Governance, Finance, and Entrepreneurship: Global Lessons for Indian Country Policy Makers










This is the substance of a talk I am giving on Tuesday, Nov. 6 (yep, election day) at the Society for Government Economists' annual conference at George Washington U. in Washington, DC.





Many thanks to my colleagues Eddie Welch and Bill Swart for their comments on earlier drafts.



By Robert E.
Wright, Nef Family Chair of Political Economy, Augustana College SD






                For
seven years I taught a course in the MBA program at New York University’s Stern
School of Business called “Global Perspectives on Enterprise Systems.” During
that span, two other professors who taught that same course, business historian
George Smith and financial historian Richard Sylla, joined me to create and
elaborate an heuristic device we called the “Diamond of Sustainable Growth” to
help students to better understand the economic development process. As we read
widely in comparative economic history and worked with students to apply the
model to specific countries across the globe and across history, we concluded
that our teaching tool was actually a four stage descriptive model that fit the
history of every wealthy nation on earth, with the exception of a few countries
temporarily grown fat by exploiting natural resources like oil.


                The
diamond reference in our heuristic refers to a baseball diamond, not a precious
gem or Jared. We can dispense with the baseball analogy here and move right to
the heart of the matter. What we discovered is that nations that have
experienced sustained increases in real per capita economic output have all
followed the same four stages, in order. First they developed non-predatory
governments and de facto limited constitutions. Non-predatory governments
protect life, liberty, and property; de facto limited constitutions contain
checks and balances that effectively reduce predatory behavior by the
government. With expectations of future protection of property and human rights
in place, modern financial systems arose, then open access entrepreneurial
systems, and finally modern management techniques. Holland, Great Britain, the
United States, Canada, France, the Scandinavian nations, and the Asian, Latin,
and Celtic tigers all went through those same stages in the same order, which is
a logical sequence as well as an historical one. Before modern management becomes
necessary, an economy needs large companies which are the result of competition
between entrepreneurs for sales and financing. Before people have an incentive
to create a well articulated financial system, they need to have fairly strong
assurances that their property, not to mention their lives and liberties, will
be secure from threats foreign and domestic.


Impoverished nations
in Latin America, Africa, Eastern Europe, Central Asia, the Middle East,
Southeast Asia, and Micronesia suffer under governments that are predatory,
that in other words do not adequately protect most citizens’ lives, liberties,
or properties. In many such cases, the governments themselves are the local alpha
predator and their predatory practices range from genocide, famine, and
unchecked pestilence to systemic corruption and crony capitalism to
institutions that, purposely or not, create and perpetuate an underclass, a
topic to which I will shortly return.


Nations that
backtracked, including Argentina, Japan, and Germany, experienced revolutions
that established governments that offered fair protections of their citizens’
lives, liberties, and properties. They later suffered economically, however,
when their constitutions proved to have de facto checks and balances insufficient
to prevent a return to predatory government. After the horrors of World War II,
Japan and Germany developed constitutions with de facto checks and balances and
unsurprisingly thrived economically thereafter. That Japan’s economy has
remained stagnant, albeit at a high income level, since the early 1990s is
testament to the strength of national economies once they have achieved all
four stages of development described by the diamond model.[1]


The reason that you
probably haven’t heard of the diamond model is that it has not been tested
statistically. As larger and improved datasets addressing governance quality,
financial systems, entrepreneurship, and management become available, however,
testing has become more appealing and I’d be happy to team up with anyone who
wants to do so. For me, however, the most compelling evidence of the model’s
power comes out of natural experiments, not statistics. Several nations have
been arbitrarily cut into two and randomly assigned different types of
government while retaining similar cultures, histories, genetics, natural
resource endowments, and so forth. Those with non-predatory governments and sufficient
de facto checks and balances developed modern financial, entrepreneurial, and
management systems and they grew economically and have stayed wealthy even in
the face of global financial shocks. Think West Germany, South Korea, Hong
Kong, and Taiwan. Those with predatory governments have remained or became
impoverished. Think East Germany, North Korea, and mainland China before Deng’s
reforms.[2]


Pertinent to our
focus here today, the diamond model also helps to explain differences in
economic outcomes within nations.
South Africa has a bifurcated economy because its government was long
non-predatory toward whites and highly predatory toward blacks. India’s economy
is also uneven due to the long persistence of the Hindu caste system. The U.S.
South lagged the North economically until the remnants of slavery, Jim Crow,
and the KKK were defeated in the 1960s. Appalachia remains somewhat backwards but
improved dramatically after company coal towns in cahoots with tidewater
politicians were reformed after the Second World War.


And American
Indian Reservations in the continental United States were poverty stricken
places until federal, state, and tribal governments made credible commitments
to protect the lives, liberties, and properties of Native Americans. Well, I
hope to be able to claim that within the next two or three decades. As it
stands now, many natives rightly equate their situation with blacks in South
Africa under apartheid. Much of the impetus for change is being provided by
native peoples themselves, some from well meaning outsiders like the people in
the audience here, and some from federal budget constraints. Providing basic
public goods like protection of life, liberty, and property is cheap in the
scheme of things and certainly less expensive than trying to micromanage Reservation
economies with bureaucratic controls, the modus operandi for over a century.
After adequately protecting Natives’ lives, liberties, and properties, policymakers
should stand aside and watch the woodlands, prairies, and even the Badlands
blossom, metaphorically if not literally. As native American entrepreneur
Charlie Colombe put it, “if we had good … governments, we would be overflowing
with business opportunities and jobs.”[3]


What Indian
Country can do without are grand top down schemes, the sort of government or NGO
planning rightly derided by Bill Easterly, Dambisa Moyo, Hernando de Soto, and
others, that have so often failed in Indian Country as well as in Africa, Latin
America, and elsewhere. As Adam Smith put it in 1755, “Little else is requisite
to carry a state to the highest degree of opulence from the lowest barbarism,
but peace, easy taxes and a tolerable
administration of justice
; all the rest being brought by the natural course of things. All
governments which thwart this natural course, which force things into another
channel or which endeavour to arrest the progress of society at a particular point,
are unnatural, and to support themselves are obliged to be oppressive and
tyrannical.”[4]


We can debate what
Smith meant by “easy taxes” but basically he argued that nations with predatory
governments will have lousy economies while those with non-predatory ones will
thrive, regardless of their resource endowments. He elaborated on that point in
his discussion of China in the Wealth of
Nations
. “China seems to
have been long stationary,” he
noted, “and had probably long ago acquired that full complement of riches which
is consistent with the nature of its
laws and institutions
. But this complement,” he added, “may be much
inferior to what, with other laws and
institutions
, the nature of its soil, climate, and situation might admit
of.” Rather than natural resource endowments determining income levels, in
other words, Smith saw that “laws and institutions” were the limiting factors.[5]


In the eighteenth
and nineteenth centuries, the notion was widespread that the quality of political
governance mattered far more to income levels than natural resource endowments did.
In an 1831 book, Albert Gallatin, the
longest serving treasury secretary in U.S. history, argued that “the increased
wealth and prosperity of Europe and America are the cause, and not the effect, of the increased amount in value of
gold and silver, which they now possess. The causes of that great increase of
wealth, are not to be found in the fertility of the mines of America, but in
the general progress of knowledge,
skill, and every species of industry, in the consequent improvement of
governments, laws, and habits
, in all that constitutes civilization.”
Two years previously, an anonymous author argued that “the powerful influence of good laws and their good administration on the wealth and prosperity of nations, is
in theory universally acknowledged.
A wise and beneficent policy in the law of debtor and creditor, or in any laws
affecting the interests of large
numbers
,” he continued, “may do more
to advance the welfare of a nation
than the greatest natural advantages.”
“Who would carry on business,” he asked, “in a place in which wealth rendered
the life of its possessor insecure?”[6]


Who indeed? What
has been missing on Indian Reservations from the beginning has been good
governance, assurances that life, liberty, and property would be protected by
the government, not taken by it. The cost of poor governance has been enormous.
According to one Treasury Department study, Indian Reservations should have
received $44 billion more in investment than they actually have. Other studies
have come to comparable conclusions.[7]


Much of the blame for
the investment deficit falls squarely on the federal government. “We must act
with vindictive earnestness against the Sioux,” General William Tecumseh
Sherman told President Grant, “even to their extermination, men, women, and
children. Nothing less will reach the root of the case.” But one does not have
reference the Trail of Tears, Bad Axe, Bloody Island, Sand Creek, Bear River,
Skull Valley, Fort Robinson, Wounded Knee, hundreds of lesser known massacres, or
even the Cobell case against the
Department of the Interior to show that the federal government behaved in a
predatory manner toward Native Americans. Even more insidious was the
reservation and government trading systems that developed over the nineteenth
century because they bred dependence, a point well understood by astute
contemporaries. Indian commissioner E. A. Hayt argued from his experience in
the mid-1870s that “civilization” had “loosened” and in some cases even
“broken, the bonds that regulate and hold together Indian society” but the federal
government had failed to fill the resulting power vacuum. As a result, “women
are brutally beaten and outraged; men are murdered in cold blood … and schools
are dispersed by bands of vagabonds; but there is no redress.”[8]


An Indian agent complained
in 1880 that while the government stood idly by traders exploited Native
Americans on both ends of trades, charging too much for manufactured goods and
crediting too little for Indian wares, a common expropriation technique of
predatory leaders and their cronies throughout the globe to this day. Other
agents and newspaper reporters evinced similar sentiments, rendering the common
complaint that Native Americans were “disinclined to work” unsurprising. By the
1910s, Native Americans in South Dakota had been thoroughly pacified, “partly
through kindness and partly through fear” in the words of one Dakotan farmwife.
Yet predatory pacification policies persisted for decades thereafter. Land
allotment and inheritance policies, for example, rendered Indians’ lands less
valuable than they would otherwise have been by dividing ownership among
hundreds or even thousands of descendants. In addition, the over 11 million
acres of Indian lands still owned in trust by the U.S. government are not
available to collateralize loans. The reason for the trust arrangement, like
the rationale for most aspects of Indian policy, was deeply racist and paternalistic:
don’t let Indians run into debt or they will surely lose their lands. But the
policy had the effect of cutting Native peoples off from a major source of
startup capital, keeping them dependent on the government and non-Native
businesses for employment except in the rare instances when other collateral
was available. Tim Giago obtained initial funding for his newspaper, for example,
by putting up a classic automobile as collateral. By the 1950s, so-called “termination,”
a process by which the federal government no longer recognized tribes, had
replaced physical annihilation but the effect on incentives was nearly as
negative. The Klamath tribes, for example, lost 1.8 million acres when they
were “terminated” in 1954 and their lands were not returned when federal
recognition was restored in 1986.[9]


Most interaction
between native tribes and government occurs at the federal level but state and
county governments have also generally governed Reservations poorly in several
important realms of responsibility, including criminal justice, transportation
and other infrastructure, income redistribution, taxation, and business
regulation. Government policies at all levels create a vicious cycle of low
expectations, high unemployment, and low wages that cannot be broken solely by
economic forces. According to certain neoclassical economic models, the high
levels of unemployment endemic on most Reservations should attract capitalists
eager to tap a cheap, easily replaceable workforce. It has not, however, worked
out that way on most Reservations. In the postwar period, for example, several
businesses tried to establish factories on South Dakota’s Indian Reservations, most
of which then as now were among the poorest of the poor. Some lasted for
several years but all eventually failed or moved away, including a meat packing
plant, a bison ranching and slaughtering operation, and factories for making
arrows, dolls, electrical circuits, fish hooks, moccasins, and shirts. The
state’s Employment Security Department, for example, expected big things of the
Wright & McGill Fishing Tackle Company, which set up operations on the Pine
Ridge reservation in 1960. Wright & McGill is still around but shuttered
its Pine Ridge facilities in 1968. It turns out that businesses do not seek low
wages per se, they seek high levels of productivity, of output per dollar paid
in compensation. Unsurprisingly, uneducated, unmotivated Natives did not on
average produce enough to justify even their low wages, so manufacturers moved
on.[10]


More recent attempts
to improve life for Native Americans has in a way reinforced their dependency
by raising incomes without necessarily sparking development. The gambling,
gasoline tax, and tobacco tax regulatory advantages of native tribes helped to
relieve some poverty but in some ways replicate natural endowment curses. Oil
and other endowments raise per capita incomes but stymie development by allowing
and even encouraging governments to remain predatory by fueling corruption. Tribes,
like other nations, are best off when they begin to tap endowments after
developing well-checked and balanced non-predatory governments. Of course the
BIA and corporations have ensured that Natives would rarely face such a problem
by stripping the Black Hills from the Lakota, fleecing the Navajo nation of the
majority of its reserves, and similar acts of predation.[11]


Wealth without
development alleviates poverty but only temporarily. Casinos have brought
wealth to a few tribes near major urban centers but what happens when gamblers
start visiting the rapidly growing number of alternatives? Or if gambling
enters a secular decline, as has happened several times in the past? (Thankfully,
several well-governed tribes have used gambling profits to diversify into
other, less volatile businesses.) And what happens when hybrids and electric
vehicles mean fewer trips to the gas pumps? Or if Congress revokes one or more other
tribal regulatory advantages? Rather than regulatory advantages or natural
resource endowments like water, fossil fuels, minerals, or timber, the
improvement in economic conditions on many Reservations since the mid-1990s is
best attributed to the Self-Governance Act of 1994 because after its passage all
Natives faced a federal government somewhat less capable of predation.[12]


The
self-determination movement, however, brought problems of its own. Tribal governments
are less predatory than federal, state, and county governments but many tribes do
not have the capacity to protect the lives, liberties, or properties of
individual Native Americans sufficiently to induce those individuals to invest
in their own education, health, or other aspects of their human capital. “Prolonged
federal paternalism,” explained The Harvard Project on American Indian Economic
Development in its recent book, “has resulted in underdeveloped institutions
and in tribal leadership that is ill-prepared to lead fully sovereign
communities.” Internal disputes and jealousies do not help matters. “So many
times,” explains Rosebud Reservation entrepreneur Wayne Boyd, “our tribal
governments enact laws that counteract economic development.”[13]


Moreover, many tribal
governments have yet to enact the basic laws or court precedents needed to
assure financiers and entrepreneurs that their successful efforts will be
fairly rewarded. Most tribal constitutions do not explicitly bar impairment of
contractual obligations and have not included ex post facto stipulations in their
constitutions. Many tribes have yet to create separation of powers between
their courts and their legislative tribal councils, and suffer for it with
higher unemployment rates. Most have yet to enact the UCC and many lack zoning
ordinances or land use plans. Those that have find effective implementation
challenging. Many tribes also lack checks and balances rooted in traditional
governance practices, largely because many adopted, or were forced to adopt,
the weak cookie-cutter constitution proffered in the 1934 Indian Reorganization
Act. Constitutions imposed from on high, or from outside of domestic political
traditions, did not work in Latin America or most other places. Checks against
undue power come in many varieties, not all of them de jure or conjured up by
the U.S. Framers. When it comes to checking predation, substance trumps form
every time. Natives need to find what checks work in their society and
implement them.[14]


One would expect
to find little in the way of finance, large scale innovative entrepreneurship,
or modern management on the worst governed Reservations and one would be right.
The first native controlled credit union on the Pine Ridge Reservation, Lakota
FCU, was approved just a few months ago and is slated to begin operations in
Kyle this month. Pine Ridge is hardly an outlier in this regard as a Treasury
department report released in 2001 found that only 14 percent of Indian Reservations
had even a single financial institution to serve their communities. Over a
third of Native Americans had to travel at least 30 miles, mostly on dirt
roads, to reach an ATM or bank. In 2008, the 561 federally recognized tribes
owned only 21 FDIC insured banks. Little wonder then that when Natives need to
borrow, most must resort to loan sharks or other uber-expensive types of lenders.[15]


Native-owned businesses
have increased in number in the best governed areas but overall
entrepreneurship is lacking. In fact, native Americans own private businesses
at the lowest rate per capita of any group in the United States. When the
Lakota Fund, a micro-finance lender, was established in 1985, there were fewer
than 40 registered businesses on a 2 million acre reservation, and most were
owned by non-Natives. The situation has since improved but in 2006 only about 5
percent of the working age population in the Rosebud and Cheyenne River
reservations were engaged in formal entrepreneurial activities and more than
half of all businesses operating on or near those reservations were owned by non-Natives.[16]


Numerous
replicative unregistered nano-enterprises owned by natives operate in the
underground economy, as is typical in Third World nations with chronic double
digit unemployment and little public confidence in government authorities, but
few innovative or scalable enterprises exist, though interest in
entrepreneurship among Natives has been trending upward since the mid-1990s.
Receiving small liquidity loans from micro-finance lenders helped many beaders,
quilters, nano-retailers, and others to escape the deepest depths of poverty
but in and of themselves are insufficient to transform local economies, in part
because it takes Natives significantly more time and money to register
businesses than it takes non-natives to.[17]


Where tribes have
done well developmentally, tribal governance has been non-predatory and
political power has been sufficiently checked. The Mescalero Apache Tribe, for
example, improved its economy by first changing its constitution to promote, in
the words of Wendell Chino, “more stability.” Chief Phillip Martin of the
Mississippi Choctaw also credits constitutional reform for his tribe’s relative
economic success, which includes enough automobile subassembly, plastics
manufacturing, printing, and electronics manufacturing jobs for every tribe
member who is willing and able to work. Similarly, economic conditions on the
Flathead Reservation in Montana improved after constitutional reforms reduced
tensions between rival tribes. Tribal corporations have done best where not
subjected to political oversight.[18]


There are those
who think, typically silently or between the lines but sometimes openly, that
native peoples simply do not have the desire, smarts, and/or chutzpah to join
advanced economies. We have developed a whole complex of myths to convince
ourselves of this, stories about Native American ecological stewardship,
hunting and gathering subsistence strategies, and economies based on gift
exchange, a lack of private property rights, and even disdain for wealth
accumulation. Slowly, however, old notions of communal or even socialist
Indians are unraveling under an avalanche of archeological data on pre-contact
native lifeways. It is now clear that most native groups were agriculturalists
who farmed everything from corn to fish. Most tribes had clearly defined private
property rights in land, horses, and other possessions, some vested in
individuals and some vested in groups analogous to Western corporations.[19]


The existence of
extensive trading networks is also becoming increasingly well documented.
Pre-Columbian native groups even engaged in specialized manufacturing for large-scale,
long-distance exchange. In Mitchell, South Dakota, researchers like my
colleague Adrien Hannus are uncovering evidence of an extensive factory for
processing bison hides and meat en masse hundreds of years before Columbus was
born. Those goods were then exchanged for pottery from Cahokia – but it isn’t
yet clear, and may never become clear, if those were arms length market
transactions, inter-firm transfers, or something in between.[20]


Of course
ultimately what matters for economic development today are Native Americans’ attitudes towards the market today. Ask just about anyone in South
Dakota and they will tell you that most Reservation Indians are poor because
most are lazy, lying, drunken bastards. Or words to that effect. Unfortunately,
casual observers have the causality backwards. People do what they have
incentives to do. Many casual observers used to think of Mexicans as
sombrero-wearing, siesta-taking, Jose Cuervo-swilling miscreants but after
NAFTA and other reforms improved incentives south of the border those same
observers now express fears that Mexicans are going to “take our jobs.” Ditto
the Irish, nay all Catholics if you want to go down Max Weber’s well worn path
of prejudice. And when is the last term you heard a good Pollock joke? Well,
gosh darn it, Poland got rid of Communism and joined the EU and now it only
takes one Pole to screw in a light bulb.[21]


What I am trying
to say here is that it is too easy to dismiss the potential of entire peoples
by positing a sort of culture of poverty trap. The latest and greatest research
indicates that grinding poverty was not
a cultural trait of Native peoples. Their technology lagged that of their
western European conquerors for roughly the reasons outlined by Jared Diamond
in Guns, Germs, and Steel but their
population densities were at world standards, per capita incomes were much
closer to those of Western Europeans than they are today, and their overall
levels of individual health, abstracted from studies of their bones, may very
well have exceeded those of Europe. Post contact, numerous individual Natives
as well as entire tribes tried to attain riches and some succeeded. Some owned
slaves, others huge ranches or lumber operations, others lucrative energy or mineral
leases. More recently, a few have established fabulously successful casinos.[22]


Many Natives do
profess disdain for wealth accumulation but to a large extent economic
conditions determine cultural attitudes toward the wealthy. In a poor, stagnant
economy, it makes sense to be critical of large wealth because the rich
probably got that way by exploiting others. Thus we have the African “PHD” or
pull him down behavior and the infamous jokes about crabs in boiling water preventing
each other from escaping death and Russian peasants who would rather see their
neighbor’s cattle destroyed than their own herds increased. In most parts of
America, by contrast, social jealousy is expressed differently, as “keeping up
with the Joneses” rather than torching the neighbor’s new Mercedes. In pockets
of rural poverty, like the Reservations, or in urban ghettoes, by contrast, the
only practical way of maintaining community standards is to prevent others from
getting ahead.[23]


What I am
suggesting here is that rather than lamenting, or trying to change, cultural
characteristics, policymakers should concentrate on economic development. The
culture will reform itself as expectations about future household wealth adjust
to improved conditions. It generally takes only a decade or two to see pronounced
improvements in prevailing cultural sentiments. In short, there is no reason to
“kill the Indian, save the man” or to destroy native cultures as they are not inherently
antithetical to development. Most natives want property, and they want it protected.
As American Indian Rides at Door put it: “I want some law or protection whereby
I can always hold that [incidentally oil rich] property intact so that no white
man can take it away from me.”[24]


The question for
policymakers convinced by the growth diamond model is how to credibly commit to a policy of
protecting the lives, liberties, and properties of Native Americans, especially
those living on Reservations. The ultimate goal is to learn what threats to
their lives, liberties, and properties Natives perceive and then to remove
those threats in palpable and permanent ways. The federal government doesn’t
have a very good record of keeping its promises to native peoples and the
record of tribal governments is so far spotty at best. At the very least, governments
at all levels need to reduce uncertainty by creating clear, equitable policies about
land ownership and jurisdictional authority that it can stick to over the
vagaries of election cycles and swings in political sentiment.[25]


Canada may be a place
to begin looking for clues. Our northern neighbors have clearly bested us,
repeatedly, in the realm of financial regulation and in the last few decades
anyway in the treatment of native peoples. Canadian policymakers are not
perfect, as they are the first to admit, but there is much we can learn from
them. Other valuable resources include the recommendations in Robert J.
Miller’s recent book, Reservation
“Capitalism”
and in the Harvard Project’s book. Finally, after federal,
state, county, and tribal governments have become non-predatory, and are amply
checked from returning to their formerly predatory ways, policymakers,
especially at the federal and state levels, have to learn to step aside and
allow economic development to proceed in its own way. Adam Smith was not right
about everything, but he did correctly predict that economic development occurs
where ever and whenever people have confidence that they will be able to be
able to keep the just fruits of their labors. What Natives need most,
therefore, is a climate “conducive [to] economic development,” not “affirmative
entrepreneurship policies.” As Lynn Rapp, an investment advisor and Oglala
Lakota, put it: “In every economy from the beginning of time, the more
governments are involved, the less successful … business becomes.”[26]


Thank you.









Notes














[1]
For more information about the model and more in-depth discussion of specific
cases, see Robert E. Wright, One Nation
Under Debt: Hamilton, Jefferson, and the History of What We Owe
(New York:
McGraw-Hill, 2008), 2-15; George D. Smith, Richard Sylla, and Robert E. Wright.
“The Diamond of Sustainable Growth,” Sternbusiness
(Spring/Summer 2007): 26-29.





[2] M.
A. Thomas, “What Do the Worldwide Governance Indicators Measure?” European Journal of Development Research
22 (2012): 31-54; Martin Cihak, Asli Demirguc-Kunt, Erik Feyen, and Ross
Levine, “Benchmarking Financial Systems Around the World,” (World Bank, August
2012). 





[3]
Lisa Little Chief Bryan, American Indian
Entrepreneurs: Rosebud and Pine Ridge Reservations Case Studies
(Pablo,
Montana: Salish Kootenai College Press, 1999), 36, 39-40; Ian Frazier, On the Rez (New York: Farrar, Straus,
and Giroux, 2000), 73.





[4]
Robert J. Miller, Reservation “Capitalism”:
Economic Development in Indian Country
(New York: Praeger, 2012), 39-40,
46; The Harvard Project on American Indian Economic Development, The State of the Native Nations: Conditions
Under U.S. Policies of Self-Determination
(New York: Oxford University
Press, 2008), 4, 20, 113; William Easterly, The
White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much
Ill and So Little Good
(New York: Penguin Press, 2006); Dambisa Moyo, Dead Aid: Why Aid Is Not Working and How
There Is a Better Way for Africa
(New York: Farrar,
Straus and Giroux
, 2009); Hernando de Soto, The Mystery of Capital: Why Capitalism Triumphs in the West and Fails
Everywhere Else
(New York: Basic Books, 2000); The Harvard Project on
American Indian Economic Development, The
State of the Native Nations: Conditions Under U.S. Policies of
Self-Determination
(New York: Oxford University Press, 2008), 113; Ian
Frazier, On the Rez (New York:
Farrar, Straus, and Giroux, 2000), 277; Duane Champagne, “Tribal Capitalism and
Native Capitalists: Multiple Pathways of Native Economy,” in Brian Hosmer and
Colleen O’Neill, eds. Native Pathways:
American Indian Culture and Economic Development in the Twentieth Century

(Boulder: University Press of Colorado, 2004), 324;  www.econlib.org/library/Smith/smWN0.html;
Tim Giago, “The Failed Policies of the Democrats on Indian Reservations Will
Continue Under Matt Varilek,” Huff Post
(28 Oct. 2012). www.huffingtonpost.com/tim-giago/the-failed-policies-of-th_b_1997978.html 






[6] Albert
Gallatin, Considerations on the Currency
and Banking System of the United States
(Philadelphia: Carey & Lea,
1831), 17; “Manufacturing Corporations,” American
Jurist
(July 1829), 92.





[7]
Robert J. Miller, Reservation
“Capitalism”: Economic Development in Indian Country
(New York: Praeger,
2012), 93; The Harvard Project on American Indian Economic Development, The State of the Native Nations: Conditions
Under U.S. Policies of Self-Determination
(New York: Oxford University
Press, 2008), 130; Lisa Little Chief Bryan, American
Indian Entrepreneurs: Rosebud and Pine Ridge Reservations Case Studies

(Pablo, Montana: Salish Kootenai College Press, 1999), 111.





[8]
Bahman Dehgan, ed. America in Quotations
(Jefferson, North Carolina: McFarland & Co., 2003), 20; Robert J. Miller, Reservation “Capitalism”: Economic
Development in Indian Country
(New York: Praeger, 2012), 34; The Harvard
Project on American Indian Economic Development, The State of the Native Nations: Conditions Under U.S. Policies of
Self-Determination
(New York: Oxford University Press, 2008), 369; Will G.
Robinson, “Digest of the Report of the Commissioner of Indian Affairs, 1877,” South Dakota Historical Collections and
Report
32 (1964): 260; Martha Shirk and Anna Wadia, Kitchen Table Entrepreneurs: How Eleven Women Escaped Poverty and
Became Their Own Bosses
(New York: Westview Press, 2002), 112; Ian Frazier,
On the Rez (New York: Farrar, Straus,
and Giroux, 2000), 7-8; Lisa Little Chief Bryan, American Indian Entrepreneurs: Rosebud and Pine Ridge Reservations Case
Studies
(Pablo, Montana: Salish Kootenai College Press, 1999), 113; Linda
Barrington, “Native Americans and U.S. Economic History,” in Linda Barrington,
ed., The Other Side of the Frontier:
Economic Explorations into Native American History
(Boulder, Col.: Westview
Press, 1999), 33.





[9]
Will G. Robinson, “Board of Indian Commissioners Report, 1880,” South Dakota Historical Collections and
Report
32 (1964): 498; Will G. Robinson, “Digest of the Report of the
Commissioner of Indian Affairs, 1877,” South
Dakota Historical Collections and Report
32 (1964): 268, 271, 385; Jennifer
Malkin and Johnnie Aseron, Native
Entrepreneurship in South Dakota: A Deeper Look
(CFED, 2006), 23; George
Kolbenschlag, A Whirlwind Passes:
Newspaper Correspondents and the Sioux Indian Disturbances of 1890-1891

(Vermillion: University of South Dakota Press, 1990), 20-23; Estella Bowen
Culp, Letters from Tully: A Woman’s Life
on the Dakota Frontier
(Boulder, Col.: Johnson Books, 2007), 207; The
Harvard Project on American Indian Economic Development, The State of the Native Nations: Conditions Under U.S. Policies of
Self-Determination
(New York: Oxford University Press, 2008), 55, 96-99,
102; Alexandra Harmon, Rich Indians:
Native People and the Problem of Wealth in American History
(Chapel Hill:
University of North Carolina Press, 2010), 195-96, 205; Robert J. Miller, Reservation “Capitalism”: Economic
Development in Indian Country
(New York: Praeger, 2012), 44, 94, 121; The
Harvard Project on American Indian Economic Development, The State of the Native Nations: Conditions Under U.S. Policies of
Self-Determination
(New York: Oxford University Press, 2008), 96-97; Lisa
Little Chief Bryan, American Indian
Entrepreneurs: Rosebud and Pine Ridge Reservations Case Studies
(Pablo,
Montana: Salish Kootenai College Press, 1999), 92, 95; Ian Frazier, On the Rez (New York: Farrar, Straus,
and Giroux, 2000), 39-40; William Bauer, “Working for Identity: Race,
Ethnicity, and the Market Economy in Northern California, 1875-1936,” in Brian
Hosmer and Colleen O’Neill, eds. Native
Pathways: American Indian Culture and Economic Development in the Twentieth
Century
(Boulder: University Press of Colorado, 2004), 245; Kathy M’Closkey,
“The Devil’s in the Details: Tracing the Fingerprints of Free Trade and Its
Effects on Navajo Weavers,” in Brian Hosmer and Colleen O’Neill, eds. Native Pathways: American Indian Culture and
Economic Development in the Twentieth Century
(Boulder: University Press of
Colorado, 2004), 113.





[10]
Robert J. Miller, Reservation
“Capitalism”: Economic Development in Indian Country
(New York: Praeger,
2012), 94, 123; The Harvard Project on American Indian Economic Development, The State of the Native Nations: Conditions
Under U.S. Policies of Self-Determination
(New York: Oxford University
Press, 2008), 69-81; Kathleen Ann Pickering, Lakota Culture, World Economy (Lincoln: University of Nebraska
Press, 2000), 17-18. Martha Shirk and Anna Wadia, Kitchen Table Entrepreneurs: How Eleven Women Escaped Poverty and
Became Their Own Bosses
(New York: Westview Press, 2002), 111 mentions the
moccasin factory, which apparently had a putting out system component; 25th Annual Report of the
Employment Security Department of South Dakota
(1961), 17; Ian Frazier, On the Rez (New York: Farrar, Straus,
and Giroux, 2000), 169-72, 250; Sebastian Braun, Buffalo Inc.: American Indians and Economic Development (Norman:
Oklahoma University Press, 2008).





[11]
Ian Frazier, On the Rez (New York: Farrar,
Straus, and Giroux, 2000), 210-11; Kathleen P. Chamberlain, Under Sacred Ground: A History of Navajo
Oil, 1922-1982
(Albuquerque: University of New Mexico Press, 2000), x-xii,
38-40, 92-115. On cigarette sales by Indian tribes, see Philip DeCicca, Donald
Kenkel, and Feng Liu, “Reservation Prices: An Economic Analysis of Cigarette
Purchases on Indian Reservations,” (Working Paper, September 2012) and Jessica
R. Cattelino, “Casino Roots: The Cultural Production of Twentieth-Century
Seminole Economic Development,” in Brian Hosmer and Colleen O’Neill, eds. Native Pathways: American Indian Culture and
Economic Development in the Twentieth Century
(Boulder: University Press of
Colorado, 2004), 81-85.





[12]
The Harvard Project on American Indian Economic Development, The State of the Native Nations: Conditions
Under U.S. Policies of Self-Determination
(New York: Oxford University
Press, 2008), 7-10, 114-16, 121-25, 135-36, 145, 156, 161, 369-72; Lisa Little
Chief Bryan, American Indian
Entrepreneurs: Rosebud and Pine Ridge Reservations Case Studies
(Pablo,
Montana: Salish Kootenai College Press, 1999), 69; Ian Frazier, On the Rez (New York: Farrar, Straus,
and Giroux, 2000), 81-85; Duane Champagne, “Tribal Capitalism and Native
Capitalists: Multiple Pathways of Native Economy,” in Brian Hosmer and Colleen
O’Neill, eds. Native Pathways: American
Indian Culture and Economic Development in the Twentieth Century
(Boulder:
University Press of Colorado, 2004), 318-20.





[13]
Robert J. Miller, Reservation
“Capitalism”: Economic Development in Indian Country
(New York: Praeger,
2012), 119, 126-27; The Harvard Project on American Indian Economic
Development, The State of the Native
Nations: Conditions Under U.S. Policies of Self-Determination
(New York:
Oxford University Press, 2008), 9, 23, 203-212; Ian Frazier, On the Rez (New York: Farrar, Straus,
and Giroux, 2000), 12, 258; Richard Polsky, Boneheads:
My Search for T. Rex
(San Francisco: Council Oak Books, 2011) 96-98; Lisa
Little Chief Bryan, American Indian
Entrepreneurs: Rosebud and Pine Ridge Reservations Case Studies
(Pablo,
Montana: Salish Kootenai College Press, 1999), 79.





[14]
Robert J. Miller, Reservation
“Capitalism”: Economic Development in Indian Country
(New York: Praeger,
2012), 102, 106-8, 120-21, 142-43; The Harvard Project on American Indian
Economic Development, The State of the
Native Nations: Conditions Under U.S. Policies of Self-Determination
(New
York: Oxford University Press, 2008), 19-20, 24, 126-9; Jennifer Malkin and
Johnnie Aseron, Native Entrepreneurship
in South Dakota: A Deeper Look
(CFED, 2006), 51-52; Lisa Little Chief
Bryan, American Indian Entrepreneurs:
Rosebud and Pine Ridge Reservations Case Studies
(Pablo, Montana: Salish
Kootenai College Press, 1999), 36, 41; Ian Frazier, On the Rez (New York: Farrar, Straus, and Giroux, 2000), 190-93.





[15]
Stephanie Woodard, “Pine Ridge Gets New Credit Union on Reservation With ‘No
Other Access to Federally Insured Financial Services’,” Indian Country (31 August 2012); Robert J. Miller, Reservation “Capitalism”: Economic
Development in Indian Country
(New York: Praeger, 2012), 2, 148-49; The
Harvard Project on American Indian Economic Development, The State of the Native Nations: Conditions Under U.S. Policies of
Self-Determination
(New York: Oxford University Press, 2008), 130-31; Ian
Frazier, On the Rez (New York:
Farrar, Straus, and Giroux, 2000), 40-42.





[16]
Jennifer Malkin and Johnnie Aseron, Native
Entrepreneurship in South Dakota: A Deeper Look
(CFED, 2006), 5, 42; Duane
Champagne, “Tribal Capitalism and Native Capitalists: Multiple Pathways of
Native Economy,” in Brian Hosmer and Colleen O’Neill, eds. Native Pathways: American Indian Culture and Economic Development in
the Twentieth Century
(Boulder: University Press of Colorado, 2004),
320-21.





[17]
The Harvard Project on American Indian Economic Development, The State of the Native Nations: Conditions
Under U.S. Policies of Self-Determination
(New York: Oxford University
Press, 2008), 117-121; Robert J. Miller, Reservation
“Capitalism”: Economic Development in Indian Country
(New York: Praeger,
2012), 3, 113, 129; Cary C. Collins and Charles V. Mutschler, eds., A Doctor Among the Oglala Sioux Tribe: The
Letters of Robert H. Ruby, 1953-1954
(Lincoln: University of Nebraska
Press, 2010); Martha Shirk and Anna Wadia, Kitchen
Table Entrepreneurs: How Eleven Women Escaped Poverty and Became Their Own
Bosses
(New York: Westview Press, 2002); Dale Peterson, Storyville USA (Athens: University of
Georgia Press, 1999); Kathleen Ann Pickering, Lakota Culture, World Economy (Lincoln: University of Nebraska
Press, 2000); Ian Frazier, On the Rez
(New York: Farrar, Straus, and Giroux, 2000), 169-70, 220; Jennifer Malkin and
Johnnie Aseron, Native Entrepreneurship
in South Dakota: A Deeper Look
(CFED, 2006), 5, 11-12, 29, 39-41, 49-50;
Lisa Little Chief Bryan, American Indian
Entrepreneurs: Rosebud and Pine Ridge Reservations Case Studies
(Pablo,
Montana: Salish Kootenai College Press, 1999); Kenneth Provost, “American
Indian Entrepreneurs: A Case Study,” (Ph.D. diss., South Dakota State
University, 1991); Duane Champagne, “Tribal Capitalism and Native Capitalists:
Multiple Pathways of Native Economy,” in Brian Hosmer and Colleen O’Neill, eds.
Native Pathways: American Indian Culture
and Economic Development in the Twentieth Century
(Boulder: University Press
of Colorado, 2004), 317-18; Michael J. Francisconi, Kinship, Capitalism, Change: The Informal Economy of the Navajo,
1868-1995
(New York: Routledge, 1998), 81-98, 103-5.





[18]
Robert J. Miller, Reservation
“Capitalism”: Economic Development in Indian Country
(New York: Praeger,
2012), 49-70; The Harvard Project on American Indian Economic Development, The State of the Native Nations: Conditions
Under U.S. Policies of Self-Determination
(New York: Oxford University
Press, 2008), 26, 44-47, 112. For other examples of tribal economic success see
Ian Frazier, On the Rez (New York:
Farrar, Straus, and Giroux, 2000), 78-79, 85-86, 252-53. The characteristics of
successful individual Indian entrepreneurs is very similar to the population at
large: appropriate education, experience, and social skills. See Kenneth
Provost, “American Indian Entrepreneurs: A Case Study,” (Ph.D. diss., South
Dakota State University, 1991); Duane Champagne, “Tribal Capitalism and Native
Capitalists: Multiple Pathways of Native Economy,” in Brian Hosmer and Colleen
O’Neill, eds. Native Pathways: American
Indian Culture and Economic Development in the Twentieth Century
(Boulder:
University Press of Colorado, 2004), 322-23.





[19]
Robert J. Miller, Reservation
“Capitalism”: Economic Development in Indian Country
(New York: Praeger,
2012), 11-16; Alexandra Harmon, Rich
Indians: Native People and the Problem of Wealth in American History

(Chapel Hill: University of North Carolina Press, 2010), 9, 209; Ian Frazier, On the Rez (New York: Farrar, Straus,
and Giroux, 2000), 77; David Arnold, “Work and Culture in Southeastern Alaska:
Tlingits and the Salmon Fisheries,” in Brian Hosmer and Colleen O’Neill, eds. Native Pathways: American Indian Culture and
Economic Development in the Twentieth Century
(Boulder: University Press of
Colorado, 2004), 156-83; Linda Barrington, “The Mississippians and Economic
Development Before European Colonization,” in Linda Barrington, ed., The Other Side of the Frontier: Economic
Explorations into Native American History
(Boulder, Col.: Westview Press,
1999), 86-102.





[20]
Robert J. Miller, Reservation “Capitalism”:
Economic Development in Indian Country
(New York: Praeger, 2012), 10,
21-24, 115-16.





[21]
Ian Frazier, On the Rez (New York:
Farrar, Straus, and Giroux, 2000), 5, 207.





[22]
Robert J. Miller, Reservation
“Capitalism”: Economic Development in Indian Country
(New York: Praeger,
2012), 4-5, 8-24, 29; Alexandra Harmon, Rich
Indians: Native People and the Problem of Wealth in American History

(Chapel Hill: University of North Carolina Press, 2010), 5, 17-54; Jared
Diamond, Guns, Germs, and Steel: The
Fates of Human Societies
(New York: W. W. Norton, 1997); Angus Maddison, The World Economy: A Millennial Perspective
(OECD, 2001), 231-32, 264; P. Willey, Prehistoric
Warfare on the Great Plains: Skeletal Analysis of the Crow Creek Massacre
Victims
(New York: Garland, 1990), 153-75; Duane Champagne, “Tribal
Capitalism and Native Capitalists: Multiple Pathways of Native Economy,” in
Brian Hosmer and Colleen O’Neill, eds. Native
Pathways: American Indian Culture and Economic Development in the Twentieth
Century
(Boulder: University Press of Colorado, 2004), 314-16; Paul C.
Rosier, “Searching for Salvation and Sovereignty: Blackfeet Oil Leasing and the
Reconstruction of the Tribe,” in Brian Hosmer and Colleen O’Neill, eds. Native Pathways: American Indian Culture and
Economic Development in the Twentieth Century
(Boulder: University Press of
Colorado, 2004), 32-44; Nicholas G. Rosenthal, “The Dawn of a New Day?: Notes
on Indian Gaming in Southern California,” in Brian Hosmer and Colleen O’Neill,
eds. Native Pathways: American Indian
Culture and Economic Development in the Twentieth Century
(Boulder:
University Press of Colorado, 2004), 90-111; Linda Barrington, “The
Mississippians and Economic Development Before European Colonization,” in Linda
Barrington, ed., The Other Side of the
Frontier: Economic Explorations into Native American History
(Boulder,
Col.: Westview Press, 1999), 86-102; Daniel H. Usner, Jr., American Indians in the Lower Mississippi Valley: Social and Economic
Histories
(Lincoln: University of Nebraska Press, 1998), 95; Brian Hosmer, American Indians in the Marketplace:
Persistence and Innovation Among the Menominees and Metlakatlans, 1870-1920

(Lawrence: University Press of Kansas, 1999).





[23]
Robert J. Miller, Reservation
“Capitalism”: Economic Development in Indian Country
(New York: Praeger,
2012), 117-18; Jennifer Malkin and Johnnie Aseron, Native Entrepreneurship in South Dakota: A Deeper Look (CFED,
2006), 26; Ian Frazier, On the Rez
(New York: Farrar, Straus, and Giroux, 2000), 12, 218, 238, 241-42, 246,
249-50; Lisa Little Chief Bryan, American
Indian Entrepreneurs: Rosebud and Pine Ridge Reservations Case Studies

(Pablo, Montana: Salish Kootenai College Press, 1999), 38-39, 49, 65-66, 83,
85-86.





[24]
Colleen O’Neill, “Rethinking Modernity and the Discourse of Development in
American Indian History, an Introduction,” in Brian Hosmer and Colleen O’Neill,
eds. Native Pathways: American Indian
Culture and Economic Development in the Twentieth Century
(Boulder:
University Press of Colorado, 2004), 3, 14-15; Jessica R. Cattelino, “Casino
Roots: The Cultural Production of Twentieth-Century Seminole Economic
Development,” in Brian Hosmer and Colleen O’Neill, eds. Native Pathways: American Indian Culture and Economic Development in
the Twentieth Century
(Boulder: University Press of Colorado, 2004), 66-90;
As quoted in Paul C. Rosier, “Searching for Salvation and Sovereignty:
Blackfeet Oil Leasing and the Reconstruction of the Tribe,” in Brian Hosmer and
Colleen O’Neill, eds. Native Pathways:
American Indian Culture and Economic Development in the Twentieth Century

(Boulder: University Press of Colorado, 2004), 28; Brian Hosmer, American Indians in the Marketplace:
Persistence and Innovation Among the Menominees and Metlakatlans, 1870-1920

(Lawrence: University Press of Kansas, 1999), xii, 16-17.





[25]
The Harvard Project on American Indian Economic Development, The State of the Native Nations: Conditions
Under U.S. Policies of Self-Determination
(New York: Oxford University
Press, 2008), 58, 134-35; Lisa Little Chief Bryan, American Indian Entrepreneurs: Rosebud and Pine Ridge Reservations Case
Studies
(Pablo, Montana: Salish Kootenai College Press, 1999), 83.





[26]
Jennifer Malkin and Johnnie Aseron, Native
Entrepreneurship in South Dakota: A Deeper Look
(CFED, 2006), 46; Lisa
Little Chief Bryan, American Indian
Entrepreneurs: Rosebud and Pine Ridge Reservations Case Studies
(Pablo,
Montana: Salish Kootenai College Press, 1999), 68.



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