Indians, Free Markets, and Property Rights

In a Wall Street Journal oped today, Naomi Schaefer Riley discusses federal policies toward American Indians:

There are almost no private businesses or entrepreneurs on Indian reservations because there are no property rights. Reservation land is held in trust by the federal government and most is also owned communally by the tribe. It’s almost impossible for tribe members to get a mortgage, let alone borrow against their property to start a business. The Bureau of Indian Affairs regulates just about every aspect of commerce on reservations.

Instead of giving Indians more control over their own land—allowing them to develop natural resources or use land as collateral to start businesses—the federal government has offered them what you might call a loophole economy. Washington carves out a sector of the economy, giving tribes a regulatory or tax advantage over non-Indians. But within a few years the government takes it away, in many cases leaving Indian tribes as impoverished and more disheartened than they were before.

I explored the same themes in a 2012 essay at DownsizingGovernment. My essay traces the history of Indian policies back to our nation’s founding and concludes:

American Indians and Alaskan Natives have a unique history and a special relationship with the federal government. However, subsidies and regulatory preferences are not a good way to create broad-based and durable economic growth for these peoples. Subsidies are also inconsistent with the movement toward Indian self-determination. A better way to generate a lasting rise in Indian prosperity is to make institutional reforms to property rights and tribal governance on reservations.

The problem is that Washington is a massive screw-up these days in so many ways. There is so much to repeal and reform, but members of Congress don’t seem to have the time, patience, or incentive to fix the failures that they have created, including the failures of Indian policies.

It is true that the solutions to Indian poverty and related problems will not be easy to implement, but I do think that free markets and property rights is what Indians should aim for. I found that,

One of the historic reasons why the federal government variously exploited, coddled, and micromanaged Indians was because of the belief that they were primitive socialists with no understanding of market institutions such as property rights. But research has found that stereotype to be false. One recent study argues that “most if not all North American indigenous peoples had a strong belief in individual property rights and ownership.” Various tribes in North America developed systems of property rights in farm lands, garden plots, horses, fishing streams, fur-trapping territories, hunting grounds, and other resources. Research has also found that Indians were very entrepreneurial and had extensive trading networks.

Kudos to Ms. Riley for tackling this important subject that Congress is ignoring. Her new book is titled The New Trail of Tears: How Washington Is Destroying American Indians. But you can get a free introduction to the general issues by reading my “Indian Lands, Indian Subsidies, and the Bureau of Indian Affairs.”

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