EFHA and a Digital Divide Taxonomy February 7, 2007
Posted by Tim Schneider in Digital Divide, Rural Electrification, Uncategorized.trackback
Here’s a New Deal program you haven’t heard of: the Electrical Home and Farm Authority (EHFA).
This is what the EHFA did, according to D. Clayton Brown:
EHFA made agreements with the manufacturers of electrical appliances in the specifications and standarization of three items–ranges, water heaters and refrigerators. Arrangements were made with power companies and cooperatives to act as retail distributors. Each customer went to the distributor, signed a purchase contract and made the first installment payment. EHFA paid the retailer the balance. The purchaser’s unpaid balance, however, was divided into installments and incoporated into the monthly electric bill.
The key to the plan was low-cost financing. A single appliance was financed over a period of three years and two or more appliances over a period of three to five years. Private lending institutions at the time normally placed the maximum lending period for appliance loans at twenty-four months. EHFA interest rates were set at 5 percent, about half that generally in effect for small consumer loans. Congress did not make appropriations for the agency since it obtained funds from regular private sources and from the earnings of the business.
The program was originally a hugely successful companion program to the TVA, though it went national in 1935 (where apparently it was less successful for reasons Brown doesn’t make clear).
You can essentially break the rural electrification project down into to three complementary pieces, which I think help explain some of the conceptual instability in “digital divide.” First is supply side, the infrastructure component, addressing what was essentially a market failure to run lines to rural homes. The second and third components are demand side: the EFHA financing home appliances (and internal wiring), and an extensive education campaign conducted by the REA and groups like the Grange and the American Farm Bureau Federation, among others. Also, it would be a mistake to characterize this as all top-down, it’s more mutually reinforcing (educations and advocacy spurred cooperative creation, for example).
I have a feeling that when we talk about the digital divide we’re actually talking about the absence of three different things: infrastructure, the tools to access and utilize the infrastructure, and the skills and practices that enable effective use of that infrastructure. Absence of any of the above constitutes a “digital divide,” and the overall effect is the same, but they don’t all have the same solution, since they aren’t even really the same problem.
I’m going to look more into the digital divide discourse over the next couple of weeks. This will (probably) be my last post on rural electrification for a little while . . . don’t cry.
technorati tags:digitaldivide, rural, electrification, infrastructure
That’s a pretty cool program, and I had definitely never heard of it. I wonder what interest rate cell phone companies get on 2 year contracts? I figure that if the cell phone company subsidizes my phone by the tune of $X, then my monthly payments are actually the service charge + a monthly payment on X.
There also used to be big computer discounts with a subsidy paid by AOL. Trapping you, of course, with a long term AOL contract. Those deals seem to have gone mostly away.
Anyway, would either of those deals, if the implicit (and hidden) interest rate was low, work like the EFHA financing?