Case Studies of Tribal Governments, Part I

1
Case Studies of Tribal Governments, Part I

• Institutions and Organizations that May Support
  Economic Progress and Those that Do Not

2
Case Study of Montana Reservations

• Despite the standardized constitutional model
  imposed on tribal governments, the result was not
  the same everywhere.
• Consider an interesting case study of the seven
  Montana Indian reservations
• Each has a slightly different form of government
• Some enjoy more economic progress than others
• None appear to effectively link the authority
  given to the tribal politicians or bureaucracies
  with responsibility for the well being of tribal
  members

3
Crow Tribes Government

• Crow constitution establishes a tribal council as
  the decision making body of the tribe, consisting
  of all adult members of the tribe
• Every member of the tribe gets a vote on every
  issue.
• Such a democracy may be desirable in many
  situations, but the main functions of tribal
  government is pursuing and deciding how to
  allocate federal funds and carry out federal
  programs, and for this function, this form of
  government has proven to be very problematic

4
Crow, Continued

• Individual voters have very weak incentives to
  make careful informed votes in a case like this
• First, an informed vote doesn't guarantee that
  the vote will make a difference anyway because
  the policy supported by the vote may not pass
• Second, if it does pass the benefits are shared
  by lots of other people
• Third, just because a vote is wrong doesn't mean
  it matters either since the wrong policy also may
  not pass so it won't matter, and if it does pass
  the costs of the bad decision are shared by lots
  of other people.
• Coalitions form however, in order to pursue their
  interest, and the results in lots of vote trading
  as individuals and groups within the tribe reward
  their friends and punish their enemies.

5
Crow, Continued

• Incentives to monitor the outcome of decisions
  made also are vary weak
• Costs of monitoring those given the authority to
  pursue a policy or spend the federal funds
  allocated for some purpose are born by the
  individual who monitors, but any benefits with
  shared with many other people.
• Crow system has almost no checks and balances.
• Individuals make deals with their friends and
  relatives to trade votes for jobs in programs
  that they gain control of.
• Jobs go to friends and supporters of successful
  political operators, not to the most qualified
• Large amounts of federal funds are misused,
  employment and other records are falsified, and
  fraud and corruption is rampant.

6
Crow Tribes Resources

• Tribal resources are also allocated to those who
  can trade the most votes with friends, not the
  one who might be able to use the resources most
  effectively.
• The Crow reservation is one of the richest in the
  country in terms of natural resources
• e.g., tribe is one of the largest owners of coal
  deposits in the world, and this is excellent low
  sulfur coal that tends to burn clean.
• Also owns large tracts of grazing land as well as
  a lot of land that could be productive in
  cultivation agriculture
• potential tourist revenues are large (e.g., the
  site of the Battle of the Little Big Horn or
  Custers Last Stand is on the reservation)

7
Mismanagement of Resources

• In 1988, the estimated value of Crow tribes
  assets was almost 27 Billion, which came to over
  3.25 million per capita
• Because of the political management of these
  assets, they earned only about 3 million per
  year in the early 1990s, a rate of return of
  about 0.01 per year.
• Note that a bank savings account pays around 3
  per year during that period, and a diversified
  portfolio of stocks probably earned an average of
  at least 7 to 10 per year, so if the tribe could
  have sold its assets and invested the money they
  could increase their rate of return several
  hundred times (a 7 return would be about 1.9
  Billion, for instance)

8
Crow Economy, Continued

• The Crow are also relatively well educated
  compared to most tribes, suggesting that they
  have substantial human capital, but they are
  among the poorest Indians in the country because
  there is virtually no productive economic
  activity on the reservation.
• Unemployment runs around 75, with most of those
  who are employed working for the government in
  the various programs and bureaucracies
• Combination of Federal monies and an unchecked
  political process mean that the Crow's tribal
  institutions are conducive to political transfers
  but not to economic productivity (other tribal
  governments are similar The Navajo are
  notorious, for instance, for the level of
  corruption and resource misallocation)

9
The Flathead Reservation

• Flathead Reservation in Western Montana is made
  up of a confederation of Salish and Kootenai
  tribes
• Developed a significantly different government.
• Adopted a constitution under the Indian
  Reorganization Act, that reflected the model
  concept of government that reformers had in mind,
  but rather than universal democracy, a
  representative democracy or parliamentary
  democracy was created with specialized committees
  as in Congress and the state legislatures
• Also, rather than focusing on political
  competition for Federal government programs and
  revenues, the Flathead tribes moved in the
  opposite direction

10
Flathead, Continued

• In 1944 the tribal council asked the BIA to leave
  the reservation and give the tribe full control
  over tribal lands and other resources.
• Request was rejected, and the BIA continued to
  dominate the tribe
• Tribal politics began to develop along the lines
  of the Crow, with political favoritism and
  patronage evolving, but the tribal council
  remained resistant to the heavy hand of BIA
  trusteeship and the developing tribal political
  process was not popular
• In the 1970s another attempt was made to end BIA
  control
• BIA was viewed as a "smug bureaucracy operating
  without comment, access, or accountability, A
  common judgement is that the Bureau makes no
  contribution at all to the welfare of the tribes."

11
Flathead Escape from BIA Dominance

• In the 1970s, the tribal government started
  implementing structural reforms that would help
  them bypass the BIA, but they also recognized
  that an unconstrained tribal government would be
  detrimental
• Chose to streamline their government system of
  committees, and established a clear chain of
  command that created methods of holding tribal
  leaders accountable for their actions.
• Developed a system of checks and balances and
  separation of powers, including a separate,
  independent, and effective tribal court.

12
Flathead Economy

• Even though the Crow reservation is much
  wealthier in terms of natural resources, the
  Flathead has one of the lowest unemployment rates
  and highest economic growth rates of all the
  Indian reservations in the country.
• Unemployment rate remains above that of the
  country as a whole, but the Flathead tribes are
  among the small number who appear to be moving in
  the direction of true independence for some time
  now, in part because they have developed
  relatively effective tribal government
  institutions and in part because they have
  attempted to withdraw from BIA control

13
Tribal Success

• At least prior to the development of Casino
  gambling, none of the reservations in the country
  were able to develop political environments that
  actually foster sufficient stability to attract
  the kinds of investments in physical and human
  capital that can create an economic environment
  comparable to the U.S. as a whole. But there are
  a few, like the Flathead and the White Mountain
  Apache, that were relatively successful and
  relatively well off.

14
Other Montana Reservations

• The Governmental institutions on the other 5
  Montana reservations lie between the Crow and
  Flathead reservations, with the Fort Belknap
  (Assiniboine and Gros Ventres) and Rocky Boy
  (Cree) reservations relatively more like the Crow
  while the Fort Peck (Assiniboine and Sioux) and
  Northern Cheyenne are relatively more like the
  Flathead, and the Blackfoot somewhere in between.
• Case study of these 7 reservations suggests a
  number of characteristics of reservation
  government that may influence economic progress
  such as stability, an effective political
  structure that includes separation of powers and
  formal decision-making procedures, and fiscal
  restraint

15
Case Study Conclusions, Continued

• List some other things too
• Good leadership, but this tends to be a function
  of the institutional constraints that the leaders
  face
• Shared values, but again, that depends in part on
  the institutional environment
• When people are competing for transfers they are
  less likely to share values
• Shared values also depend on common roots and
  practical experience, which is likely to apply
  for most reservations, although not all
• e.g., The Fort Peck and Fort Belknap reservations
  in Montana are both shared by two tribes, for
  instance, and this is one source of political
  conflict.

16
Conclusions, Continued

• Flathead reservation also has two tribes,
  suggesting that the incentives created by the
  political competition for transfers can overwhelm
  traditional sources of shared values, and a
  political environment that constrains such
  competition can create incentives to cooperate
  and develop shared values
• Flathead tribes' long resistance to the BIA and
  federal government influence in general meant
  that they did not go as far down the political
  transfer path as the Crow or most other
  reservations.
• Case study of the Montana tribes, and other
  studies of other tribes do illustrate that
  economic progress will not arise if the
  institutional environment that discourages
  investments and encourages transfer seeking
  activities.

17
Conclusions, Continued

• Also, those reservations where tribal governments
  have managed to withdraw from BIA supervision, at
  least to a degree, and where the tribal
  governments are then relatively constrained in
  what they can do, tend to do better than the
  reservations that remain under BIA control or
  that have governments that are unconstrained and
  arbitrary.
• Also show that resources, including natural
  resources, are important for economic development
  and growth, but only when the institutional
  environment encourages their efficient use
• A statistical study by Harvard researchers,
  Cornell and Kalt reinforce the point.

18
Cornell and Kalt Study

• Data from 67 reservations to test hypotheses
  about constitutional constraints on tribal
  governments
• Employment measures and the portions of the
  Indians on a reservation earning above the BIA
  defined poverty level were measures of economic
  performance, and hypothesized that
• An independent judiciary that constrains other
  branches of government should improve economic
  performance
• A general tribal council like the Crow's with
  everyone having a vote should reduce performance
• Tribes with a strong executive or a small but
  strong legislature should do better than tribes
  with a general council

19
Cornell and Kalt Findings

• Statistical results appear to support all of
  their expectations, although the impact of
  independent courts was not statistically
  significant (hypothesized sign was correct)
• Tribes with strong Executives had about 4 to 5
  more employment and about 2 more economic growth
  than tribes with large general council
  governments
• tribes with small councils of 7 to 15 members had
  from 10 to 13 more employment and 7 to 10 more
  growth than the large general councils

20
Findings, Continued

• Also concluded that a successful economy is more
  likely if the formal institutions of government
  are relatively consistent with the customs and
  traditions of the tribe, although this contention
  is not easy to test or support
• Tribal government on the Flathead reservation
  does have some precedent within the tribe, for
  instance it is relatively close to what came
  before the Indian Reorganization Act, at least
  compared to the Crow

21
Flathead Governance Before the 1934 Act

• Tribes on the Flathead reservation had developed
  a relatively informal system of governance before
  the Indian Reorganization Act pushed them to
  write a constitution
• Included a council of headmen, and a hierarchical
  system of chiefs, with a head chief and lesser
  chiefs
• Did not have much power, since these tribes had a
  very strong tradition of individual autonomy
• Probably developed these governance institutions
  primarily to deal with the BIA , rather than to
  govern the affairs of tribal members, but by
  creating a government that was relatively
  constrained, with a relatively small parliament
  similar to their council of headmen, it was not
  as dramatic a break with previous institutions as
  the Crow, who went for a tradition of individual
  autonomy to participatory democracy