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How FDR enacted his 'public option'

Remote farmers had no power, because the private utilities didn't want to bother. So Roosevelt created a government agency to electrify the folks and drive down the rates. He didn't unplug grandma; he plugged her in.
Farmers didn't seem worth helping out with electricity

Farmers didn't seem worth helping out with electricity USDA

Full disclosure of a conflict of interest: My family and I and all of our neighbors milked cows by hand, by the light of kerosene lanterns that smoked and smelled more than they lighted. My mother cooked on a wood-burning stove and pumped all our household water by hand.

When I brought friends home from college, I waited until they'd unpacked before explaining that they'd have to use the outhouse. For most of these city-reared young men and women, it was their first encounter with that smelly, drafty, fly-ridden cultural artifact. They were appropriately impressed and grateful.

Nineteenth Century museum piece? Nope, this was the mid-twentieth. Post-Roosevelt, pre-Ike, late Truman. Electrical service had not yet penetrated the hills of rural Southern Iowa. Everyone wanted it, Hell yes. We yearned for it. The investor-owned power company wouldn't sell it to us. Analogous to millions who today can't get health care insurance (another thing we did without) we were disqualified by pre-existing conditions: We were farmers and we were poor. We might not use enough power. We might not pay our bills.

President Roosevelt had decreed a public option in 1935, putting the federal government in the electrical utility business. He created the Rural Electrification Administration, enabling government-backed Rural Electrical Cooperatives to buy cheap power from the government and sell it to farm families in neighborhoods where the investor-owned utilities would not go.

It was 1951 when the magic arrived at the end of the road. The REA mounted a push to string electric lines to the loneliest farms in Southern Iowa. That would be us. Neighborhoods organized to acquire the easements and clear the trees, to make way for the power poles. By September the lights were on.

Think of that.

Lights! In the kitchen, in the cowshed, in the milk house, in the hen house. There were electric fans, a refrigerator, an electric range, running water. An indoor toilet &mdash no more overshoes at midnight in a snowstorm.

What took so long? World War II got in the way, and after the Big War, the turf war. Investor-owned utilities, who rejected the farmers for years, wanted them dearly once the competition showed up. They fought in legislatures and courts and newspapers to keep the Rural Electric Coops from lighting the back roads. One rural legend (I can't say it's true, I didn't see it) has the investor-owned utility crews coming along after dark, removing REA power poles, installing their own, and stringing wire through the night. At any rate, the public option prevailed. The cooperatives multiplied.

And omigawd were they evil. Socialistic, un-American, undermining the very fabric of democracy. Legislators, businessmen, members of Congress, editorial page editors all over the country railed at the specter of Big Government shouldering into private enterprise, when everyone knew Government couldn't do it right.

Most infuriating of all, government did it right. The cooperatives became the pricing yardstick for electrical power. Investor-owned utilities had to lower their rates to compete. In four years, the cost of installing a mile of rural power line dropped from $2,000 to $600. In 2007, 72 years after FDR created the public option, customers using public power nationwide reportedly paid 17 percent less than those served by privately-owned utilities (according to the American Public Power Association, not necessarily a neutral source).

It's intriguing to study FDR's fight with conservatives over public power, in the light of today's fury at health care reform. Unlike President Obama, Roosevelt showed no interest in being a uniter who would seek bipartisan consensus through compromise. None of that. He was proud to be a divider, and relished taunting his conservative enemies. "They are unanimous in their hatred of me," he told a 1936 radio audience, "and I welcome their hatred."

When he couldn't get what he wanted from Congress, Roosevelt winged it on his own. In creating REA by Executive Order 7037 in 1935, he consulted neither his Republican opposition nor the electrical utility giants who so furiously raged together. He did it without a Washington DC consensus and made it one of the most successful government programs ever.


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Comments:

Posted Tue, Sep 8, 11:19 p.m. Inappropriate

Last year, just after your piece, Bob, on the Puget Sound Energy buyout and the calls for mass takeovers by local PUDs, I wrote a piece at http://www.examiner.com/x-479-Seattle-History-Examiner~y2008m8d4-PSE on the 1941 campaign by Puget Sound Power and Light, as it was then called, to resist takeover by Seattle City Light within the city limits.

"You may be next" under the "chopping block for private enterprise," threatened a Puget Power billboard on Aurora Avenue N.

Will we once again see billboards featuring hooded executioners?

Posted Wed, Sep 9, 7:55 a.m. Inappropriate

A wonderfully straight-forward perspective on this emotionally charged subject, using history for grounding, lessons and proof. Thank you!

Posted Sun, Sep 13, 12:54 a.m. Inappropriate

I'd suggest people interested in this topic read Amity Shlaes' "The Forgotten Man." Roosevelt's TVA was seen by as many as a white knight, but also by many and many as a pillaging marauder. There's more than one side to this story.

dbreneman

Posted Tue, Sep 15, 8:30 p.m. Inappropriate

It's simple; private, for-profit companies will only do something if they can make a profit from it. Why would they do otherwise? They're not set up to serve the common good. That's not their purpose. Most people understand that.

So what else or who else will step up and do the things that we need in common, even if they don't make a profit? The government; that's who.

Without the government there would be no military; no public schools; no public universities; no fire department; no police department; no libraries; no roads; no Social Security; no Medicare; no Medicaid; no water---unless, of course, you set up "private accounts" for all of these, and paid extra for the sales, marketing, advertising, billing, etc., adding at least a quarter to the cost of everything, and making everything much harder to obtain for all of us.

The world idealized by so many conservatives---one in which every essential service is "privatized"---actually did exist; it was called the 19th Century. And it largely sucked. Which is why people moved on and changed things for the better.

Bashing "the government" in an adolescent, nihilist way isn't a good argument; it's embarrassing. The eighties are over, people. You'll have to do better than the hoary Reaganist clichés.

JimCap

Posted Sun, Oct 11, 10:04 a.m. Inappropriate

Very poor logic here.
The initial layout is the only 'unexpected' cost, and public utilities will cut you off just as quickly as private utilities of you fail to pay your bill.
If you choose to use a ton more electricity than the folks down the road- even if your use is dictated by higher need than those folks, your bill will still be higher. By this logic, everyone should be able to have insurance on the public option and get the care they needed- so long as they were able to pay the full cost of delivering that care, and if they failed to pay, care would be cut off within 30 - 60 days regardless of circumstance. Sometimes, if you were really poor, this option would give you a $50 a month credit towards your care needs, but it wouldn't carry over to next months needs.
Brilliant solution, except for the fact that such an option would be WORSE than what we have now, and few would be able to afford to keep their care if anything at all went wrong to drive up their costs.
This is exactly the faulty logic that has driven UP costs in numerous facets of our lives every time Government steps in under the assumption that adding a layer of bureaucracy would make things LESS expensive.
The situations that a public option actually helps are few and far between, and health care is not electricity.

Kitwench

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