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Savings & Wealth Accumulation Panel Presentation at the Asset Building: The Perspective of People of Color Convened by the National Economic Development & Law Center Funded by the Ford Foundation Tuskegee University, Alabama October 3, 2005 John L. Phillips American Indian Higher Education Consortium Introduction First of all, I’d like to tell you a little about myself. Although I’ve worked in Indian Country for 8 years now, I am not an American Indian. My family story starts in Korea and has progressed through lower working class America to my work with Native American higher education. For me, higher education was the key out of poverty, and so I that has been a rewarding area of work for me. This morning I want to share with you a bit of information on my research interests and the work that we have been doing at the tribal colleges and universities in savings and wealth accumulation. Some of you may not know that there are 35 triballychartered colleges and universities throughout the country. You’ll find most of these institutions in the north-central region of the US, but also in Montana and the southwest. They have turned an educational model that was historically about acculturation into a model that preserves and strengthens tribal culture. At the same time, these colleges increase access to higher education and improve student retention and graduation rates through higher levels of support and mentoring. I’ll return to the tribal colleges in a bit, but let me first share some background to my research interests. Free agency vs. Structuralism Sociologists and economists have engaged in a long-running debate on the nature of agency, or the free will of individuals. And, as with many of our debates today, some people have camped out at the extremes to make their point. Free agency advocates will tell you that we are all individual economic actors that make rational decisions based on our best cost/benefit analyses. At the other end of the spectrum, structuralists say that we are all embedded in the structures of society and that we have very little free will—that our decisions are all determined by social norms and customs. Poverty: blame the poor vs. blame society In the discussion on poverty, this dichotomy roughly translates into those who would blame the poor for their situation versus those who would blame society. The free agency folks would say that the individual poor make sub-optimum economic decisions while the structuralists would say that societal factors cause the plight of the poor. New institutionalism as middle ground (North): Culture, institutions, and path dependency However, there are some sociologists and economists who are finding some middle ground, and these folks are sometimes referred to as the New Institutionalists (Brinton & Nee, 1998). One of the more notable of these folks is Douglass North, Nobel prize winning economic historian at Washington University in St. Louis. North says that individuals do have some measure of agency, but it only goes as far as social institutions will allow. And these social institutions are products of our culture and history (North, 1990). Relationship to Poverty: North and the Developing World North (2005) uses this framework to explain why countries in the developing world who try to adopt Western models of governance and economics fail to prosper. Many Latin American countries tried to adopt the US Constitution in the nineteenth century but with very different results than our own. Look at Russia’s attempt at the adoption of capitalism after the fall of the Soviet Union and the widespread pillaging of national assets. And consider the current plan to export our version of democracy to the Middle East. In each of these cases, there was or is a failure to understand that indigenous institutions are products of long histories and entrenched cultures. Individuals within these societies are able to exercise free will, but only to the extent that indigenous institutions allowed. They may be able to stand in a line and vote, but that does not mean that there is a democratic society. And that phenomenon works here in the US as well. One can simply think of the intense pressure that immigrant communities feel to give up their cultures of origin and to conform to American society. So, how does all of this related to the topic of savings and wealth accumulation in Indian Country? Describe American Indian Situation: Cornell and Kalt at Harvard Stephen Cornell and Joseph Kalt have taken North’s new institutionalist perspective and applied it to Indian Country. Cornell and Kalt are co-directors at The Harvard Project on American Indian Economic Development (http://www.ksg.harvard.edu/hpaied/). The Harvard Project has three central premises in their work: 1) Sovereignty matters, 2) institutions matter, and 3) culture matters. What they essentially say is that economic development at a tribal level must take into account an understanding of indigenous governmental, institutional, and cultural social structures. And that successful economic ventures must mesh with those indigenous structures. Harvard has many case studies that back this up. Large-scale manufacturing doesn’t work when the indigenous society is based on small sub-tribal units like clans or extended families. Small-scale cottage industries don’t work well when tribal society is based on large-scale collective action. Extractive natural resource management doesn’t work when there is an environmental ethic of sustainability and stewardship. Individual entrepreneurship doesn’t work well when communal values are most important. And so on. The point is here, that we cannot continue to import Western capitalists models of economic development into Indian Country if they are at odds with indigenous institutions. (Note: I don’t mean to use the term “Western capitalists” in a derogatory sense. It simply describes our dominant economic model.) And I believe this holds true with efforts at savings and wealth accumulation at the individual and household level. For these efforts to work, we must understand the indigenous history, culture, and institutions that individuals and households operate within. Tribal College setting and experiences with savings and wealth accumulation So that brings me to the current work that we have done at the tribal colleges and universities. In cooperation with a national partnership called the Native Financial Education Coalition, the tribal colleges are developing and using culturally appropriate curriculum for basic individual and household financial education. I want to emphasize the term “culturally appropriate.” This is curriculum that has been designed specifically for Native America, with input from Native Americans. In some cases, it has been packaged into a product and widely distributed, such as this one developed by First Nations Development Institute and the Fannie Mae Foundation. This one is called “Building Native Communities.” In other cases, individual tribes and some of our tribal colleges, have designed their own curriculum, or modified existing curriculum. Let me give you an example of how culture is addressed within the curriculum. At first when we talk about individual savings, many of our Native American clients will say that this is contrary to their culture of communal property and values of generosity and emphasizing the group over the individual. But, in fact, our curriculum shows that saving is a very traditional Native American value. Historically Tribes were masterful at budgeting and saving their resources to ensure that their needs were met throughout the year. Food crops were harvested and preserved for the long winter months. Seeds were saved for next year’s planting. Meat from the hunt were dried and stored. But we must still appreciate the fact that it is culturally important for many Native Americans to share what one has, even if it is all that they have. For instance, I learned when living on the Cheyenne River Reservation in South Dakota that the Lakota tribe celebrates their birthdays and other important occasions by having a “give away”. At your birthday party, no matter how poor, you give everyone a gift. Now some may try to judge the rationality of giving away everything as a suboptimal economic strategy from a Western capitalist perspective. Yet, from an indigenous perspective, I think this makes quite a bit of sense. By giving, you build and strengthen social capital bonds of reciprocity and trust. The short-term cost of giving becomes social capital banked for the future. And so, in many indigenous communities all across the world, there are no child care costs, no elder care costs, no need for life insurance, disability insurance, unemployment insurance, and so on. Deep supportive bonds of social capital, invested among families and communities over generations, provide these social services. My point here is that we need to be careful of our own cultural lenses when working across cultures, and we need to find ways to build upon indigenous social structures. How might we start to do that? Well, my own research has focused on mapping indigenous social capital networks in tribal colleges and their communities, and trying to understand how best to build upon that social capital. We conducted in-depth interviews in four tribal communities and found that there were varying patterns of social capital, and that these patterns of social activity corresponded to the effectiveness of communitybased tribal colleges. We found that social networks that were more inclusive and less dense corresponded to higher satisfaction in communities and tribal colleges. Communities and tribal colleges that had more exclusive and dense social networks were less satisfied in how things were (Phillips, 2005). This has provided us a strong baseline of data to begin to develop communitybuilding programs that are culturally-appropriate, that mesh with indigenous social structures, and that build social capital. For instance, if we wanted to start a communitywide savings plan in one of these communities, we know the community leaders who can make things happen or stop things from happening. We know how information flows throughout the community, and what community groups work together, who can find resources, and who goes to church together. These multi-stranded relationships comprise the web of the community and it is critical to understand this before one tries to implement a program. Well, I fear that I’ve rambled on a bit too much, so let me try to summarize my thoughts and wrap up. I spoke of individuals defined as actors who have a range of options, but who are ultimately constrained by their social histories, cultures and institutions. And in cross-cultural work, it is critical to understand those social structures if we are to develop programs that work in those communities. We need to develop programs that are culturally-appropriate, that mesh with indigenous social institutions, and that build social capital. It is not enough to ask individuals to start savings accounts and to learn how to manage a budget. Or perhaps to implement tribal IDAs and CDFIs. These implementations will only work to a point, unless they are in-sync with indigenous institutions. How we accomplish those goals will be the challenge. We have not done a very good job at replicating our select successes in Indian Country. Each tribe, each community will be different and will require individual attention. What works in one community may not work in the next. But if we can define some general guiding principles, we may make some progress. References Briton, Mary C., and Victor Nee. 1998. The New Institutionalism in Sociology. Stanford, CA: Stanford University Press. North, Douglass C. 2005. Understanding the Process of Economic Change. Princeton, NJ: Princeton University Press. North, Douglass C. 1990. Institutions, Institutional Change and Economic Performance. Cambridge, UK: Cambridge University Press. Phillips John L. 2005. “The Political Capital of Trustees and Stakeholder Satisfaction At Four Tribal Colleges and Universities." Journal of American Indian Education 44(1):127.