How TVA has negatively warped economies in the South

How TVA has negatively warped economies in the South
January 10, 2011

Let’s face it; Huntsville along with much of North Alabama has been under the dominance of the federal government for many decades. The space program with all of its ancillary support businesses has propped up the local economy unrealistically.

When business is not free-market driven and is left to the machinations of a distant national government, some surprising and unexpected things can and do happen. The President is effectively phasing out the space program and assigning its employees to other non-space activities; a federal government decision, not a local one.

Now there is the promise of BRAC transferees of federal employees, nothing but a burp at this point. But look at the possible consequences. Those national decisions affecting thousands of lives flow off planning papers in Washington as easily as slipping on an icy sidewalk with similar outcomes.

The whole of North Alabama has become for over three-fourths of a century a whipping boy of the federal government. It all started well before the TVA when President Wilson decreed that Muscle Shoals would be the location of a munitions plant to support WWI firepower needs. To fulfill the requirements of such a facility electrical power was needed, hence the construction of a powerhouse in a Tennessee River dam.

The dam, now called Wilson Dam, was not completed at that time because the war thankfully was over more quickly than anticipated. Meanwhile, private utility companies were moving into the Tennessee Valley to take advantage of the plentiful water source of power to drive electricity producing turbines. And the power the Wilson Dam produced at that time was mostly sold as surplus electricity by the government.

Then the most exciting event ever to come to the Shoals and the Tennessee Valley happened when Henry Ford and Thomas Edison proclaimed in 1921 the Valley to be the future “Detroit of the South” and real estate speculation went wild up and down the Valley.

However, the great potential economic growth engine of the South driven by the entrepreneurial spirit of America came to a screeching halt mainly because of one Republican senator, George Norris of Nebraska, who constantly derailed Ford’s great plans. Norris wanted and eventually got his own plan for a government designed and operated regional TVA after throwing his support to Democrat Franklin Delano Roosevelt’s election in 1932. FDR even expanded the Norris plan to include hoped for “little TVA’s” throughout the country. Later congresses, however, rejected that part of the TVA expansion.

Today, we have the results, the long-term impact, of the federal government on North Alabama and the South. All areas surrounding the TVA territory progressed economically faster than those areas inside TVA’s “fence”. And that gap continues. To listen to TVA rhetoric however, TVA is the jewel of the South. And their dissembling and dishonesty continues.

A large number of TVA industrial customers are grumbling about the steady increases in their rates, they claim this is driving business away from the Valley and the many jobs that go with those businesses.

Perhaps some who recently saw the interview with Governor Bob Riley on the Bloomberg Report have come away with the ghostly uneasy feeling that businesses outside the TVA area continue to expand and develop while TVA is losing customers. This is so particularly in the automobile industry. Looks like Henry Ford’s wish to turn the South into a dynamic industrial engine has come true everywhere except George Norris’s government run TVA. That is irony of the first order.

I once knew the former head of the Alabama Development Office, Max Peacock, (we belonged to the same civic club) and he as well as others then mostly discounted North Alabama economically because of its extreme federal dominance.

Alabama’s new governor seems determined to carry on Gov. Riley’s business approach to Alabama’s economy and a lot less dependence on government controlled and subsidized initiatives such as provided by TVA. In fact, I would hope that the State of Alabama would require the Tennessee Valley Authority to pay its fair share of taxes for the activities it carries on in Alabama.

The farce known as “payments in lieu of taxes” is nothing more than a payoff to politicians to not resist the intrusion of the federal entity TVA by providing them slush fund money. State taxes are handled one way and TVA “taxes” another. (There is a serious question whether or not TVA ratepayers are being taxed without representation when they are required to pay into TVA’s Treasury account for the use of TVA electricity.)

The sooner the people in the South realize they are in a strangle grip of federal rules run by non-elected bureaucrats at the TVA the better. There never has been a successfully run government program; the TVA has proved that in Spades. The $3.6 million salary of their CEO only proves that some people can be duped.

Where’s the outrage, folks!

Ernest Norsworthy

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