The Government IS in Business
SEPTEMBER 01, 1963 by PAUL L. POIROT
If you, as a property owner, have occasion to negotiate with an electric company concerning a right-of-way across your lands for its transmission lines, you may want to take some lessons in bargaining from the nation’s largest landlord, the federal government.
For many years, the government has exercised considerable control over the activities and operations of the privately-owned electric companies. And out of its interest in flood control, conservation, national defense, and miscellaneous matters, it has developed an enormous power-generating and distribution network in various parts, if not quite all, of the
Furthermore, applicants for rights-of-way for electric lines across public lands must agree to allow the federal government to use any of what the government decides may be "excess" capacity of the line. And the government would have the right, at its expense, to increase the line’s capacity and to use such increase for its own purposes, thus jeopardizing any reserve for future expansion that the line’s owner might have intended.
Naturally, the privately-owned electric companies are perturbed about the stringency of these new regulations. Even the most casual witness of the extension of the "TVA Yardstick" since the first inch was granted in 1933 must realize by now that the "power marketing program of the United States" has no natural limits, that it is designed to encompass every square foot and every citizen of the country, and that those in charge must deem to be in conflict with their program any and every privately-owned electric generating and distributing facility in the land. The federal government already has pulled tight the noose of its monopoly over the electric power industry in the TVA territory. When and where its next foreclosure will come is debatable, but the definite trend of the times and mood of the electorate is in that direction. The timing is strictly a matter of political expediency.
REA in Practice
Slightly more than a quarter of a century ago, when the Rural Electrification Administration was under debate in Congress, Representative Sam Rayburn of
Contrary to Mr. Rayburn’s solemn and sincere assurances of 1936, the growing REA giant is reaching out to serve not only rural customers but industrial and suburban markets as well. Five out of six new REA co-op customers, in fact, are now commercial, industrial, or nonfarm consumers. And tax funds are being loaned through REA at less than cost to finance lumber plants, housing projects, and, in one case, snow-machines for a ski resort.
The recent regulations governing rights-of-way across federal lands mark perhaps the most extreme, abusive, and arrogant grab for power yet attempted in a major movement toward socialization of the electric power industry of the
How Limit Government When Principles Are Abandoned?
One of the proper functions of a government of limited powers is to protect the rights of citizens to life and property—as long as each lives and uses his property peacefully and without injury to others—and to constrain those who might attempt such injury. But when the government itself acquires the ownership of land or any other property, who then is to constrain the government in its injurious use of such property? The principle of limited government is thus abandoned whenever the government claims title to land. It is abandoned whenever the government takes the first step toward building a hydroelectric dam or power-generating plant or transmission line. Indeed, it is abandoned whenever the government undertakes to set the rates and otherwise regulate the operations of privately-owned electric companies. So, there are no fundamental libertarian principles left upon which one can then make a firm stand when the federal power agency takes its next logical step—such as posing impossible conditions for rights-of-way across federal lands. Why should anyone be particularly concerned at that late stage?
This is no gross exaggeration or wild prediction of something that might possibly happen in the
Nor is "the power marketing program of the
Communications and Transport
Everyone knows that it is now illegal to undertake any operation in conflict with "the communications program of the
A similar pattern toward government monopoly is emerging in "the transportation program of the
Another clear example of government monopoly is in "the monetary and credit program of the
Agriculture and Labor
Less clear, perhaps, in its monopoly characteristics but at an advanced stage, nonetheless, is "the agricultural production and marketing program of the
"The labor marketing program of the
Freedom in Jeopardy
While the foregoing examples by no means exhaust the list of goods and services that have been brought partially or wholly under government monopoly in the United States, they should suffice to illustrate to anyone concerned that economic freedom is seriously threatened; that one advance toward the welfare state leads inexorably to the next step; that the proponents of government regulation and control of creative activities are in deadly earnest; and that once allowed in principle, there is no logical stopping of compulsory intervention until the government owns and controls not only all the property in a given industry but also all the people dependent on that industry as investors, employees, and consumers.
Go Back to Basic Principles
Let us return now to the immediate problem of the private electric companies concerning rights-of-way across government-owned lands. The companies may contend, of course, that the government ought to be a kind and benevolent landlord, willing to grant rights-of-way with no strings or conditions attached.
But suppose an electric company were seeking a right-of-way for a power line across the lands of one of its competitors in the electric business—as the builders of coal pipelines are now seeking rights-of-way across properties owned by the railroads, which also want to transport coal. Under such conditions, is the property owner expected to grant right-of-way to a competitor strictly on the latter’s own terms? This, of course, is not a reasonable expectation.
As electric power companies well know, property owners along a proposed right-of-way can be most demanding in their terms and conditions. And occasionally, such opposition may be confronted with governmental power of eminent domain to force acceptance of "fair and reasonable" terms. However, the government’s power of eminent domain is of no avail when that self-same government is the demanding owner of the property at issue. So it is that the electric companies, licensed, chartered, regulated, and controlled by the government, are strictly at the mercy of the government when seeking right-of-way across government-owned land.
To argue their case logically before the court of public opinion the electric companies and other businessmen similarly threatened by governmental encroachment will be obliged to hark back to the fundamentals and basic principles of personal freedom of choice and full responsibility for the consequences; private ownership and control of property; voluntary exchange of all goods and services in open competition; and government limited in scope and power to the defense and protection of the life and property of every citizen equally against unprovoked acts of violence, fraud, predation, with a system of courts to decide matters in dispute and armed forces powerful enough to enforce all such decisions and to collect taxes sufficient to maintain the government in its proper functions.
By these basic principles, it is possible to explain logically why neither power companies nor any other creative activities should be chartered or licensed by the government in the first place, but left instead to competitive private enterprise; why the government has no business whatever in the generation or transmission of electricity or as producer or provider of any other goods or services that have a market price, leaving all this to competitive private enterprise; why the government should neither own nor control any parcel of land or any other scarce goods and resources beyond the necessary tools and instruments of war, leaving such ownership instead to the highest bidder and thus to the most capable management that can be found by the true and tested methods of open competition; why the government should grant neither favor nor exemption to any individual group.’ Then and only then can life and property be reasonably secure in the possession of those who have earned and paid for their rights-of-way.
1 For further explanation of these limitations, see Government: An Ideal Concept by Leonard E. Read, Foundation for Economic Education, Irvington-on-Hudson, New York (1954). 149 pages. $1.50 paper, $2.00 cloth.