Why Are Indian Reservations So Poor? A Look At The Bottom 1%
When customers who live and work on the nearby Crow Indian reservation don’t make their car payments, there’s not much Square One Finance of Billings, Montana can do. Going to state court to repossess the car or garnish wages is not an option. Instead, Square One enters the murky realm of international affairs. The reservation is a separate nation — judgments in American courts can’t be enforced. And the chances of finding the customer and the car on the sprawling rural reservation, or winning in the unpredictable Crow courts, are slim. “We take on such a huge extra risk with someone from the reservation,” says Square One’s Nancy Vermeulen. “If I knew contracts would be enforced, then I could do a lot more business there.”
At a time when there’s a spotlight on America’s richest 1%, a look at the country’s 310 Indian reservations — where many of America’s poorest 1% live — can be more enlightening. To explain the poverty of the reservations, people usually point to alcoholism, corruption or school-dropout rates, not to mention the long distances to jobs and the dusty undeveloped land that doesn’t seem good for growing much. But those are just symptoms. Prosperity is built on property rights, and reservations often have neither. They’re a demonstration of what happens when property rights are weak or non-existent.