Chapter 1: Introduction

This study of TVA logically falls into two parts. First, what is the monetary cost of TVA? Second, what are the social, political and economic consequences of the TVA idea? In examining the cost of TVA, however, we must do more than add the figures recorded in the TVA financial statements. We must consider what is not recorded as well as what is recorded. Why this is so may be best illustrated by the following story: 10 INTRODUCTION A young hoodlum threw a rock through the plate glass window of a bakery. A crowd gathered. One man said: "Well, this misfortune isn't without its brighter side. The baker will buy a new window. This will mean more work for the glass makers. Thus employment will be increased. The glass makers will have more money to spend. They will buy more products, including more of the baker's bread. This, in turn, will mean more prosperity for him and for everyone/' As far as it went, that explanation is sound economics. But what the speaker didn't understand is this: He was speaking only of the things that could be seen. He completely ignored another side of the picture. The baker was planning on buying, for instance, a new suit from the tailor across the street. But instead, he had to buy a new window. Thus the work and prosperity created by the purchase of the new window were canceled out by the work and prosperity not created because the suit was not purchased. The suit was not permitted to come into being. Just as much work and prosperity would have been created by the purchase of the suit as by the purchase of the window. Thus the community, and wage earners as a group, were no better off.

True, the glass workers got more work. But for every new glass worker hired, the same number of tailors were fired or not hired. And in addition, the baker did not get his new suit. All he got was a window to replace the window that he already had. It is this hidden loss that many people forget when TVA is being discussed. They can actually see the TVA dams, and can count the persons hired to build them. Pictures and glowing descriptions of TVA can be sent all over the world. But when one tries to explain that TVA actually prevented an equal or greater amount of products and services from being created, he is apt to be greeted with a blank stare. This is because we can't see the eggs, hats, shoes and haircuts that the taxpayers never bought due to the fact HIDDEN COSTS; CONSTITUTIONALITY OF TVA 11 that hundreds of millions of dollars were taken from them in taxes to pay for TVA. We can't see the number of new factories and jobs that would have come into existence if the government had allowed the taxpayers to spend their money as they wished. We can't see it because it was never permitted to happen. Thus there are no pictures and no publicity. Yet, the fact of the matter is that the taxpayers' money that was used to build TVA would have created just as much work — and more happiness — if the individual taxpayers had been permitted to spend the money. If they had not been forced to pay for TVA, the taxpayers would have spent their money on something they preferred, instead of on TVA navigation, TVA fertilizer, TVA electricity and other TVA products that the buyers did not want badly enough to voluntarily pay the cost of producing them.

* * * The TVA project as a whole was reasoned to be within the authority of the federal government because the Constitution gives the federal government power "To regulate commerce . . . among the several states. .. ." The Supreme Court has ruled that this federal power covers all navigable streams; that the control of floods is a necessary part of keeping the streams navigable; that government navigation and flood control dams may be used incidentally to generate electricity as a by-product of these primary purposes; that government may sell this incidental electric power. Logically, then, this study should begin with an examination of the TVA flood control and navigation programs, which are its professed and constitutional reasons for existence.