Why do Property Rights Matter for Generating Wealth?

One of the main arguments in my book, Beyond the Indian Act: Restoring Aboriginal Property Rights, co-authored with Tom Flanagan and Andre Le Dressay, is that property rights can be a powerful tool for fostering economic development on Canadian Indian Reserves (but in no way is it a panacea nor will it be appropriate for all First Nations). Here’s a very good primer on why and how property rights can generate wealth.  (read the op ed and check out the marginal revolution university video).

Private Property Rights on Reserves

According to a recent Globe and Mail article:

“The Conservative government will introduce legislation that would allow first nations members living on reserve to own their property, a radical change that aims to spur economic development in native communities that choose to embrace the new law ….

The act would potentially affect more than 366,000 natives living in more than 600 first nations communities, comprising some 2.7 million hectares of land. However, each first nation would be able to choose whether to introduce private property onto reserves….

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“We intend to move on our commitment to implement legislation to allow on-reserve property rights,” the [federal government] official confirmed. “There is solid support from first nations for this and we’ll work with them.” There is no word on when the government intends to introduce the bill.”

I’ve written about this issue before here and in other places, and in general I think this type of policy experimentation and reform, especially when it comes from the bottom-up, is worth exploring.

What puzzles me about this debate is the fierce and widespread opposition to the legislation among a number of Indigenous groups.  According to the same Globe and Mail article:

“The move is strongly opposed by many chiefs, including Shawn Atleo, who was re-elected in July as National Chief of the Assembly of First Nations.

Band councils fear that, beyond offending traditional communal approaches to land ownership, transferable property rights could lead to non-natives taking control of land on reserves.”

I haven’t seen the draft legislation so I have no idea what’s in it.  But we, and others, have long argued that a fundamental part of this legislation must include the transfer of underlying title to reserve land from the Crown to the Indigenous group.  That way, the land will always belong to the Indigenous group regardless of who owns the land individually.

Think of it this way.  If an American buys property in fee simple in Toronto, that land remains part of Canada.  It does not become American property nor is the integrity of the Canadian nation or (Toronto, for that matter) threatened by this purchase.  Instead, the underlying title remains with Crown and the land remains subject to Canadian laws.  Similarly, if Indigenous individuals decided to sell their land to non-band members, the land would continue and forever belong to the band and be subject to band laws and rules.

A second thing that struck me about this Globe and Mail article was the reported opposition to the legislation by many chiefs, including Chief Shawn Atleo of the AFN.  Because the legislation is voluntary, no band will, can, or ever be forced to opt into the legislation.  At the core of Indigenous sovereignty is the freedom to choose.  I completely understand why some groups may not want to opt into the legislation.  But I don’t understand how some of these same groups can in good conscience interfere with the right of other Indigenous groups to choose this path.