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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.