EDITOR’S NOTE: The following article is excerpted from Naomi Schaefer Riley’s new book, The New Trail of Tears: How Washington Is Destroying American Indians.
Lucille Brooks is perched at an empty conference table in the neat new office of the sprawling Seneca government building in upstate New York. Dressed in a gray pantsuit and pumps and wearing tasteful pendant earrings and a striking Indian necklace, Brooks looks nothing if not professional. Her bookshelves are lined with thick binders of regulations, but there are few papers lying around. Light streams in through the glass door that welcomes people to the Seneca Nation of Indians Economic Development Company. SNIEDC, as it is known, was launched to help members of the Seneca Nation start businesses, by offering them not only loans but also technical assistance to help them create business plans and grow their already existing enterprises. It’s officially certified by the U.S. Treasury as a Community Development Financial Institution (CDFI).
And yet I see no clients here. After my initial interview with Brooks, I walked by the office several more times during the day. The only people in the office were Brooks and her assistant. The phone isn’t exactly ringing off the hook either. Indeed, this small business incubator hasn’t incubated much at all, Brooks acknowledges. There are a couple of small businesses – a logging company, for instance – that have come to SNIEDC for loans to purchase more equipment. The SNIEDC website lists three clients – a bakery, a Subway franchise, and a company that makes radiant heating technology. But the members of the Seneca Nation seem largely uninterested in or unaware of SNIEDC, now in its 20th year of existence.
SNIEDC loans seem like a perfect opportunity for anyone with the slightest inclination to start a small business. Just a few blocks away, the main streets of the town of Salamanca (2010 population: 5,815) are lined with empty storefronts. Upstate New York has experienced a degree of economic depression for more than half a century, but it’s nothing compared to what you’ll find in Seneca territory. You’d think people would be queued up around the block to take advantage of the opportunities Brooks has to offer. SNIEDC gives out what it calls “micro-loans” of up to $250,000, with no collateral necessary. Indeed, until recently, no one even did a credit check on the applicants. You won’t get a better deal from your own parents.
Truth be told, though, there’s not a lot of entrepreneurial spirit on the Allegany and neighboring Cattaraugus territories. As Brooks explains, “The sense is that the annuities have created an entitlement attitude, and that is the downfall. The annuities have enabled people not to work.” The annuities that Brooks mentions are drawn from casino revenues.
In 2002, desperate to change its financial situation, the Seneca Nation entered into a gaming compact with New York State, which granted the nation the exclusive right to build and operate three gaming facilities. The decision wasn’t an easy one for the tribe. Some people worried that casinos would destroy the culture and traditional religion of the Seneca people. Others worried about its moral impact or worried that Seneca leaders would use casinos to increase their influence in ways that would leave other factions out in the cold. Ultimately, however, in light of the success of other tribal gambling enterprises, there was no other way to go.
The Seneca Niagara Casino opened its doors in 2002, and a luxury hotel followed in 2005. The Seneca Allegany Resort and Casino opened in 2007, and the Seneca Buffalo Creek Casino followed in 2013.
The Seneca Nation has made well over $1 billion in profits off of these facilities. And during the past decade, that largesse has begun to trickle in ever-larger amounts into the hands of the Seneca people. The current annuity for an adult between the ages of 18 and 60 on the reservation is about $8,000, disbursed in quarterly payments. Elders get a larger amount, in a kind of American Indian social security program. Half the money for children under 18 is given to their parents, and the other half is put into a trust. When a Seneca youth turns 18 and can show he or she has graduated from high school or earned a GED, he or she receives a lump sum of $30,000. Those who don’t get a high-school degree have to wait until they’re 21 to receive the money. With each passing year, the annuities get larger, because the tribe invests its earnings.
Government officials and other members of the nation tell me that the best thing most young adults do with this money is buy a new truck. These are kids who have never had very much before; someone hands them a huge check and they clearly don’t know what to do. Store owners report that young people will come in to buy candy and hand over $50 or $100 without expecting any change. These young people seem to have no concept of saving or investing. They’re not unlike lottery winners, who tend to be no better off a few years after hitting the jackpot than they were before. According to the National Endowment for Financial Education, about 70 percent of those incurring a financial windfall lose that money within a few years. There’s apparently something about earning money that makes people less willing to spend it unwisely.
Instead of giving Indians more control over their own land – allowing them to develop natural resources in ways that respect their own views of the environment or to use land as collateral to start their own businesses – we’ve offered them what you might call a loophole economy. We allow Indians to engage in enterprises that we can’t or won’t have in other neighborhoods.
It used to be selling tax-free cigarettes, liquor, and gasoline. Then it was the gaming industry. Now, more states are allowing casinos to be run by non-Indians, and casinos aren’t the source of profit they once were. But never fear. The Justice Department decided in December 2014 to allow marijuana to be grown on reservations – even if the drug is illegal in the state where the reservation is located.
Gambling, cigarettes, alcohol, drugs – who wouldn’t want these businesses to form the economic backbone of their community? In some cases, these businesses have proved very profitable for tribes. For most, though, these are hardly viable paths to economic growth. And they bring all sorts of problems with them.
Deron Marquez, who served as chairman of the San Manuel band of Mission Indians in Southern California from 1999 to 2006, says that the upside of his tribe’s bingo parlor is obvious. The tribe has more money to spend on health care, education, and housing. But the gaming business – particularly the payments that members of the tribe receive from it – has created problems, too. “For anyone in society who has addictive behavior, we are making addiction stronger with per capita payments. We’ve become the enabler.” But even for people who don’t have problems already, Marquez says it’s “hollow money. It’s just a new kind of government program – a tribal government program.”
The results are just like the results of government dependency anywhere. As Marquez notes, “The apathy becomes overwhelming. The payments can create an atmosphere [where] why would you have to do anything?”
— Naomi Schaefer Riley is a senior fellow at the Independent Women’s Forum. This piece is excerpted from The New Trail of Tears: How Washington Is Destroying American Indians. Copyright © 2016 by Naomi Schaefer Riley. Published by Encounter Books.