Thursday, September 18, 2014
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First Nations property rights double-edged

By: Robert McGarvey

Winnipeg Free Press

EDMONTON -- President Abraham Lincoln once described the United States as the "last best hope for mankind." Given that this last best hope was tearing itself to pieces in a bloody civil war at that time, the president thoughtfully added a caveat: The Union, as high-minded as it was, was conceived with two original sins -- African slavery and its appalling treatment of aboriginal peoples.

Canadians are smugly superior in regards to slavery, but we conveniently forget our shared original sin with respect to native peoples.

There have been many attempts to solve the "Indian problem" over the decades, including paternal neglect, forceful assimilation, wilful blindness and, more recently, buying First Nations off with the modern equivalent of shiny beads and blankets. Nothing seems to work out as planned; a poisonous legacy continues to haunt us, whether American or Canadian, aboriginal or mainstream.

One idea, however, keeps reappearing -- that of incorporating aboriginal people into the mainstream capitalist system through private property ownership. This idea re-emerged in Canada in the late 1960s in a government white paper that recommended converting reserve lands into private property that would be owned by tribal bands or individual members. More recently, the government's First Nations Property Ownership Act, inspired by a Fraser Institute report prepared by Katrine Beauregard and Tom Flanagan, suggests private property ownership would eliminate aboriginal poverty, elevating living standards to Canadian norms.

Reaction to the act was immediate. Lawyer and Idle No More founder Pamela Palmater asserted it "is not a solution to any of the issues First Nations are facing." The power of "big money" will suck Canada's native populations into the same concentration-of-wealth vortex threatening the global middle class, destroying what's left of indigenous culture.

As this debate on aboriginal property rights intensifies, I am reminded of Tevye in Fiddler on the Roof. In the Broadway play, Tevye overhears two neighbours arguing. As the first one makes his case, he turns aside to the audience and says, "He's right," and then after listening to the other side of the argument, he sighs deeply and says, "And he's right, too."

On the positive side of the property debate, there's no doubt private property has played an important role in the creation of the western middle class and the advancement of western civilization over many centuries.

Private property, a house in particular, is valuable to individuals and families because it's an asset. Why do assets matter? They matter because assets are the institutional vessels within which capital is stored and value accumulates. Private ownership means the accumulating value in property attaches itself to the owner and can be borrowed against, leveraged or sold for a profit.

Ultimately, private property is a social invention that allows humanity to store the financial equivalent of sunlight in a bottle. It is perhaps capitalism's ultimate gift to civilization.

On the other hand, Palmater is also right. Modern capitalism has structural imbalances built into it that are rapidly concentrating wealth and capital. Today, the top one per cent of Americans owns 40 per cent of all assets in the country and takes home 24 per cent of all income. Meanwhile, the bottom 80 per cent takes home only seven per cent of the national income. Shockingly, almost one in five Americans lives below the poverty line.

But, dangerous imbalances aside, many believe private ownership also serves a larger purpose, for it bonds humans into shared ethical systems. Friedrich Hayek, one of the 20th century's most original thinkers, believed the co-operative system we call capitalism is supported by an ethical foundation, and that these ethics, centring in the individual, are the consequence of the mutual ownership of property. For Hayek, these ethical networks are generated automatically with property ownership; indeed, they are "an evolved morality... that created and sustains the extended order."

Private property ownership has played a key role in enabling and enlivening the extended social networks that underpin a modern society. Thomas Aquinas acknowledged this larger social virtue in property in the 13th century: "The institution of private property," he explains, "is an addition to the natural law, devised by human reason to serve the well-being of the human community..."

Although many in the aboriginal community are suspicious of private property, seeing it as another 'white man's trick,' it is important to keep in mind private property has a very long history dating back to Bronze Age Mesopotamia, and its central features can be customized to suit their own needs and ends.

Perhaps Canadian aboriginal leaders could take a leaf out of the Duke of Westminster's book. The duke "owns" almost all the freehold in London, England. London property is some of the most expensive real estate in the world, yet property owners have only leaseholds, not freeholds. Ownership of the property will revert back to the duke's aristocratic estate when the lease expires.

This might not be a bad idea for aboriginal communities. It would allow them to maintain their ownership of traditional lands and yet participate in the full societal benefits of the remarkable social invention of private property.

Robert McGarvey is an economist and co-founder of Genuine Wealth, a Canadian enterprise whose mission is to help the businesses, communities and the economies of nations flourish.

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