This is an archived version of the PW Sources newsletter from Saturday, April 8. Sign up to receive PW Sources directly to your inbox here.

FEDERAL DEPOSIT INSURANCE CORPORATION

After the collapse of Silicon Valley Bank and Signature Bank, Federal Deposit Insurance Corporation (FDIC) announced that it would protect all depositors, including those with amounts over $250,000.

In a 2014 article, CHRISTOPHER W. SHAW charts the origins of the FDIC in the Banking Act of 1933.

From the text:

“The Federal Deposit Insurance Corporation is the product of everyday Americans’ demand that government secure their bank deposits. Ordinary citizens overcame vested financial interests and the preponderance of the national political establishment in their pursuit of guaranty. But leading opponents of guaranteed deposits managed to extract something they wanted in return: branch banking. Americans no longer dread the prospect of their life savings vanishing in a bank failure, but they are increasingly aware that a handful of financial institutions are ‘too big to fail.’ The Banking Act of 1933 not only secured bank deposits, by sanctioning branching it also encouraged banking concentration in the future. And the elimination in 1999 of the Act’s prohibition against banks of deposit participating in other realms of the financial sector elevated systemic economic risk. In 2010, the six larges banking corporations in the nation held assets equivalent to 63 percent of the Gross Domestic Product, as opposed to only 17 percent in 1995. The likelihood of banks plunging Americans into financial insecurity has returned with a vengeance.”

+ “Is the federal agency with the largest say over the national economy at risk of a coup, putsch, revolt, or revolution by associate governors?” By Todd Phillips. Link. 

+  Haelim Anderson, Gary Richardson, and Brian Yang on how the establishment of deposit insurance affected public perceptions of the overall health of the economy. Link. 

+  “Having worked for ten FDIC chairmen and served for many years as a buffer between political appointees and career staff, I saw the inherent tension between the two groups.” By former FDIC Chief Operating Officer John V. Bovenzi. Link. 

NEW RESEARCHERS

US Air Carriers & Freight Service

ZOE LAULEDERKIND is a PhD student in economics at the University of Wisconsin-Milwaukee. In a recent paper, she examines the cost structure of US air carriers.

From the paper: 

“While this group of carriers consistently provided both freight and passenger services as early as 1964, the freight component of their operation remained a relatively small part of their transport services. For instance, other than for 1994, freight’s share of combination revenue rarely exceeded 20 percent from 1990 to 2014. However, freight service increased dramatically by 2021 as combination air carriers transported an average of 984 million revenue ton miles of freight and mail (RFTM) in 1990 and that number increased 68% to 1.68 billion RFTM. Freight-share information shows this growth in air-freight transport outpaced the change in passenger service following 2014, as freight’s share of air transport service in the US increased fairly regularly from 2015 to 2021, reaching nearly 30 percent of all revenue-ton-miles for combination carriers. Freight’s increasing share of business has provided these combination carriers with a source of additional revenue growth, however, it is not obvious, a priori, whether expanding services to include increasing amounts of freight hauled is costly. For instance, coordinating freight service to match with passenger service could limit the amount of freight hauled such that combination carriers are shipping freight appreciably below capacity levels.”

+ + +

+  JFI’s affiliate initiative, the Center for Active Stewardship, has launched a newsletter about shareholder proposals at public companies, which have become a venue for activists to challenge the private sector on climate change. Sign up for weekly updates. Link. 

+  “After decades of complacency and austerity, the embrace of explicit industrial strategies in the EU marks a significant break.” New on PW, Roy Cobby tracks Europe’s quest to produce a microchip, from the 1980s to the present. Link. 

+  “New protectionist industrial policy in the rich world is in tension with the agenda of developmentalist states in Asia.” New on The Polycrisis, Kate Mackenzie and Tim Sahay on the challenges of decoupling from China. Link.

+  “Using panel data from 45 countries from 1985–2019, we find that capital controls combined with reserve accumulation—strategic capital account policy—contribute to growth in real GDP.” By Paul Bergin, Woo Jin Choi, and Ju H. Pyun. Link. 

+  Adewumi Damilola Adebayo on electrification in Lagos Colony, among the earliest British colonies in West Africa. Link. 

+  “This article is concerned with aspects of sourcing coolies wide and far and confined labour relations in Asia from colonialism until today.” By Jan Breman. Link.

+  “We find that labor markets in the services sector are less sensitive to changes in interest rates, increasing the lag for monetary policy transmission.” By Karlye Dilts Stedman and Emily Pollard. Link. 

+  Mateo Crossa and Nina Ebner on Tesla’s planned gigafactory in Monterrey, Mexico. Link. 

+  “My most basic aim here has been to explain why the discovery of petroleum and growing use of other fossil fuels did not end whaling. Since fossil fuels provide potential substitutes for the main products of whaling—whale oil most notably—rising petroleum production could have ended whaling. However, to the contrary, fossil fuels allowed for the development of modern whaling technologies, which greatly expanded the capacity to kill whales. Additionally, a variety of other technological innovations, like hydrogenation, allowed for the development of new commodities, such as whale oil–based margarine, that expanded the market for the products of whaling. Due to these changes, most whales that were ever killed were killed in the twentieth century, in the era of plentiful fossil fuels and substitutes for whale products. Tragically, widespread whaling did not end until most whale stocks were driven to commercial extinction and many species to the brink of biological extinction.” By Richard York. Link. 

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