National Review: Off the Rez: It's time to close the Indian reservations

'If you want to start a business on the reservation, here's what you have to do," says Mark St. Pierre, executive director of the Pine Ridge Chamber of Commerce, on the Pine Ridge Indian Reservation in South Dakota. "First you have to go to the tribal government to see if there's an appropriate piece of land for you. Nothing's been set aside for business development, so this is harder than it sounds. If you do identify a piece of land, you apply for a five-year lease, which won't help you with the banks because they prefer 25-year leases. Next, your application goes before the tribal land committee, which often doesn't have a single businessperson on it. This part can get very political, and it matters who's in your family. If the committee approves your application, then it must go before the Bureau of Indian Affairs. This is usually a rubber stamp, except that it can take months or more than a year before you actually receive it. If the BIA signs off, you're finally done. And what does it give you? A short-term lease on a bare piece of prairie."

It's no wonder, then, that few businesses get started on the Pine Ridge reservation. The reservation's boundaries box in an area about the size of Rhode Island, just south of the desolate Badlands. Nowhere in its rolling spaces is there a store to buy shoes. There's not a single bank, hotel, or movie theater within its borders, either. Many of its tiny towns don't even have a barbershop. Yet the place is home to about 41,000 Lakota Indians (also known as the Oglala Sioux). They are the direct descendants of Crazy Horse, Red Cloud, and Sitting Bull -- some of the fiercest fighters to roam the Great Plains. Yet none of them can walk into a store on their own reservation and purchase a pair of pants, because nobody sells them.

Most communities of any size have a chamber of commerce building. St. Pierre makes do in just a single room, with two desks, a table, and a dry-erase chalkboard. Sometimes there's nobody around to answer the phone, which isn't a big problem because there aren't too many incoming calls. St. Pierre works hard at what he does -- his chamber has grown to nearly a hundred members since it was founded three years ago -- but it's tough to get recognition. "If there's a chamber of commerce at Pine Ridge, I haven't heard about it," says David Owen, president of the state chamber.

While there may be a chamber at Pine Ridge, there isn't much in the way of commerce. The rez itself is a grab bag of mortifying statistics. In the 1990s, the poorest county in America, as determined by the Census Bureau, was wholly contained within its boundaries. Unemployment is currently at 88 percent. About one-third of its households don't have electricity or indoor plumbing. The place is supposedly dry -- it's against tribal law even to possess a can of Budweiser -- but alcoholism is rampant. The town of Whiteclay, just across the border in Nebraska, isn't really a town at all; it's a glorified liquor stand catering to carloads of thirsty Indians. Traffic accidents are a leading cause of death at Pine Ridge, because of all the drunk driving. The typical Lakota male can expect to live a few months shy of his 57th birthday; women get about a decade longer. In the Western Hemisphere, only Haitians fare worse.

What may be most depressing about Pine Ridge, however, is that it's not unique in Indian country. It's the second-biggest reservation in the nation, and many of its problems afflict other tribes as well. To be sure, a handful of reservations seem to succeed, even among those that don't cash in on lucrative casino operations (and most don't). On the whole, however, reservations are rural slums -- demographic disaster areas in which the economy shows few signs of life. Through a suffocating combination of government meddling, political incompetence, and cultural suspicion, they have let down the very people they're supposed to serve. The problem is so severe, in fact, that the time has come to rethink the whole concept of reservations.

There's certainly no shortage of explanations for reservation failure, and among the most popular is the old grievance of stolen land. When Bill Clinton set foot in Pine Ridge on his 1999 tour of poverty- stricken areas, someone displayed a sign: "Stop Lakota Ethnic Cleansing." It's not entirely clear what the message meant. The most recent example of what might be called Lakota ethnic cleansing occurred more than a century ago, at the Wounded Knee massacre in 1890. That event was certainly reprehensible -- U.S. soldiers were trying to disarm a band of Lakota, fighting broke out, and some 300 Indians, including women and children, were slaughtered. What this sorry incident has to do with economic development in Pine Ridge nowadays isn't obvious, except that the site has become a minor tourist attraction where locals sell their handicrafts to visitors during the warm months. Modern-day Indian activists have done an amazing job of deflecting attention from the real problems of reservation life in favor of turning the events of the past into a morbid fetish. Writing on the most famous locale in the nearby Black Hills, in a University of Nebraska publication called American Indian Quarterly, Lilian Friedberg had this to say: "Mount Rushmore is [our] Bitburg." Listening to other tribal spokesmen, it would seem that the most pressing concern for Indians today isn't a lousy reservation economy that can barely support more than a handful of private-sector jobs, but Atlanta Braves fans performing the "tomahawk chop" during late-inning rallies.

The main problem for Indians on reservations isn't that land was stolen from their ancestors a few generations ago, but that the federal government owns or controls most of the land they live on now. This means that Indians have a hard time securing bank loans, because they can't do something other Americans take for granted: put up land as collateral. Even making improvements to the land, such as building new structures on it, requires a maddening series of applications, reviews, and permits. To complicate matters even further, longstanding federal law encourages tribal governments to charter corporations and run their own businesses -- in essence, to set up a command-and-control economy of tribally owned and operated enterprises, rather than creating a pro- business environment in which entrepreneurs can flourish. At Pine Ridge, the tribe at various times has tried to run a moccasin factory, a meat-processing plant, and a fishhook-snelling operation, among other projects. All have flopped, as government-run ventures are wont to do. At bottom, reservations such as Pine Ridge are socialist enclaves in the heart of a capitalist country.

Indian reservations are sometimes described as sovereign nations, and they are said to deal with the federal government on a "nation-to- nation" basis. Much of this is illusory: Reservations aren't separate countries, their residents are U.S. citizens, and the BIA is contained within the Department of the Interior rather than the Department of State. Yet the notion of sovereignty is a real one, stretching back to the days of the 19th-century treaties, when tribes ceded territory in exchange for a measure of control over reservation land and the promise of material assistance. The tribes are exempt from many state rules and regulations and have considerable leeway to enact their own laws. They have their own courts and police forces. They can also determine their own membership policies. These legal distinctions explain why some tribes sell tax-free cigarettes, as well as the rise of reservation casinos in states that restrict gambling.

The federal government once gave individual Indians clear title to specific tracts of reservation land, but ended the practice in 1934 when it placed the bulk of reservation land into trust. The result was to turn people on the reservations into wards of the state. The federal government now pumps some $40 million into Pine Ridge every year, and most of the few jobs that exist are on the public payroll. A private- sector economy has not thrived in the area since the days of fur trading and buffalo hunts. "When you drive around Indian country, you can just tell which pieces of land are privately owned and which ones are held in trust," says Terry L. Anderson of the Political Economy Research Center (PERC), in Bozeman, Mont. "The private lands are the ones that you can see being put to productive use."

Without clear land-ownership rights, reservation Indians find it almost impossible to secure loans and start businesses. Another financial activity that most Americans take for granted -- getting a mortgage for a house -- is therefore also beyond the reach of many Indians. That's one reason there are so many trailer homes in Indian country: Banks are willing to lend the money for them, because repossession is possible if it becomes necessary. As Pete Homer of the National Indian Business Association explains, "Most Indians just can't use their land to get a business going."

A responsive tribal government could address some of these problems by adopting a uniform commercial code to enforce contracts and provide rules for business transactions. Every state has these codes, which are the guidelines that make investors willing to put their capital to work across state lines. Yet only one of South Dakota's nine reservations has a commercial code that tracks state law, and it isn't Pine Ridge. "I don't understand why the tribes don't want commercial codes," says Tom Leckey, deputy secretary of state. "It would really help their economies. We've tried to convince them of this."

The tribe itself is a major obstacle. A 1997 report by the Harvard Project on American Indian Economic Development highlighted the problem: "Businesses that get interested in Pine Ridge eventually discover that the person they were dealing with is only one player in a large web of rules and political gamesmanship. At any time during the process of permitting a business, officials may delay the process." Just about anybody involved in business development on the reservation can share a story or two about some project that nearly got underway, only to be cancelled after tribal elections, which are often petty spectacles that reveal ancient rivalries (between, say, the family lines of Crazy Horse and Red Cloud) and pit full-blooded Indians against those of a mixed racial background. The president and council members serve two-year terms, and each election cycle sees most of them swept out of office. Even if a few of them wanted to pass a uniform commercial code for the reservation, they don't have enough time to lay the groundwork for doing it. "There's no stability," says St. Pierre. "We have a political revolution every two years." Sometimes it's more often than that. In 2000, a group of protesters occupied the Pine Ridge government building and didn't leave for 18 months -- people who don't work, after all, have a lot of time on their hands.

The Pine Ridge judiciary is another aspect of the same problem, because there is no separation of powers. "The legislative, executive, and judicial [branches] are very interrelated and thus virtually one," complained William V. Fischer, president of the American State Bank of Pierre, S.D., in Senate testimony last June. Judges are appointed by the tribal council and may be recalled at will. Appeals of their decisions don't go to an independent review board, but to the tribal council itself. Imagine the Supreme Court ruling that the new federal campaign-finance law is unconstitutional -- only to have the decision appealed to the law's authors in Congress. This is the situation on Pine Ridge and many other reservations. In fact, experts in reservation economies say reforming this system is one of the most important things tribes can do to spur business development, because investors see themselves exposed to terrific political risks if they have to engage the tribal court system. A study of 67 tribes by Stephen Cornell of the University of Arizona and Joseph P. Kalt of Harvard claims that "simply having an independent judicial system reduces unemployment, on average, by 5 percent."

It would also improve the performance of the businesses already operating on reservations. "We can't collect on bad checks," says Patty Pourier, co-owner of a Texaco gas station and convenience store in Pine Ridge. "If someone bounces a check at one of our stores in Hot Springs or in Chadron (Neb.), we go to the county court and collect on it. That never happens on the reservation. It would if we had an independent business court."

Pourier and her husband, Bat, who is a member of the Oglala Sioux tribe, are the biggest private-sector employers on the reservation, because of their single store in Pine Ridge. It opened its doors in 1990 and began to thrive. Rather than becoming a cause for celebration, Big Bat's, as the store is called, became a target of resentment. "Around here, making a profit is a new idea," says Mrs. Pourier. "The politicians have a warped sense of what a profit really is. Some of them think that all revenue is profit." When Big Bat's burned down last year, the Pouriers replaced it with a larger store. One might think that the local politicians would have lined up for the ribbon-cutting ceremony at the grand reopening, but instead they greeted the Pouriers with a plan to quintuple their rent. The proposed rate increase was based on nothing but the arbitrary judgment that the Pouriers could afford to cough up more dough for the tribe. With the help of the Chamber of Commerce led by St. Pierre, they were able to defeat the proposal -- but this attempt to squelch homegrown capitalism shows the true, discouraging face of the reservation government when it comes to entrepreneurship.

Because stores are so rare in Pine Ridge, an estimated 90 percent of the reservation's income winds up being spent off the reservation -- and about half of it leaves within 72 hours of showing up. Tribal members have to pour an inordinate amount of time and resources into traveling long distances off the reservation for basic necessities that their local economy ought to provide.

Some Indians actually believe that they aren't supposed to get businesses going at all. "There's a persistent question about whether it's culturally appropriate to start a business, and lots of people ask, 'Isn't that a white-man thing?'" says Monica Drapeaux of the Lakota Fund, a non-profit lender in Kyle, S.D. This resonates with the popular myth -- peddled by academics, Hollywood, and many tribal activists -- that traditional Indian societies aren't compatible with capitalism. The free market, in this view, is a Western imposition upon the collective, sharing folkways of indigenous North Americans.

This is utter nonsense. While it may be true that Indians did not develop an intricate set of rules governing property rights, they engaged in plenty of commerce, even before the coming of the white man. Ancient archeological sites have borne proof of extensive trading networks that spanned the continent. Meriwether Lewis -- of Lewis & Clark fame -- described the Chinooks as "great hagglers in trade." The fur-trading empires of John Jacob Astor and the Hudson Bay Company would not have been possible without substantial Indian participation.

What the Lakota must overcome now, however, is a culture that doesn't know work. "Kids grow up around here not even thinking about where they'll start their first job -- their parents and grandparents haven't held regular jobs and it doesn't even occur to them that they should think about it," says Drapeaux. The most basic elements of employment - - showing up on time, dressing appropriately, scheduling time off in advance -- are alien concepts to many Lakota, simply because job scarcity has left huge numbers of them inexperienced at something other South Dakotans, with their 4 percent unemployment rate, take for granted. Chronic alcoholism compounds the problem. "If somebody came here and wanted to open a factory with 50 workers, we wouldn't be able to supply enough people," says Elsie Meeks, a Lakota who lives in Pine Ridge and specializes in reservation development nationwide.

Cornell and Kalt are probably the most respected experts on reservation economies, and they agree that tribal sovereignty is the key to success. "We cannot find a single case of successful economic development and declining dependence where federal decision makers have exercised de facto control over key development decisions," they write. Devolving power away from the federal government and toward the tribes -- as units of local government -- should appeal to conservatives, who have often been hostile to the concept of Indian sovereignty. But Cornell and Kalt don't go far enough. The tribes themselves must devolve power away from their own governments and toward the people these governments are supposed to represent. The most important thing they can do is demand that the land now held in trust be returned to the people. It should be given back -- not to the tribe or its governing council, but to the individuals who make up the tribe. This would mark the end of reservations as we know them, but the time has come for them to go the way of the buffalo: Indians, too, deserve the chance to live an American dream of material prosperity.

Ian Frazier has noted that there were probably never more than 70,000 members of the western Sioux tribes during the Indian wars, but that from this small group emerged a disproportionate number of genuine heroes -- warriors like Crazy Horse, Red Cloud, and Sitting Bull, who fought a valiant but losing campaign against white encroachment, and helped give their people a proud history that all Americans may respect and honor. The next wave of Lakota heroes won't be so famous, but theirs is a struggle that must be won -- a struggle for individual economic rights and against collectivism; a war to end the reservation system as we know it.

The odds are long, but the Lakota may yet prevail. When I visited Pine Ridge in December, I stopped by the site of the Wounded Knee massacre. There isn't much to see -- some barren land, a cemetery on a hill, and a hand-painted billboard describing what happened. For a while, I just looked around. Nobody else was there. Then a car pulled up from the south, and an old Indian man got out. He had one of those bulging noses that comes from too much drinking. We talked about Wounded Knee, and he pointed out a few local features. As our conversation drew to a close, he changed the subject. "There aren't too many jobs around here," he said. I was afraid he was going to ask for a handout. Instead, he offered to sell me a small drum and a dreamcatcher. I had been trying to find something for my kids, but hadn't seen anything appealing. In fact, I hadn't seen much of anything at all -- there just aren't that many stores in Pine Ridge. So we began a negotiation, settled on a price, and shook hands. Then he drove off. Alone again on the rez, I was left with a single thought: It should be this easy for them.