How Co-ops Can Make Infrastructure Great Again
If the Trump administration is serious about bringing jobs and pride back to rural America, they should take a lesson from cooperatives of the 1930s.
Not many people I’ve known who lived through the Great Depression recall it fondly. I suspect most of them would be perplexed to hear how Donald Trump’s chief strategist, Steve Bannon, described the new administration’s trillion-dollar infrastructure plan: “It will be as exciting as the 1930s.”
Exciting or not, it’s true that Americans have accomplished some remarkable things, and created some inventive new options, in times of widespread economic disaster. Social Security, the Empire State Building, and the gorgeous stretch of California’s Highway 1 through Big Sur all date to that period. But one less-celebrated accomplishment might be particularly instructive if the Trump administration is serious about bringing jobs and pride back to left-behind parts of the country.
I’m referring to the rise of rural electrification—how we got the lights on in communities off the beaten path, from the Rocky Mountains to the Florida Everglades. At the start of the Great Depression, much of the U.S. countryside had no electricity, even after most cities and towns had been electrified for decades. Power companies refused to make the investment, which would furnish lower profits than urban projects; some even claimed, astonishingly, that rural communities were better off in the dark. I don’t think that my grandfather, who grew up on northern Colorado beet farms without electricity, would have agreed.
Rural Americans took the matter into their own hands. Well before the Great Depression, they started forming electric cooperatives—utilities built, owned, and governed by customers themselves. These efforts added to a long legacy of rural cooperation as a means of economic inclusion, including 19th-century organizations like the Grange and the Farmers’ Alliance, whose purchasing and marketing cooperatives enabled farmers to compete in markets increasingly controlled by urban capital. Electric co-ops started taking advantage of hydroelectric dams built under President Franklin Roosevelt’s New Deal to distribute cheap, renewable power, and the federal government finally recognized their success enough to invest in it. In 1936, the Rural Electrification Act provided low-interest loans and technical support; by the end of World War II, around half of U.S. farms had electricity, up from around 10 percent a decade earlier. It turned out that, without investors clamoring for profits, powering the countryside was a perfectly sensible business proposition.
Today, nearly a thousand local cooperatives provide electricity to the inhabitants of around three-quarters of the landmass of the United States. They have formed larger co-ops in order to build and manage their own power plants. They’ve formed cooperative banks to finance new projects, lessening the need for public loans. Together with the rural phone co-ops that emerged in the same period, some electric co-ops are now bringing broadband internet service to underserved areas. Some have also become leaders in transitioning to renewable energy sources.
And all along, the basic model hasn’t changed: The co-ops are still owned and governed by the people they serve. Members typically get ballots for board members with their bills. It’s not a perfect system, and far too many co-ops have tolerated low election turnouts, entrenched board members, and bylaws designed to make change difficult. Still, co-ops have strong incentives to keep rates affordable, and any excess earnings get reinvested in the communities from which they came.
Electric cooperatives have also garnered remarkably bipartisan support over the years. Although spurred and nurtured early on by Democratic presidents, for decades now, these fixtures of the red state economy have had GOP lawmakers among their chief advocates, including former Indiana governor and vice president-elect Mike Pence. And it’s easy to see why: Co-ops are practical businesses that foster strong communities and local control. Because they’re regulated by their member-owners, in most cases they require significantly less oversight from government bureaucracies, if any.
Co-ops are practical businesses that foster strong communities and local control.
This kind of investment in infrastructure—a kind that empowers huge swaths of people—doesn’t appear to be what the Trump administration has in mind. The current proposal relies heavily on targeted tax credits for private developers and their investors, encouraging the kind of profiteering businesses that preferred not to bring power-lines to my grandfather’s farm. The developers’ projects will create new jobs, at least for a while. But when the construction is done, they can take the profits away to their preferred tax havens. They might also retain control over the projects for decades to come, continuing to reap profits from local populations to which they have little accountability. The Trumps of the world benefit long-term, while the rest of us see just a temporary respite from systemic decline.
Any new opportunity for public investment is an opportunity for building shared, sustainable, public wealth. Co-ops and other kinds of democratic ownership models can help make sure that this happens. Co-ops place the initiative and control with communities trying to meet their needs. Developers and lenders can then line up to serve those needs—rather than the other way around.
Community ownership can take a variety of forms. In Italy, a new model of “social cooperatives” is spreading rapidly as an affordable, humane way of delivering care to aging populations. Our crumbling water systems might be better served by something resembling the electric co-ops or by public-benefit companies like the one that saved the Welsh water infrastructure from an ill-fated period of privatization. Co-ops have proven effective in enabling communities to build solar and wind farms when investor-owned utilities have refused to do so. And, alongside locally owned broadband networks, we could invest in platform cooperatives—alternatives to Silicon Valley’s online utilities that increasingly shape how we find work and do business.
Cooperative models ensure that public investment goes to projects with enough public support that people are willing to become co-owners, responsible for setting their own priorities and keeping the business sound. They just require a willingness to trust—not in the largess of big investors, but in ourselves.