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Tribal governments can both help and hamper economic growth

RAPID CITY, S.D. - Tribal government will have to separate itself from its businesses and support the growth of the private economy before any real economic benefits can be realized, experts said at the April 17 9th Great Plains Regional/Tribal Economic Summit.

Socialistic economies, present on many reservations, are no longer advisable; but a market-based economy, which drives most of the world's economic success, is now preferred.

A tribal government that taxes and imposes fees on private businesses in the attempt to create a revenue stream for itself is also not in the best interest of a reservation's successful business community, attendees heard.

''We are slowly getting into corporate structures and getting the tribe away from running the businesses,'' said Sam Allen, Flandreau Santee Sioux Tribe. The Flandreau Santee imposes a tax on sales by businesses on the reservation, but only the same amount imposed by the state in order to keep the state out of the tribe's business by leveling the playing field.

Panelists agreed that charging large, imposing license and business fees or high tax rates on private businesses is a deterrent to future business development.

A major issue on every tribal government's agenda is the task of building a solid and sustainable economy on reservations, but it seems that each year the same agenda appears with little progress to report.

A stronger voice is rising from the people who work at the grass-roots level, who see the private ownership of businesses as the answer to creating a successful market-based economy.

''Fortune 500 companies reported they made $780 billion in profit; there are 512 federally recognized tribes, what's the difference?'' said Lance Morgan, CEO of Ho-Chunk Inc. and a keynote speaker at the economic summit.

''They have a legal support system, 200 years of government. We have a government imposed on us,'' he said.

Morgan pointed out that on the national level, the federal government is involved in 25 percent of businesses, but tribal governments are involved in 75 - 80 percent of businesses within their jurisdiction.

''They have a free exchange of land; they get the best. We get poor, unstable governments and trust land that holds us back, and the side effects impair the free flow of capital,'' Morgan said.

As a reminder, Morgan pointed out that after World War II, the United States flourished economically while other countries recovered and then switched to market-based economies. The United States moved to a market-based economy in the '80s and then again flourished, but the reservations were locked out of the economic change.

''Money was flowing in the country that was attached to land and equity. We were not getting anything,'' he said.

The economic success of Ho-Chunk Inc. on the Winnebago Reservation is the result of creating a ''fake economy,'' Morgan said. That company is under the auspices of the tribal government, but is not operated by the government and it was driven by forces outside the government.

''Tribally led economies are models for failure,'' Morgan said, comparing the tribal-led economic models with that of Russia.

Experts in tribal economic development agreed that tribal government involvement is necessary, but that the government should not be in the business of operating businesses. On the Cheyenne River Sioux Reservation, tribally owned entities such as a grocery store and the oldest phone company on any reservation in the country are both successful and essential to the reservation.

It may have been necessary for the tribe to own those businesses in order to provide the needed services to the communities involved, because a private owner may not have been able to acquire the capital needed to achieve the necessary size of business.

Larger tribally owned businesses may also act as the anchor for many smaller, privately owned businesses on a reservation, experts said. But the businesses owned by the tribe must be left to operate on their own and separate from the tribal politics, business executives said.

Elsie Meeks, executive director of First Nations Oweesta Corporation, told the group that what she mostly heard from the panelists was about tribal governments, not entrepreneurial ventures.

''Many tribes have not been good at business; private business is more successful,'' Meeks said.