Liberty versus Bureaucracy on Native American Lands.

AuthorLofthouse, Jordan K.
  1. Introduction

    Native Americans suffer from disproportionately high rates of poverty and low rates of entrepreneurship. Native Americans own private businesses at a much lower rate per capita compared to other Americans, and the businesses they own produce less income on average than those of all other racial groups (Miller 2001). As of 2010, 28.4 percent of American Indians and Alaska Natives were in poverty, compared to 15.3 percent for the United States. Many of the most impoverished Native Americans live on federally recognized reservations (US Census Bureau 2011). The poverty on Native American lands may be blamed largely on formal governance structures, including inefficient property rights regimes and excessive bureaucratic governance (Akee and Jorgensen 2014; Anderson and Parker 2008, 2009; Cornell and Kalt 2000; McChesney 1990; Regan and Anderson 2014; Russ and Stratmann 2014).

    One of the most unique aspects of Native American governance is that a dual bureaucracy of federal and tribal officials has broad discretion in the day-to-day lives of many Native Americans. This paper examines the effects of those unique institutions on Native American liberty, governance, and economic well-being. Native Americans, more than other demographic groups, have had their personal liberties curtailed by the formal institutions that govern them. This paper examines how institutional structures on most reservations limit personal liberty and thus impede economic wellbeing.

    Much of the discussion in this paper is general. Institutions and governance vary between reservations, but there are similarities across most tribes that limit the overall economic freedoms of Native Americans. In section 2, I analyze the emergence of the complex relationship between the federal government, tribal governments, and individual Native Americans. In section 3, I illustrate how bureaucratic institutions that govern Native American reservations tend to limit economic freedoms and raise the costs of private enterprise. I conclude with implications that Native Americans will continue to suffer from systematic poverty as long as the bureaucratic institutions continue to restrict economic liberties and raise the costs of private enterprise. II.

  2. The Emergence of the Administrative State on Native American Lands

    One of the most important ways that the federal government and tribal governments interact is through the federal trust system. The modern federal trust responsibility is interpreted as a fiduciary obligation to protect tribal lands and resources, as well as an obligation to enforce federal laws on Indian lands (Bureau of Indian Affairs, n.d.). To understand the federal trust system and other institutions that govern economic life on reservations, it is imperative to understand how those institutions emerged over time. This section details how the federal trust system and the bureaucratic governance structure were formed, and then it examines how the modern system of Native American governance functions in the widest sense.

    The two most important congressional acts that shaped modern institutions on Native American lands were the Dawes Act and the Indian Reorganization Act. In 1887, Congress passed the Dawes Act, also known as the General Allotment Act, which allowed the federal government to allot parcels of reservation land to individual Native Americans. Land that federal officials deemed as "surplus" was sold to white Americans for settlement (Anderson and Parker 2009; Thompson 1997). The Dawes Act stipulated that the federal government would hold allotted land in trust for twenty-five years, meaning that the United States would be legal title holder until individual Native Americans proved that they were "competent" to manage their own land. After the twenty-five-year period, Native allottees would then be given a fee patent, which granted full legal ownership of the land (McChesney 1990). This act was formative for modern federal-Indian relations because it began the federal obligation of holding land in trust for Native Americans.

    The Dawes Act was meant to both assimilate Native Americans into white American culture and to transfer desirable lands to white settlers (Akee, Jorgensen, and Sunde 2015; McChesney 1990). Due to the Dawes Act, large amounts of Indian-controlled land were lost, dropping from approximately 138 million acres in 1887 to about 48 million acres in the early twentieth century. Those lands were lost mainly through coerced land sales, voluntary land sales, foreclosures, and delinquent tax payments (Newton 2005; Miller 2006). Allotment through the Dawes Act did little to improve the economic conditions for Native Americans, and there is evidence that it may have made them worse off in the short term. For example, child mortality increased significantly in families who received allotted lands from 1887 to 1934 (Hacker and Haines 2005). Some scholars have condemned "privatization" through allotment as a detrimental policy, but allotment was not a true privatization scheme. The complex structure of property trusteeship meant that the definition of property rights was incomplete. Because the federal government retained considerable rights over the land, the social gains that would have been possible through privatization were largely dissipated (McChesney 1990).

    In 1928, the Institute for Government Research commissioned a study, later called the Meriam Report, that criticized the Bureau of Indian Affairs' performance during the allotment era. A few years after the report came out, John Collier became the Commissioner of Indian Affairs. Collier was ardently anti-allotment and drafted new legislation based on the findings of the Meriam Report. Collier then persuaded Congress to pass his bill, which became the Indian Reorganization Act of 1934 (McChesney 1990).

    The Indian Reorganization Act has become the foundation of the modern system of tribal governance. First, the act allowed Native Americans who held full legal title to their land to retain the title. Second, the act ended allotment and allowed the federal government to hold land in trust indefinitely. Even today, many Native Americans are subject to trust constraints over alienation, leasing, and encumbrance if their land was still in trust when the Indian Reorganization Act was passed. Third, the act restored some tribal properties that were within the original reservations (Mika 1995; McChesney 1990; Anderson and Lueck 1992).

    During the late nineteenth and early twentieth centuries, allotment and the federal trust system did not enhance the social welfare of Native Americans because it destroyed the informal land rights that Native Americans had for generations. The federal government's attempt to impose alternative institutions with different values, morals, and rules caused Native Americans to suffer economically for generations (Anderson and Parker 2009; McChesney 1990; Roback 1992; Carlson 1981; Williamson 2011).

    From the 1940s to the 1960s, Congress abolished some Indian reservations and removed governmental power from many tribes (Walch 1983). Beginning in the 1960s, the Civil Rights Movement persuaded many federal officials to reverse previous policies, allowing tribes to have more "self-determination" over their own governance. Congress passed the Indian Civil Rights Act of 1968 and the Indian Self-Determination and Education Assistance Act of 1975, but despite those laws, the Bureau of Indian Affairs (BIA) has become highly involved in the...

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