Little Biz on the Prairie
By Robert E. Wright, Nef Family Chair of Political Economy, Augustana University
For West River History Conference, Rapid City, So. Dak., 13 October 2017
My
book about the history of entrepreneurship in South Dakota, Little Business on the Prairie, has two
themes relevant to this conference. The first is that South Dakota has an
unusually strong record of entrepreneurship, proprietorship, and
self-employment in part because it always has. The second is that taking the
Indian’s land was not the worst thing that Euroamericans did to them, stripping
them of their entrepreneurial heritage was.
History
tells me that I better talk a bit about entrepreneurship. Specifically, last
year at the annual South Dakota book doohickey held in Brookings a woman
straight up asked me how the word was pronounced and what it meant, pointing at
it in the subtitle of my book. “No wonder it has only sold a few dozen copies,”
I thought to myself. Will Baumol, my good, now deceased friend from New York University’s
Stern School of Business, where I used to teach courses in business history,
always said there were three types of entrepreneurship: innovative,
replicative, and exploitative.
The
first type is what people usually think of as entrepreneurship: inventors,
business innovators, and what not. You know Thomas Edison and Elon Musk types.
South Dakota has had its fair share of inventors and business innovators. A
good way for history buffs to while away an afternoon is to look through the
old patent records by using Google’s advanced patent search engine and the
names of inventors mentioned in my book. Unfortunately, researchers still
cannot systematically search patent applications by state for patents filed
before the mid-1970s. I found the ones in my book the old fashioned way, by
digging around.
South
Dakota has also had its fair share of exploitative entrepreneurs, though
perhaps none as famous as the fictional Tony Soprano, the most recognizable
exploitative entrepreneur, who make a living by raid instead of by trade, by
taking rather than making. The so-called Wild West was full of sundry bank
robbers, desperadoes, gunslingers, and so forth. Some Indians were exploitative
entrepreneurs, too. The most well-known example is the massacre and slave raid
at Crow Creek circa 1350 AD.
But
most entrepreneurial activity in South Dakota, both before and after Columbus,
was replicative. Replicative entrepreneurs extend existing techniques and
technologies to new geographical areas, so almost all agriculturalists,
butchers, dentists and doctors, fishers and hunters, photographers,
shopkeepers, and all other proprietors engage in replicative entrepreneurship.
Their employees and government workers are the non-entrepreneurs according to
Baumol’s typology, which is the one I use because it’s the best.
Previous
typologies made lame distinctions between, for example, legal and illegal
enterprises. Well, a gambling establishment or a brothel in Deadwood, though
illegal, is just replicative entrepreneurship because the patrons willingly pay
for the services offered. A legal monopoly, by contrast, Baumol rightly
categorizes as exploitative because it has the power to set prices or
quantities to maximize its profits at the expense of buyers.
So
we can now turn to the proposition that South Dakota has always been very
entrepreneurial. We know that because big businesses were few and far between
in the state from its inception as a territory to the present. Eventually
mining companies like Homestake supplanted individual placer miners and the
timber and food processing industries spawned or attracted companies that
employed hundreds of people. Nevertheless, more of South Dakota’s income comes
from proprietors than any other state. Throughout history, relatively few South
Dakotans were employees and most of them were employed by very small businesses,
from ranchers to small retailers to professionals.
The
relatively strong entrepreneurial presence in early South Dakota attracted yet
more entrepreneurial types, whose very example helped to spur even more to form
their own businesses. A few entrepreneur-driven companies, like Raven, became
very successful and relatively large but many entrepreneurs were happy just to
make a living and moved on to new endeavors as the economy transformed away
from extractive industries like mining and ag and into trade, light
manufacturing, and professional services. Those people, called serial
entrepreneurs, that is S E R I A L not C E R E A L entrepreneurs, sometimes
became public or private sector employees for awhile before growing tired of
bosses or co-workers and struck off on their own once again.
In
most states, economic recessions led to high rates of unemployment but in South
Dakota laid off workers tended to simply go into business for themselves. An
exception was during the Great Depression and that was because there was no
money to start up a new business as most banks that hadn’t failed during the
agricultural recession of the 1920s failed during the great bank failure waves
of the early 1930s. And the remaining banks were not about to finance new
businesses that would not be able to find paying customers.
As
I already mentioned, the book makes a big point about Indians. If you believe
in the theory of conquest, the big crime was not taking their land, it was
denuding them of their entrepreneurial heritage to the point that today some
Indians themselves believe that their ancestors were somehow non-economic
entities. In fact, Indians, including the Lakota, had a long history of
entrepreneurship well before Columbus sailed the ocean blue, so the kids in
South Park could have a day off “skoo.” In addition to exploitative
entrepreneurship like that at Crow Creek, Indians were innovative and
replicative entrepreneurs as well. From the time they arrived in the New World
some 12,000 or more years ago until incarcerated on Reservations in the late
nineteenth century, Indians were thriving. One piece of evidence of that is
that they populated both North and South America lickety-split. And their bones
look good, better than those of Europeans over most time periods.
Innovative
and replicative entrepreneurial activities include the Mitchell site, which
apparently was a factory that produced pemmican from bison and prairie berries
that was then shipped down the Big Jim and Mighty Mo rivers in bull boats to
Cahokia, near present day St. Louis, where it was traded for pottery. Other
evidence of long distance trade also abounds. It turns out that those trading
meets held throughout the West were not the idea of Euroamerican trappers, as
once assumed, but long-standing and purely native institutions analogous to
European trade fairs.
‘Tis
true that Indian technology lagged behind that of the Europeans in some ways
but that does not mean that it was stagnant. Atlatls, for example, eventually gave
way to bows and arrows. Moreover, Indian medical technology was well ahead of
its European counterpart in many ways. It was the Europeans, after all, who
didn’t bathe very often and who thought everything could be cured with a good
dose of mercury and a blood-letting.
As
Jared Diamond pointed out some 20 years ago now, the Europeans were able to
conquer the Indians due to guns, germs, and steel. The germs were pure luck of
the draw, the steel due to Eurasia’s relatively huge market area and hence
relatively more advanced division of labor, and the guns due to the European’s
proclivity for warfare, which was in turn a function, Diamond explained, of its
funky geography, which lent itself to the creation of numerous competitive
polities and hence lots of warfare.
The
point of all this is to show that Indians were not unusually dumb or lazy, or
uninterested in technology or entrepreneurship, they simply found themselves on
a part of the planet that was not the best suited to inventing guns or steel
first. For that, they suffered the loss of their land. As I mentioned before,
that taking is somewhat justified by human history. The Lakota themselves drove
off other indigenous peoples, for example.
But
what is unconscionable, and the second theme of Little Business on the Prairie, is stripping Indians of their
willingness and ability to engage in entrepreneurial activities. The Bureau of
Indian Affairs is the main culprit here as it has essentially created socialist
enclaves throughout the U.S. in the form of Indian Reservations. It created a
system of socialized medicine and education and denied Reservation Indians the
right to own land in fee simple, which is the way most Americans do. It even
mandates acceptable signage, which is why most of the few native-owned
businesses on Reservations do not have appropriate signs to indicate their existence.
To
make matters worse, various Left-leaning anthropologists in the 1950s and 1960s
managed to convince some Indians, particularly Lakota, that their ancestors
were eco-friendly communists. Yeah, they often used all of the bison but do you
think that any part of cattle or hogs or chickens go to waste today? Heck no!
Does that make Morrell’s an eco-friendly communist? Heck no! In fact,
individual Lakota were extremely entrepreneurial, until that spirit was sucked
out of them by generations of welfare programs deliberately designed to
infantilize them. Of course such policies all began, in the Dakotas anyway, in
the late nineteenth century. The problem is that we allow them to persist and
then blame the Indians themselves, or their culture, for the extreme poverty
still found throughout much of Indian Country.
When
Tom Isern, a North Dakotan scholar, reviewed my book, he chastised me for
asserting that all the Indians need to thrive is the ability to borrow money to
form small businesses and otherwise to be left alone. I really do not
understand his criticism as Indians have always taken advantage of economic
opportunities until they are snatched away, usually by the BIA. From natural
resource exploitation to tax-free smokes and gas to casinos, Indians know how
to make a buck or two, or two billion in the case of some well-placed casinos. Leave
them alone, let them borrow money when their ideas merit it, and they will do
just fine, just like all other South Dakotans will, from immigrant Norwegians
to immigrant Germans to immigrant Ethiopians. South Dakotans don’t need fossil
fuel fracking to thrive, as they can summon corn from the ground, balloon
companies out of thin air, and tourism out of Chinese birds, old bones, and
just about anything else you can think of!
Thank
you.
Any questions?
