NCPA - National Center for Policy Analysis

It's Time to Close the Indian Reservations

February 28, 2003

The chief 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, say critics. This means that Indians have a hard time securing bank loans for housing or business development, because they can't do something other Americans take for granted: put up land as collateral.

  • In the 1990s, according to the Census Bureau, the poorest county in America was wholly contained within the boundaries of the Pine Ridge Indian Reservation in South Dakota.
  • The federal government pumps some $40 million into Pine Ridge every year, and most of the few jobs are on the public payroll.
  • A private-sector economy has not thrived in the area since the days of fur trading and buffalo hunts.

In fact, 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.

Due to these policies, an estimated 90 percent of the reservation's income is being spent off the reservation. About half of the income leaves the reservation within 72 hours of showing up.

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.

Critics say the reservations should be dissolved, and tribal property distributed to individual residents, a policy that was pursued up to 1934.

Source: John J. Miller, "Off the Rez," National Review, December 31, 2002.


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