” By Peter Scott. Link.

Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: editorial@jainfamilyinstitute.org