Native American Poverty as a Harbinger of Things to Come
By: Robert Carlson
Tags: Economy, Unemployment, Native Americans, Poverty, Capital

Native American Poverty as a Harbinger of Things to Come

Access to Capital is Essential

Native American properties are some of the most rural and poverty laden lands inside of the American nation. The reasons for this condition are many and have persisted for many generations of indigenous civilization. Some of the reasons for the persistence of poverty and deprivation harkens to the culture itself. Other reasons are promulgated by the geographic location of the lands themselves. Many of the sources of the poverty and deprivation are legacies of the occupation of the peoples’ lands by settlers from the European continent. Forced relocations of tribes and collections of tribes left them without access to the bountiful waters, hunting and farming lands they once inhabited. They were people in equilibrium with their environment.

This equilibrium was cultivated over centuries of use of the resources and an implicit understanding that they must allow the land to rest after intense exploitation. Exploitation is not really the right word for their paradigm of resource use. They did not fully use it up and move on leaving a wasteland behind as is the image of resource exploitation commonly seen in capitalist endeavors.

Although the moniker of Indian is an error made by the Europeans who ‘discovered’ the flourishing civilizations of people already on this continent, this treatise will use that name as its reference for all the noble indigenous peoples of the North American continent. Where specific tribes and Nations are mentioned, their noble names will be used.

When Indians were in charge of the land and its uses, they needed only the basic resources it could provide. Land provided a place where dwellings could be erected. Land provided the food for animals to eat. Animals were food, shelter and clothing for men, women and children. Land provided a place for trees to grow that could be harvested for fuel and the building of dwellings. Land provided the courses where rivers and streams ran and provided water for consumption and irrigation of crops.

Nothing beneath the surface of the land had any value to the peoples of this continent. They lived on the land and took only what they needed. Their presence was not felt by the land for long periods of time. If they killed too many deer, antelope or buffalo in any one period of time, they knew it was time to move on to somewhere the game was in good supply. They never attempted to deplete a resource so as to attain a tax advantage.

One of the biggest differences between the peoples and the advancing Europeans was that the Indians were in equilibrium with the land. Their numbers were not growing exponentially trying to fill the continent with every conceivable person possible. They were not deriving an income from the building of homes, railroads, factories, mills, etc. Whereas the Indian population was growing only slightly faster than replacement speed, the quantity of settling Europeans was growing both by a birth rate and the continued immigration to the continent. This European growth rate spelled the demise of the indigenous peoples of the land. There was no more of them to immigrate and compete with the Europeans for population size.

Having said that, Indians did not exploit the subsurface resources of this land. It important to say that Europeans did. They knew the value of digging holes in the Earth and pulling out gold, copper, tin, iron ore, and coal. They knew that value could be had cutting down all the trees in the forest to saw into boards, pulp into paper, smoke into coke. They knew the value of clearing thousands of acres of land to plow straight furrows for great distances. They knew the value of drilling holes deep into the land to extract oil and gas. They had a market for millions of acres of cotton, wheat and barley. And when the Indians showed them the tasty crop of corn, they planted a lot of that too.

Nothing was to be allowed to stand in the way of progress. Indians needed to be removed to other places. Railroads needed to follow the natural course of the flattest grades. It did not matter whether it was a mountain or a mere village of skin-tent dwelling locals, it had to move or be moved.

The engine that rolled over all the land and all the peoples was fueled by capital. Nothing happened at the volition of a single man without the massive power of invested capital. The Indian populations did not have pooled capital with which to develop their environments. Indeed, that was never necessary. The peoples walked to a place that had everything they needed and stayed a while before moving on to a new place. Their old places recovered in a few years and became once again useful to themselves or another band of their tribe.

Europeans built to last. They found places to erect a town or a city and accreted more of it every year. When a section of the constructed city or town became antiquated it was razed and built upon again. Every iteration of this building and reconstruction required capital from someone somewhere in order to be possible. Many times it was a private business mogul who sought to immortalize himself or his family name with massive edifices to the glory of his short dance on this planet.

What the Indian tribes lack is capital and the single minded motive to seek and attain a financial goal. The lack of capital is a significant handicap in building a sustainable community for the members of the tribe. The lack of a single minded motive to attain the financial goal is one that only the tribe itself can rate. The biggest dissonance is whether to abandon its long and colorful cultural traditions in favor of having an economic status that provides comfort and security and possibly compromising its communal values.

There are 546 tribal entities recognized by the Federal government within the borders of what is called the United States. There are dozens of institutional structures that compose that number. Some are lands that are recognized as Sovereign Nations. There are lands which are administered by the Department of the Interior, Bureau of Indian Affairs. There are differing laws and treaties that govern the relationship of the Indian people, the land and its resources with the Federal government.

In some instances, the Dept of the Interior actually owns the land and allows the tribe to dwell upon it. If there is an ownership claim by the tribe, and there are natural resources on or under the land, the Federal government manages the resources and pays the tribal members a royalty for it. Mostly, the fees paid to individuals is inconsequential relative to the needs of those people. Like stock holders in a major corporation, one must own a lot of shares in order to live solely on the proceeds of the dividends of the stock. Most Indian people have no such portfolios.

Every resident of Alaska, whether indigenous or otherwise, is entitled to a share of the oil revenues derived from fees charged to ExxonMobile, Shell, Conoco and the other companies that extract oil from the territories of the state. While this payment is nice, it only amounts to about $1200 per person per year. A family of four would get $4800. This is no where near enough to live without a job with a significant wage.

Some tribes are very wealthy. The Seminole tribe in Florida put up $965 million to purchase the Hard Rock Café assets. These assets include casinos, hotels, restaurants and all the logos of the corporation. They earn a lot of money with this enterprise that is derived from non-Seminole people. What made this enterprise acquisition possible? Capital.

The tribe was able through its previous enterprises to aggregate enough capital and borrowing power to place the bid to buy and then derive sufficient income from the investment to pay their creditors and investors. Hard Rock Café has a global reach and few of the jobs with the company are held by Indians of the North American varieties. The locations span the globe and were already going concerns making money for whoever the owner was or might be.

Not every tribe in North America has this same type of opportunity. Whereas some tribes have opened casinos on their sovereign land, most of them are tiny bland venues without major foot traffic to generate the huge revenues the big casinos can. They just do not have the prime locations necessary to be successful. Many of the tribal members are not suited to casino jobs. The demographics of the tribes are such that many of the members are seniors, persons with disabilities, medically frail, abusers of drugs and alcohol. This character of tribal membership is not unique within the tribes or outside them. Every village and town across America has this same composition only with different levels for each. Compounding these negative aspects is the low educational attainment of tribal members. Similarly, there is no long history of working for a wage for a business in the Native American communities.

As one clings to a heritage of hunting, trapping and living off the land as being the valuable aspects of a good life, one necessarily misses out on the wealth building opportunities that make the community collectively stronger. Nobody of any culture can accumulate wealth by subsistence living. If one hunts to eat, there is little left over to sell. While this method of survival may be admirable it is not sustainable beyond the ability of the hunter to hunt. Hunting does nothing to provide for the future.

Receiving resource royalty payments from the Federal government may help buy a few groceries, even if the amounts were tripled they mostly would not provide a sustainable income for a family. The receiving of what amounts to an annuity payment each month is insufficient for the accumulation of capital that it takes to do commerce outside the tribal community.

The Amish families of the American northeast understand that. Even as they eschew electricity and gasoline powered vehicles and farm equipment, they do work collectively to earn money and pool it to buy what they need to continue their lifestyles. When they need construction materials, they can buy them. Their own internal ‘banking system’ makes it possible to retain their earnings and make great interest payment outlays unnecessary to fund a new project. They form a tight community that has both cohesiveness and well trained craftsmen to do the essential jobs in their agrarian lifestyle.

The essential ingredients of their success is local stored capital and local labor. When either of these two items are not in sufficient supply the community begins to fail.

Externally borrowed capital leads to a drain of local resources toward someone who is not part of the community. Capital on which one must pay interest to a distant party is usually better than none at all but it is never as good as ‘keeping it local.’ If a community has to pay for labor it is wisest to employ community members rather than commuting workers that take away the wages from the community. The proviso here is that the community must actually have skilled workers locally who can accomplish the job at hand.

A big detriment to tribal and Amish communities is that they cannot sell their real estate to outsiders for a capital gain. In the tribal instance it is a condition of the government’s recognition of their claim to the land. In the case of the Amish it would be a recognition of the loss of part of their community to sell off the land they cultivated for decades. If anything, the Amish would purchase additional acreage to expand their holdings. Indian tribes are not able to acquire additional acreage for the reservations and have it acknowledged as tribal land. Either way neither culture is able to build capital value with the land on which they dwell. This is a big detriment to the building of capital wealth that members of the community can live on in later years.

Many non-tribal communities were built with external capital but the total per capita income of the community was sufficient to pay the outlays as long as the providers of that capital kept the money in the community and the jobs that went along with it. Local businessmen hired local residents to do the jobs he needed done. There was a symbiotic relationship there. But as the ownership of businesses was aggregated into ever larger conglomerations of business enterprises, the loyalty to local labor was lost. The local businesses never really had to deal with health insurance costs and the burden of funding pensions. Many businesses had lifecycles that matched the lifecycle of the original owner. Sam and Lou’s Barbershop just closed shop when Sam and Lou got too old, sick or died. There was no selling of the business to an investor to continue the trade. Anybody who might have worked for them even for 30 years was just left in the lurch when the business died.

Larger businesses like car dealers, shoe manufacturers, coal mines, textile mills that located in natural locations employed many hundreds of workers. Such enterprises have lifecycles that span several owner lifetimes. The business, the physical plant and the intellectual properties of the business all make value that can be bought and sold. Unfortunately the labor force that worked for the businesses grow old too. Labor has a residual liability in the form of pensions. Such liabilities count against the value of the capital of a business when it changes hands. The decision to keep a business in its current location versus moving away may hinge on the numbers of retired employees that are still being supported by the stored capital of the business and its current revenues.

Fewer communities are supported by locally owned businesses. And even when the owner is local he many times has debt obligations that make the business less profitable and draws value out of the community where the business is located. Suder’s Soft Freeze “Best Food By A Dam Site” in southwest Pennsylvania was operated by Mom and Pop Suder since back in the 1960s. They made a good living on their paid-up mortgage free location serving hotdogs, burgers, fries, shakes, sodas and ice cream to the RV and Camping crowds below the Youghiogheny Dam in Confluence, PA. They only had to sell enough food to cover utilities, supplies and product and their personal incomes.

When Mr. and Mrs. Suder decided to quit the business, they sold the business to their daughter and son-in-law. Now the second gen owners had to sell enough food to cover utilities, supplies and product, their personal incomes and the mortgage payment they owed to the bank for the purchase price paid to their parents. This amount could have been as much as twice as much as the older gen owners had to sell due to the business loan payments. Then September 11, 2001 changed all the rules. The campground was ordered closed for national security reasons. This order decimated the customer base and the food preparation business became unsustainable. It might have been sustainable if the original owners still owned it and had not funded their golden years with the proceeds of the business loan their children have.

First generation business entrepreneurs had it good after WWII when massive economic growth began. They had low-cost locations along new highways, in the small towns along the way and in cities where industrial workers had discretionary income to spend on non-essential items like movies, sno-cones and disposable consumer products. Their experience began with 30-years mortgages at 2%. Then 30 years later when mortgages exceeded 10%, they were all paid up. Their need for capital was over. It was over until the natural decay of everything made it necessary to rebuild, renovate and replace worn out equipment and facilities. Now high-cost capital became necessary once again.

Marginal businesses merely called it quits. They might have sold their business if it was viable in the current economy and in the current conditions. New grade separated highways bypassed the two-lane concrete and asphalt roads beginning circa 1948 and provided new locations at the Exits for those businesses that could afford to move. The first segment of the Eisenhower Interstate system opened in 1957. Those which could obtain capital moved. The rest dried up and blew away.

The treatment indigenous tribes received from the economy has been extended to the remainder of the nation. People who once had valuable jobs and income have lost them. People who started out with a shiny new house now live in a 70 year old house in need of renovations and repair which they cannot afford. Nor can they borrow the funds for lack of income to repay the capital.