Government capitalism can be a very good thing
by George Sibley
This year marks the 70th anniversary of an important event in western Colorado: the first annual meeting of the Gunnison County Electric Association. The group had only 116 members when it started and just $275 in the bank, but it went on to bring electric power to the area's ranches, thanks to the federal government's Rural Electrification Program.
In 1939, residents of the towns of Gunnison and Crested Butte had already had electricity in their homes for almost half a century. This was true for the nation at large, where virtually every city and town of any size had electricity, either through a municipal or investor-owned utility. But only one rancher or farmer in nine had electricity.
Then as now, there was an unresolved cultural question: Is electricity a public good that's supposed to raise the quality of everyone's lives, or is it a commodity to be distributed in a free-market environment only to those who can afford it?
Private-sector utilities found it unprofitable to extend lines into low-density rural areas, and municipal utilities were usually limited -- thanks to private sector lobbying -- to their incorporated limits. That was an answer of sorts to the cultural question. But in the depths of the Great Depression, the Roosevelt administration came down squarely on the side of electricity as a public good.
"Electricity is a modern necessity of life," Franklin Roosevelt said, "and ought to be found in every village, every home, and every farm in every part of the United States." The Rural Electrification Administration was created in 1935 to carry out that goal.
As set up by Morris Cooke, its first director, the REA differed from other New Deal programs in that it did not involve much federal spending beyond the wages of its staff. Instead, it was a loan program, a sort of "government capitalism." The REA loaned low-interest money and staff experts to cooperatives created by rural people who wanted electricity but had no access to money. Today, more than 900 cooperatives throughout the nation bring power to rural America.
I think of this not just for nostalgia's sake. President Obama, who now confronts economic challenges similar to those faced by Franklin Roosevelt in 1933, would do well to look carefully at the rural electrification program. For one thing, it was a truly bipartisan program that Main Street Republicans in rural America could support as well as Democrats. It is true that the Wall Street Republicans of the big investor-owned utilities fought rural co-ops viciously 70 years ago, with lawsuits at the national level and "spite lines" built at the local level so they could pick up big customers like mines and mills. As one co-op manager put it back then, the private utilities were "stealing the cream and leaving us the skim milk."
But for proud rural people who did not like "socialist make-work" programs, an REA could be embraced as capitalism. It provided financial capital to people who had ideas and sweat equity; they built the power lines and paid the money back.
Now zoom to today. All over the country, in urban neighborhoods as well as in rural communities, utilities are preparing for a major energy transition. Many want to minimize our dependence on fossil fuels, because fossil fuel emissions are making our climate chaotic, and because we know we will run out of fossil fuels.
Where I live in western Colorado, the most immediate challenge will be increasing the energy efficiency of existing buildings, with costs ranging between $1,000 and $5,000 per building. Many towns and most people cannot afford this as an out-of-pocket expense. Yet if the money were fronted by something we might call a "Community Energization Administration," to be paid back over time out of energy savings, America could do this. What's missing is the capital, and we know better than to expect that from the private sector.
Are you listening, President Obama and the Congress? Put up the capital; we'll do the work. And we'll pay it back just like the REA co-ops did, for our children and grandchildren to use in finishing the work of creating a sustainable society.
George Sibley is a contributor to Writers on the Range, a service of High Country News (hcn.org). He is a writer in Gunnison, Colorado.© High Country News