Co-ops are not government
A co-op is a private business under state corporation law, owned by the people who use it. The myth that electric co-ops are government may have developed because many co-ops originally got financing by borrowing from the federal government's Rural Electrification Administration.

Customers don't run co-ops
The customers, or members, vote for the board of directors. The board sets broad policy, and hires a manager to carry out that policy. That manager hires a staff to do the work. There wouldn't be much electricity flowing if the co-op called a membership meeting for every decision or relied on food co-op-style volunteers.

Not-for-profit means good service and good prices
Conventional wisdom dictates that the profit motive provides high quality and low price. Another theory holds that a business owned by its customers, with no motivation to produce ever-higher profits for shareholders otherwise unconnected with the business, is only motivated to provide its customers with the best possible service at the lowest possible price.

The Yardstick Principle
This theory says that because co-ops are motivated by service and price for their customers rather than profits for shareholders, they set the standard, or yardstick, for measuring the ideal price and service. Some co-op business thinkers use the yardstick principle to argue that if there were more high-profile co-ops in all our industries showing how good a business could be, the resulting competition could mean less need for government regulation. Profit-making companies would have to act more like co-ops, or go out of business.

Competition is a great motivator, and produces enormous productivity. Cooperation also brings innovations that drive our economy, including credit unions in financial services, affordable homes in urban areas through housing co-ops, agricultural productivity and more rural lifestyle choices through electric co-ops, and even healthier eating through food co-ops.

Paul Wesslund
Editor