“…the cooperative continues to evolve, and indeed, many challenges lie ahead in the energy industry. The LPEA board and staff are prepared to meet these head-on, while maintaining the mission to provide members with safe, reliable electricity at the lowest reasonable cost, while being environmentally responsible.”
— From the La Plata Electric Association (LPEA) website
The mysteries of rural broadband are, of course, inextricably linked up with the mysteries of government taxation and spending in a semi-capitalist republic.
Our republic subscribes to a national Constitution that specified religious freedom as a founding principal, and thus requires a separation between Church and State. The same Constitution does not, however, specify a separation between Corporation and State. And that’s where things can get interesting. And expensive.
Back in 1935, Durango, Colorado’s downtown was already serviced by an AC electrical grid, but few people believed electrical power lines would ever extend out to the families living in the more agricultural, rural areas of southwest Colorado. Not in their lifetimes, at least. We were, after all, in the depths of the Great Depression; families were lucky to simply have food on the table. Where would our isolated rural residents ever find the money to finance miles of new power lines, expensive transformers, and rural power stations?
But President Franklin Roosevelt had big plans for the national economy in 1935. His “New Deal” involved massive federal expenditures for social programs the federal government had never before funded, including Social Security, the Works Progress Administration, and the National Labor Relations Act.
On May 20, 1936, Congress passed the Rural Electrification Act — the REA — which would provide low-interest loans for the purpose of rural electrification. The need for the REA was hard to argue with. In 1936, only about ten percent of rural America had electrical power. We will also note that most rural homes did not have running water. Proper sanitation was lacking. Most families had food storage issues.
The farmer milked his cows by hand in the dim light of a kerosene lantern. His wife was a slave to the wood range and washboard…
— from the National Rural Electric Cooperative Association website
Which brings us to the subject of ‘cooperative’ efforts.
Within months, it became evident to REA officials that established investor-owned utilities were showing little interest in using the newly available federal loans to serve sparsely populated rural areas. But loan applications from farmer-based cooperatives poured in, and REA soon realized that electric cooperatives could make rural electrification a reality. In 1937, the REA drafted the Electric Cooperative Corporation Act, a model law that states could adopt to enable the formation and operation of not-for-profit, consumer-owned electric cooperatives. By 1953, more than 90 percent of US farms had electrical service.
La Plata Electric Association, the cooperative that serves La Plata County and Archuleta County, was formed in 1939. The initial membership fee was $5. Its first power lines were electrified in 1940.
The attraction of farmer-led cooperatives faded, however, with the blossoming of the US economy following World War II. Much of the industrialized world had been devastated by the war, but the young upstart — America — had escaped damage, while also transforming itself into an industrial “super power” during the war effort.
That transformation came at a cost to the taxpayers, however. As the role of government changed drastically during the New Deal, the federal government had set a new debt-to-GDP record of 44% in 1934. And by the end of World War II, the US government’s debt-to-GDP ratio hit its all-time record of 113% — about $3.2 trillion in current dollars. The US government never made a concerted effort to pay down much of the debt it incurred during World War II, but with a thriving peacetime economy, the federal debt ratio dropped to 24% by 1974. About $1.8 trillion, in current dollars. Not exactly pocket change, but still…
The debt-to-GDP began an unprecedented peacetime upswing during the Reagan administration, as the result of a nasty recession coupled with big tax cuts for the wealthy plus increased spending on both defense and social programs.
Here’s a chart illustrating the roller coaster ride from 1790 through 2011, taken from Atlantic Magazine.
Tax increases under George HW Bush and Bill Clinton helped reverse the trend temporarily, only to see the federal debt once again heading skyward under George W and his multiple wars — and the start of the Great Recession.
The US government debt is now somewhere in the neighborhood of $22 trillion, I understand.
But weren’t we talking about rural broadband? And cooperatives? And government subsidies for the development of valuable utility services?
Yes, we’ll get back to that discussion. But first, I’d like to share a chart produced by the data company Key Policy Data, showing where we might be headed by the year 2050… if the interest rate on our federal debt increases in the manner predicted by the Congressional Budget Office:
At the most frightening end of this graph — when the federal debt is 150 percent of the GDP by 2050 — our President and Congressional leaders will be spending more on interest payments to investors than for defense, social programs, education, transportation, housing, and all other discretionary spending combined.
So, yes… with that in mind, let’s talk about the rural lifestyle. We cannot doubt that the absence of electricity in rural America, in 1935, caused hardships for the nation’s farming and ranching families, relative to the more comfortable lifestyles enjoyed by the electricity-using folks in the cities and towns. But everything is relative, as they say. The folks in the cities and town were also unable to enjoy some of the finer things available to folks out here in the countryside. Clean air. Clean water. Peace and quiet.
In some ways, too, everything is relative to the amount of pull you have with government leaders — and also relative to the lack of accountability built into government subsidies.