Dual and Dueling Economies – the American Economy and the ‘National Indian Economy’

It is easy to imagine thousands of Sears and K-Mart stores sprinkled across the country. It took each of these corporations over one hundred years, including many national economic downturns and corporate bankruptcy periods to reach a point that in November 2004 resulted in K-Mart acquiring Sears for a venture encompassing assets worth 11 billion dollars. At all times, Sears and K-Mart had to comply with all federal, state and local laws, and had to contend with substantial competition of other big-box retailers. Again, it took over a century for K-Mart and Sears to obtain assets equivalent to 11 billion dollars.

In just one year—the year 2007—tribal casinos produced over 27 billion in revenue alone. That’s just one year of revenue since this money-machine launched in 1988. Tribal casino customers do not receive product and merchandise like Sears or K-Mart customers do. Casino customers receive perhaps a good time for a few hours, while pouring disposable money straight into slots or worshiping at green felt card tables. Since 1988, in less than two decades, tribal casinos are now bringing in annual revenue worth 150% more than the value of all the Sears and K-Mart assets combined.

When Sears, K-Mart or Wal-Mart comes to town, they have to compete with other retail, play by all the rules, follow all federal and state wage requirements and kick in tons of tax revenue to states and local governments. Their presence in town frequently increases traffic and generates substantial environmental impacts, for which they are held accountable through land use and zoning, and other local government requirements. They do, however, provide a needed resource and contribute to the local economic base. Not so, with tribal casinos.

When a tribal casino comes to town it also generates substantial traffic, creates significant environmental impacts, but it often skates free of this accountability, or taxes, wage requirements, and contributes little to anything for the local economy while it sucks up the disposable income from other businesses in the community. A tribal casino has no competitors, and adds to the legal, economic and social burdens of communities. Tribal gambling revenues do not flow back into the community money stream. Casinos simply pull out the local money, putting nearly zero back.

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Indian casinos are protected by Congress and guaranteed a federal monopoly, unlike say, Wal-Mart, Sears or even other non-tribal gambling facilities that must compete with each other and follow all laws.

There was national outrage over even the possibility that Microsoft was behaving as a monopoly. Neither the federal government nor the American marketplace would tolerate monopolistic business practices so Congress and the federal Department of Justice quickly weighed in to slap Microsoft’s hands severely. One must play fair in America. Competition is the American way. Oh, except Indian casinos and tribal enterprises. The government creates, protects and facilitates a tax-exempt and tax-erasing monopoly to slither into any marketplace and start the local economic erosion.

Where’s the Sherman Anti-Trust Act when needed? And clear “tying arrangements,” ordinarily illegal, between the federal government and tribal economic enterprises completely escape the intent of the Clayton Act. These two congressional tools to preserve a fair and competitive marketplace apparently do not apply to the Class III Indian casino monopolies. Apparently, tribal governments and businesses escape the consequences of the Sherman Anti-trust or Clayton Act consequences. How convenient, and how unfair. We now have a “special preference,” dual economy, siphoning off the country’s primary economy.

Many citizens and head-in-the-sand, coin-operated elected officials have been stunned to learn of the breadth and depth of the tentacles of federal Indian policy. What is this machine? How did we get here? Why is the momentum of federal Indian policy building with such explosive, exponential forces eroding America’s free and fair competitive market system?

A system including more than 560 federally recognized Indian tribes are fully subsidized by tax dollars. Thereafter, tribally owned businesses are exempt from most taxes, and exempt from most state and local regulations. Benefiting from exemptions from regulations that all other businesses must obey, and profits from sales of goods and services at lower, non-taxed rates create significant advantages for tribal businesses over similar non-tribal businesses. And, of course, the abundant tribal contributions to political parties and elected officials provides incentives for elected officials to protect an ethnicity-based economic engine eroding one community after another across the country.

The fact that millions of Americans now face the economic, jurisdictional and quite possibly judicial takeover by tribal governments, of their communities and local government, is testimony to the escalating powerful fallout from the Indian Gaming Regulatory Act. Unlike the century of effort of Sears and K-Mart, IGRA-driven political pressure works swiftly. Even Wall Street has now come courting the monopolistic tribal industries.

An aggressively marketed Tribal Wealth Management conference was held In November 2004 at the Seminole Indian’s Hard Rock Hotel in Tampa, Florida. “Co-chairing” this event was none other than Lehman Brothers, Merrill Lynch, and Hughes Hubbard & Reed. The pre-conference hype included competitive advantages of Indian tribes such as being:

  1. Exempt from taxation
  2. Exempt from most federal, state and local regulations
  3. Protected by “sovereign immunity.”

Indian tribes are being encouraged to diversify casino profits into a range of new business enterprises. Never mind that tribal families for the most part are still living in poverty, squalor, oppression and fear. Most tribal families have no wealth to manage; but obviously someone does – tribal leaders and the Indian lobbyist industry.

Considering that the wealth of these tribes is grounded upon annual federal (taxpayer) dollars and a congressional economic monopoly, some very serious questions need to be asked.

  1. Is it appropriate for American taxpayers to continue subsidizing Indian tribes to a point where they may use additional profits for foreign direct investments?
  2. In the current time period of homeland security difficulties and questionable conduct of many foreign countries, will somebody be watching as to which foreign countries tribes choose to invest, and for what purposes?
  3. Is a dual economy – one national, and one “Indian,” operating under very different and advantageous rules, in the best interest of America’s marketplace?

The National Congress of American Indians (NCAI), and other national tribal-related entities are pushing to create a National Indian Economy. This is apparently the new national goal. Are we now segmenting out America’s economy by race and tax-status? The tribal wealth management conference is a brazen thumb in the eye to a very generous America.

For Congress to intentionally grow a dual economy creates a situation where one very prosperous (tribal, non-taxpaying) economy is being fueled and subsidized by American taxpayers to the direct loss and erosion of the primary, (taxpaying) economy. This economic train wreck is rapidly bleeding out far beyond just unfair competitive advantages in gambling. The first victims are small rural, tourist-oriented communities. Now tribal enterprises, able to rely upon federal subsidies for all basic needs, can move forward with profits to erode the American marketplace in a range of new areas — hotels, golf courses, marinas, shopping centers, gas stations, cigarette and fireworks shops — a list limited only by imagination. Communities that spent decades developing a local tourism industry are the first targets to have that industry hijacked by a tribal casino.

Tribes poised for expansion into foreign direct investment should first be tribes that no longer have unemployed poverty populations, or require annual federal subsidies, shouldered on the back of American taxpayers. This is a particularly troublesome area when prominent writers in Indian Country Today newspaper and other Indian media refer to the rest of America as “the enemy.”

American Indians have been full citizens since 1924. It is one thing to balkanize the country with separate Indian reservations and private, tribal governments. It is quite another thing to balkanize and promote separate economies, untaxed, and taxed; the former dependent upon the latter.

No wonder Chief Justice Thomas calls federal Indian policy schizophrenic. The severe schism between the principle of equality for all, and race-based federal Indian policy is a disease now quickly spreading throughout America’s economy.

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