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Elon Musk wants to create his own city. Here’s how that could work

Samantha Masunaga, Los Angeles Times on

Published in Business News

That was the case with Smeltertown, a company town established in Texas in the late 1800s by American Smelting and Refining Co. to focus on copper and lead extraction. Located outside El Paso, the town was segregated: White engineers and plant managers lived in wood-frame homes with indoor plumbing, while workers of Mexican descent resided in smaller, cinderblock homes.

El Paso County governed Smeltertown, but American Smelting and Refining operated a company store that was deeply intertwined with workers’ finances, offering credit and deducting the costs of purchases from employee paychecks. The company also provided Smeltertown residents with some resources. It had a hand in distributing water, subsidized vocational training and paid for the construction of a road to the town’s Catholic church.

“Often these amenities and relationships that were cultivated between the company and the community could work to everybody’s advantage, but in some ways [they were] a form of control,” said Monica Perales, associate professor of history at the University of Houston and author of the book “Smeltertown: Making and Remembering a Southwest Border Community.” “I’ve heard it referred to as the iron fist in the velvet glove.”

Such arrangements have given company towns a reputation for exploiting workers. Many employers paid not in cash but rather in scrip that could be redeemed for goods at the company store. In some cases, the employer owned the workers’ homes as well and deducted rent from their pay. With the company holding the power to set prices and extend credit, workers could find themselves mired in debt.

Smeltertown is no more. Nearly a century after it sprang up, it was demolished in 1973 amid an air pollution lawsuit against the company and concerns about lead contamination and poisoning in the town’s children.

A modern iteration of the company-town idea can be found in Silicon Valley. There are tech-firm campuses with laundry amenities, free food and Wi-Fi-enabled buses. Providing such services can erode the boundary between employees’ work time and personal time and removes reasons to leave the campus bubble, which can lead employees to stay at work and labor longer.

 

Another iteration: start-up societies, which are small locales that try new policies and forms of governance. They have the potential to make regulatory changes that can accelerate technological progress, but none have moved beyond the planning phase in the U.S.

There are questions about whom these start-up societies will help, said Isabelle Simpson, a doctoral candidate in geography at McGill University. The societies are billed as communities of like-minded people. While they’re typically presented as a way to help the poor by creating jobs and entrepreneurship opportunities, it’s too early to tell whether that will happen.

And then there’s the concept of innovation zones. Nevada Gov. Steve Sisolak’s proposed plan would allow a company owning at least 50,000 acres of undeveloped and uninhabited land to create its own government with the same kind of authority as a county government. That means the company-created zone could impose and collect taxes, create a school district and court system and provide services, according to the Las Vegas Review-Journal.

The state already has one interested party: Blockchains LLC, which owns 67,000 acres in Storey County near Reno and has said it would be interested in setting up a community that would rely heavily on blockchain technology. The so-called smart city would have a research and development center focused on housing, transportation and energy technologies that could help residents and others, Blockchains Chief Executive Jeffrey Berns wrote in an op-ed in the Reno Gazette-Journal.

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