U.S. tried to privatize Native land before – it failed

Elijah Moreno


A response to Terry Anderson’s Renewing Indigenous Economies

Elijah Moreno

Terry Anderson takes issue with the fact that most Indian land in the lower 48 is held in trust by the federal government. He posits that “trusteeship constrains the freedom to trade because trust land cannot be used as collateral to obtain capital investment.” Like Terry Anderson did in his opinion piece, I too will quote Mark Zuckerberg, “when you give everyone a voice and give people power, the system usually ends up in a really good place.” The trust system isn’t perfect, but it helps keep the federal government more accountable for honoring its commitments to Native people. Besides this point, it does not take a PhD in economics to understand why dismantling the trust system is a bad idea. There are four distinct reasons for this:

We’ve tried to privatize Native land before – it failed. See: The Dawes Act of 1887.

What about Alaska Natives? Unlike their Indigenous counterparts in the lower 48, Alaska Natives do not operate under trust status. They are still waiting for economic utopia.

Trust status of land has distinct economic advantages. Ever heard of casino gaming?

Governments don’t need land to raise capital. There are other ways that governments commonly raise capital such as municipal bonds.

Let us explore these four reasons a little more deeply to convince ourselves that Terry Anderson’s idea of dismantling the trust system is a bad idea.

We’ve tried to privatize Native land before – it failed.

While leaning on history of Native people in the United States, Anderson neglects to acknowledge that the same arguments he is making around privatizing Indian land were used to justify a disastrous era of federal Indian policy – that of allotment. Specifically, under the Dawes Act of 1887 tribally-held land was parceled among individual tribal members. According to the Indian Land Tenure Foundation, this resulted in the direct loss of 90 million acres of Indian land. This privatization of land did not work for several reasons that included contracts made under duress and land fractionization meant to undermine Native community structures.

What about Alaska Natives?

The Alaska Native Claims Settlement Act provided both a cash and land settlement to Alaska Native communities. More salient to this discussion is that Alaska Native communities are corporations in structure and reside on land that is not held in trust. Yet, Alaska Natives are still addressing many of the same issues that tribes (who operate under trust status) face: higher rates of poverty, lower educational attainment and greater health disparities compared to the rest of the population. Alaska Natives provide the most concrete example that undermines Anderson’s main point. If privatizing Indian land were panacea to “renewing Indigenous economies,” then Alaska Natives should fair significantly better when compared to lower 48 Natives. This obviously isn’t the case.

Trust status of land has distinct economic advantages.

The trust status of land enables tribes to operate casino gaming enterprises under the Indian Gaming Regulatory Act. Numerous studies have pointed to the positive impact of tribal casino gaming for Native people. Its impact has been found to not only improve income for Native people but also improve several health-related indicators. Removing the trust status of land would remove the foundation (legally and literally) for casino gaming. Casino gaming is just one example of the economic benefit that trust status of land can provide for Native people. Another example is that income earned on reservations is not subject to state income tax which is a principal outlined in McClanahan v. Arizona State Tax Commission (1973).

Governments don’t need land to raise capital.

Most arguments around this topic conflate a tribe’s inability to use land as collateral with hindering economic growth within their communities. Arguments advanced by researchers like Anderson fail to take into consideration that alternative means for raising capital exist that do not require assets as collateral like municipal bonds. Municipal bonds are commonly used as a source of capital by states and local governments. Tribes cannot as easily access municipal bonds as a source of capital. Research by Gavin Clarkson, an associate professor at New Mexico State University, has noted this disparity in tribal access to municipal bonds in the capital market mentioning that, “unfortunately, borrowing on terms equal to states and local governments is too restrictive or generally not available in Indian Country.”

Renewing Indigenous Economies.

Advancing the idea that tribes contemporary economic woes stem from the trust status of their land is quite frankly not the type of overly broad claim I would expect from a well-studied economist like Terry Anderson. Beyond the points I made above, there are additional considerations that help contextualize the economic challenges Indigenous communities in the United States face today. Whether it was “Manifest Destiny,” boarding schools, or forced Indian relocations, federal Indian policy has predominately focused on the seizing of physical capital (land) from Native people and destroying their human capital (culture). Despite this sordid history, Indigenous people across the United States are making great strides in advancing their economies and should be empowered in their efforts. Yes, there are still significant challenges, but it obviously takes time to counteract over 200 years of destructive federal Indian policy.

While Terry Anderson does cite some examples of how certain industries in Indian Country are negatively impacted by operating on trust land rather than fee simple land the remedy to these challenges shouldn’t focus on dismantling an entire system but should focus on reforming aspects of it. The federal government needs to better honor its trust responsibility, treaty obligations and other agreements in place with tribes. Misguided arguments advanced by researchers like Anderson underscores the need for more Native people to pursue economics. It is a field that needs more diversity so that more nuanced and thoughtful research and arguments may be brought forward. More specifically, there is a need for more Native economists who use their research to bolster tribal sovereignty and to defend it from bad ideas.

Elijah Moreno is an Advisor-Researcher at Education Northwest where he provides quantitative data analysis to various Regional Education Lab Northwest research projects including those that support Native Education. He is also a research assistant for the Taylor Policy Group, Inc., a firm that provides economic and public policy research to Native governments, corporations and consortia.

Comments (4)
No. 1-2

You are so right about Natives pursuing fields that need thought, research, defensive knowledge & offensive knowledge in tribal laws and especially laws regarding the land. There are tribal lands that need protection from the oil barons, timber barons, mining, and other minerals plus water. There were no other environmentalist besides Indians and you can believe that the, so called environmentalist of today are not exactly of the same study as the natural environmentalist. We have a majority of society selling out to laws that favor oil & gas companies. Of course with their money, they can buy just about anyone, mostly politicians, and politicians are government. They know every inch of every reservation anywhere, they know if there is water, oil, etc. I would even be suspicious about them building close to reservation land because they can drill down and steal oil, gas, water without protections. Satellite imagery gives them an edge but with knowledgeable allies, we can measure any water, oil, gas, etc. under res land if we also have engineers to read these images. A desperate need to send indigenous kids to these types of studies is very apparent.

David Hollenshead
David Hollenshead

Elijah Moreno, Privatizing Land is equivalent to selling parts of your Nation, to a Semi-hostile Nation. This won't solve the issue of poverty, only development will. If America's First Nations had adequate: Tools, Building Materials, Trucks, Fuel, etc. and freedom from the BIA, then most would address the Poverty & Despair that plague them...