Idaho V. United States

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Water rights among Native Americans is still a highly contested area of law. Even in modern history, the more granular details are still being debated. Matters are only compounded by the federal government’s guardianship over tribal lands. The blurry line of jurisdiction over Indian lands has not been clarified by this paternal arrangement. This fact is demonstrated in the 2001 case Idaho V. United States. The case details the confusion of whether the federal or state government held title lands for the Coeur d’Alene Tribe. Despite congress having the authority to transfer guardianship duties to the states. However, the function of land allocation has remained mostly with the Department of the Interior. 

Idaho V. United States was the byproduct of the federal government suing Idaho over claims of “submerged lands” within the boundaries of the reservation. Since 1873, the tribe has had a claim to part of the St. Joe River and most of Lake Coeur d’Alene. The tribe’s water usage rights being secured at the time of incorporation of the reservation. Congress in 1891, ratified the agreement, the tribe relinquished claims of all lands not included in the 1873 Executive Order. The Coeur d’Alene be compensated for the northern portion of lands ceded by the tribe. Per Oyez:

            “The District Court quieted title in the United States as trustee, and the Tribe as beneficiary, to the bed and banks of the lake and the river within the reservation. The Court of Appeals affirmed.”

It is reasonable to question whether the Federal government “holds, title in trust” for the reservation lands that encompass the St. Joe River and Lake Coeur d’Alene? The majority opinion of the Supreme Court sustained the previous findings by the lower courts. Citing that the original Executive Order specified that portions of St. Joe River and Lake Coeur d’Alene be held for the tribe by the National government. That any attempts by the state to obtain or transfer title to the specified bodies of water should be legally obstructed. Per the legal structure under which the reservation was incorporated, this is a valid ruling. The reserved right to water usage is also implied in the establishment of a reservation. See California V. Arizona (1963).

The trust relationship may have initially been implemented to protect the Indian lands from being acquired by the states. However, do the tribes truly own these lands? One of the downsides of the United States holding Indian lands in trust is that the tribes have restrictions on how they can utilize the land. This has led to some controversy regarding the ability to sell and lease water to non-Indians. If an individual owns the property they have the right to do as they please with it. That includes selling their property. The tribes may have their lands protected, but at what cost?

Should We Invest In Gold During A Biden Presidency?

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The prospect of a Biden presidency is bringing some pessimism regarding the U.S. Dollar. The investment website, Motley Fool, is suggesting that investments in gold and related stocks could be a wise move during the Biden administration. The article recommends Kirkland Lake Gold as being an excellent stock option. Kirkland is one of the premier gold mining companies with locations in Canada and Australia. Why would an investment website suggest to invest in gold due to Biden winning the presidency? The answer is quite simple. The article pointed to the potential of Biden having a “dovish” monetary policy. As president being more inclined to implement rounds of stimulus spending. Often, stimulus spending is funded by printing more money. Actively debasing the U.S. Dollar, making alternatives such as gold and silver look more attractive.

President Trump was hardly a bastion of fiscal responsibility. It is difficult to recall a president gracing the Oval office over the past three decades that has been. While Biden is centrist at heart, he will succumb to the partisan pressures of the Democratic party. Biden would then implement wide-reaching initiatives that will amount to nothing more than unchecked profligacy. The mounting despondency from the financial sector poses some valuable insights. Nothing in this world is “free” costs dispersed amongst the tax-payers. The prima facie assumption of government services being “free” is false. Even if there is not a direct tax funding a program, that does not mean that the citizens are not indirectly taxed. The government chooses to pay for safety-net programs by printing money. Inflation only serves to diminish the purchasing power of the Dollar. The average-Joe voter then has to contend with higher nominal prices.

We should all hope that the doom and gloom plaguing the current economic landscape is hyperbole. Unfortunately, fiscal conservatism is no longer a focal point of conservativism. Never mind liberals or centrists. Economic policies never operate in isolation. There is always a cascading array of various consequences resulting from a single action. Increased spending tends to lead to inflation. Inflation has an innumerous number of repercussions through the economy. If John Locke was correct about the neutral nature of the quantity of money, investors would be more optimistic regarding the Dollar. Generous benefits programs may sound great on paper. However, what will the long-term consequences entail?

The Folly of The Pilgrims

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I would sincerely encourage all of my regular visitors to read this classic essay published by the Foundation for Economic Education.  It was originally published back in 1959. It details the socialistic tendencies of the inhabitants of the Massachusetts Bay Colony. The essay explains how once the puritans did away with their collective system for allocating resources conditions began to improve.

The essay is entitled Our First Thanks Giving and it provides a unique history lesson regarding the holiday that has become in the modern-era a fest centered around football, food, beer, light conversation, etc. However, it is important to never forget the struggles of the Pilgrims. The same system of resource distribution that failed them in the nascent years of the Massachusetts Colony is being proposed today. These policies are merely being presented in a different package. Our puritan forefathers believed they could bring the kingdom of heaven down to Earth, utopia. It is imperative to note that they had failed. The European settlers underestimated human nature and the basic tenants of resource management. Let’s hope we never regress to the back to the lofty ideals of the 1620s!

Yakus V. United States: Price Controls and Wartime Socialism

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Conventional wisdom holds that many of our economic freedoms come second to the interests of the nation in times of national crisis. During World War II, there was unprecedented growth of government intervention in the national economy. Inflationary monetary policy to fund the war effort without revealing the true costs through direct taxation. Price controls to camouflage the nominal rise in prices spurred by inflation. Rationing and quota systems utilized to divert goods from the consumer markets to U.S. Military. The federal government even seized factories primarily used for the production of consumer goods for wartime production. The American people saw similar measures during World War I. However, not to the same scale nor with the same level of Universal acceptance by American citizens. 

From the standpoint of the popular interpretation of history, all these socialistic policies were justified. After all, World War II was an all-out-war. The moral imperative of defeating the Third-Reich required dispensing with individual freedoms and free-market policies. It is debatable whether these policy prescriptions aided the United States in their victory in World War II. One thing that is for certain that these policies led to the further erosion of individual liberty and property rights. Due to most academics and laypeople believing that these were minor sacrifices when compared to the result of defeating a bloodthirsty fascist dictator. The true irony is how much the United States mimicked the economic policies of the fascist or socialistic regime. Per a cursory definition of socialism, it is an economic system in which the state controls the means of production. Displayed in the actions of pricing-fixing, consumption limits, and even re-directing production towards military equipment under threat of legal sanctions. This may have stifled the maniacal aspirations of a madman, this was all done at the expense of free-market enterprise and has to lead the way to the continuous growth in the size of government.

War Time Socialism:

In his classical book, Crisis and Leviathan, Robert Higgs equates the historical wartime policies of to Higgs refers to such a state of total war as being either “wartime socialism” or “wartime fascism” (about price and wage controls during World War II). Depending on one’s “linguistic tastes” (p.211). To a certain extent, Dr. Higgs has a point. Fascism is nothing more than right-wing socialism. The brand of socialism practiced by the Soviet Union was nothing more than left-wing socialism.  In Ludwig von Mises’s magnum opus Human Action, the thin line between fascism and Marxism is divided by the variety of polylogism an individual subscribes to. Polylogism is the phenomenon where it is assumed “…logical structure of mind is different with…” groups of people. How these delineations are made depends on whether a person operates on class-based or racial/national polylogism (p.75-76). Marxism asserts that the intentions of all tycoons, entrepreneurs, and investors are inherently exploitative making it a superb example of a class-based polylogism. Fascists such as Nazis believe in the supremacy of their own race and nation-state. Assume that all other ethnicities and nationalities are inferior. Utilizing the state principles to guide the governance and economic activity of the state.

The unfortunate truth is that many of these invasive and destructive policies were nearly unanimously supported by the supreme court during the Second World War. The supreme court ill-fatedly acted as a mechanism of institutional validation for economic overreach of the government.  As detailed in Crisis and Leviathan:

“ The justices,  almost without exception, had formed themselves as cheering section for expansive legislative and executive actions of the bellicose times. None of the government’s exceptional exercises of power, not even one, was disapproved by the Supreme Court.” (Higgs, 1987,p.220)

One of the most prominent checks on executive authority did little to curb the aspirations of FDR’s administration.  In the context of the dire stakes of matching to victory in the European and Asian theaters of combat, social pressure made it difficult to articulate dissent. The ideological sway of “defeating fascism” with economic policies that mirrored some of the decrees of nationalistic dictatorships (Higgs, 1987, P.241). The Supreme Court haplessly codified this collectivist ideology by disregarding the principles of free enterprise and individual liberty. The United States won the war and even saw a few decades of prosperity after the 1940s. One can only be in awe of what was dispensed with to make it happen. These command-and-control measured were passed and validated with greater ease than those the legislation passed to remedy World War I and the Great Depression. This longstanding legacy of extension of war powers has permanently weakened the restraints against executive overreach.

Yakus V. United States – Background

One area that did receive a significant review from the Supreme Court during this era was price control laws. Most of these cases focused on whether the implementation and enforcement were procedurally constitutional (Higgs, 1987, p.221). The defining case was Yakus V. United States. The case was decided on March 27, 1944.  The Emergency Price Control Act of 1942 was implemented to prevent nominal prices from being impacted by wartime inflation. Two defendants were convicted by the district court for violating this law by selling beef at wholesale prices. The district court also invalidated any concerns of whether the Fifth Amendment rights (Due process) had been transgressed by the act. The defendants then decided to bring their case up to the U.S. Supreme Court.

Concerns of Constitutionality:

Per Oyez, there were two main points of concern regarding the Constitutionality of the Emergency Price Control Act. The first concern was regarding how congress transferred legislative authority. Making it reasonable to question the legality of conferring vast decision-making powers to the administrator of the act.  The second concern was whether the defendants had their Fifth Amendment rights under the Due Process clause breached by enforcement of this legislation.

The Decision:

The majority opinion held that the terms of the law were legally sound from a Constitutional standard. The court found that the way congress bestowed the administrator of the act decision-making authority was done so sparingly. Done so to achieve important objectives. That the Constitution enables Congress to perform its legislative function with some degree of flexibility. Regarding the concerns of whether the legislation respects Due process, again the court did not find the law to be transgressive. Citing that the standards are precise enough to guarantee that it is fulfilling its Constitutional intend, therefore it is constitutional ( operating as a narrow tautology, circuitously stating it is Constitutional because it is Constitutional).  

That doesn’t mean there wasn’t any dissent from the Justices on this case. For instance, Justice Roberts cited that providing such digressional authority to a bureaucratic administrator makes it impossible for Congress to have proper oversight. Also, pointed out that the act relied too heavily on the assumption that the administrator would be impartial. Justice Rutledge also chimed in with his criticisms of this case. Reasoning that the court should not enforce laws without allowing the court to consider their Constitutional validity. Per Higgs, Rutledge referred to enforcement of the law as “asymmetrical” from a criminal prosecution and defense standpoint. This is since a defendant could be tried in federal and state courts, but could not challenge in these same courts. The defendant was required to petition the Emergency Court of Appeals within 60 days of the prospective concern (Higgs, 1987, p. 222).


Few people are willing to challenge legal and economic decisions made during World War II. Most people would assume that these “temporary” violations of our liberties were for the greater good. Most of these invasive policies have served as the scaffolding to greater contraventions of our civil liberties and economic freedom.  We certainly want to avoid falling prey to the slippery slope fallacy. However, the historical evidence is overwhelming that it has been a steady progression of various policies that have worked slowly eroded our freedoms. Credulously acquiescing these laws and prescriptions as being for the greater good, is nothing more than a fallacy. It is well documented that price controls are awful economic policies. They distort one of the few mechanisms that both consumers and vendors have for bridging the gap between the information asymmetries of commerce. The way this atrocious policy was enforced through the Emergency Price Control Act endowed a bureaucratic apparatus with far too much authority.  The true tragedy being then the Supreme Court then proceeded to validated this horrendous policy. A tragedy indeed!

Native Americans Did Believe in Property Rights- Part II: Origins of The Myth

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The Origins of the Myth

We as humans have the unfortunate propensity for interpreting evidence that in a manner that is congenial to comport with our own beliefs. This problem is particularly rampant in the soft sciences.  In the absence of disciplined restraint and sound methodology, qualitative research is subject to be sullied by our own biases. This serving only to hamper the whole enterprise of conducting an impartial observational analysis. The fields of anthropology and history have not remained immune from the reach of the researcher’s flawed perception. Upon this realization, it becomes woefully evident that our historical perception of Native American culture is inaccurate. Our misconceptions held together with gross misinterpretations of traditional stances on private property and law held by various indigenous tribes.

Often our ideological motives and philosophical ethos skews our understanding of the historical truths of American tribal cultures. One corollary of the erroneous assumption of Native American collectivism has been designating tribal peoples as the “original conservationists” (Anderson, 1996,p. 1) [6]. Typically for political reasons, the pragmatic rationale for many of these historical conservation measures has been understated. Researcher Terry L. Anderson points out the underlying how our skewed image of Native Americans has become politicized. Citation the example of a famous speech given by the Chief of Seattle. In which he stated, “All things are connected like the blood which unites one family”. The speech was not written by the Seattle Chief, but by a script written named Ted Perry. Displaying much of the romanticized imagery that environmentalists wanted to hear (Anderson, 1996, p. 2) [6]. From Anderson’s view, such presentations of Native American culture only served to trivialize “… their rich institutional heritage which encouraged resource conservation..” (Anderson, 1996, p.1) [6].

The myths of highly collectivist property arrangements among Native tribes predates the nascent era of the modern environmentalist movement (late-1960’s/early 1970s). These myths were first promulgated based upon the narrow observations of settlers. Which dates back to the settlers of the great-plain-states who were looking for land that was suitable for agriculture. They extrapolated from their interactions with a few nomadic tribes that all Natives had little regard for property rights due to their lack of interest in “land assets” (GALBRAITH  et al. 2006, p.20) [1]. Generating the fallacy that property rights were a European invention. Completely side-stepping the reciprocal, customary, and informal means of property rights enforcement used by pre-colonial Indians (Benson, 1991, P.45) [7].

The true irony of the mythic image of the collectivistic tribes is that this assumption ignores the communal tendencies of the European settlers in the United States. Pre-colonial American tribes had strongly developed property rights and any communal tendencies were a result of economic necessity (Galbraith et al. 2006, p. 7) [1]. The Plymouth colony of the 1620s experienced declines in productivity brought on by their communal allocation of resources. This free-rider problem was resolved once the colonists began to mimic the “property rights model” of the local natives (Galbraith et al. 2006, p 7) [1im The economic folly of the Massachusetts Bay Colony is seldomly taught in Traditional American history courses. However, this all too often glossed-over the economic reality of colonial Massachusetts was immortalized in the 1959 essay Our First Thanksgiving.

“Our first Thanksgiving should, therefore, be interpreted as an ex­pression of gratitude to God, not so much for the great harvest it­self, as for granting the grateful Pilgrims the perception to grasp and apply the great universal prin­ciple that produced that great har­vest: Each individual is entitled to the fruits of his labor. Prop­erty rights are, therefore, insepa­rable from human rights.” [8].

It is difficult to ascertain whether this obscured fact of history was the result of misinterpretation or ideological motives. It is prudent to not delve too deep into such matters. Nevertheless, it is absurd that property rights are erroneously perceived as a European invention. The utopian ideals of the Puritans did not include the enforcement of property rights. Their quixotic attempt to collectively distribute resources serves as nothing more than a failed forerunner of Communism. Had it not been for the property-oriented values of the indigenous tribes, the pilgrims would not have had much to celebrate.

The popular interpretation of history seems to flat out ignore the communal propensities of the  Massachusetts colonists. This inaccurate depiction of historical fact has provided the substrate for proliferating this fallacy. A fallacy that is deeply embedded in the conventional wisdom of the American psyche. The collectivist propensities of non-Indian settlers were not limited to the pilgrims. For instance, the Spanish Catholic missionaries occupied the southwestern region of the United States in the eighteenth century. These missions were established by the Dominican and Franciscan orders. The missions implement communal economies with an emphasis on “communal behavior and support” (GALBRAITH  et al. 2006, p.7) [1]. The system imposed by the various Catholic mission was at odds with the natives’ property and land ownership rights. The mission system eventually dissolved in the American southwest. After the governor of California decreed in 1834 secularized the mission system, distribution the former mission lands as a private property to the tribes. ” (GALBRAITH  et al. 2006, p.7) [1].

It can be partially assumed that the informal recognition of property rights and law by American tribes has contributed to the false notion of a historical lack of concern for property rights. In most cases, indigenous tribes operated on customary law. Informal law functions on reciprocity and recognition of social norms within the tribe (Benson, 1991, P.44) [7]. Centricity being placed on the focus of compensation for loss of property versus criminal sanctions. Making it more in step with the common law conception of Tort law. Many of these rules were unwritten but acknowledged by tribal members (Benson, 1991, P.45) [7]. Other tactics such as ostracism and banishment of transgressive tribal members also served as informal means of punishment (Benson, 1991, P.50) [7]. More explicitly relevant to the subject of property rights, the informal means under which tribal members historically acquired property is notable. In the absence of formal deeds and title transfer documents, homesteading. This was practiced by agrarian tribes in southern California. An individual takes claim to land through the process of developing it for habitation or production (GALBRAITH  et al. 2006, p.8).


  2. CARPENTER, KRISTEN A. & RILEY, ANGELA R.  Privatizing the Reservation? (2019). The UNIVERSITY OF COLORADO. Pages 13-16, 21.
  3. November 17th, 2020.
  4. CANBY JR., WILLIAM C. American Indian Law: In a Nutshell 2nd edition. (1989). WEST GROUP PUBLISHING. Pages 19-21.
  5. FERNANDES, EDESIO. The Influence of de Soto’s The Mystery of Capital. (2002). LINCOLN INSTITUTE OF LAND POLICY. Page 6.

6.  Anderson, Terry L. Conservation—Native American Style. PERC Policy Series Issue Number PS-6. (1996). PERC. P. 1-2.

7. Benson, Bruce L. An Evolutionary Contractarian View of Primitive Law: The Institutions and Incentives Arising Under Customary Indian Law. The Review of Austrian Economics. Vol. 5. No.1. (1991). Ludwig Von Mises Institute.

8.  retrieved 11/23/2020.

Native Americans Did Believe in Property Rights- Part I: Introduction

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Native American tribes have long been perceived as being historically highly collectivistic and disinterested in the preservation of private property. Few people ever question whether these characterizations of the tribes are even accurate. These perceptions are only perpetuated when North American tribal leaders discuss economic matters at “tribal conferences and congressional hearings” (GALBRAITH et al. 2006, p.19)[1]. However, after a more rigorous assessment of the historical facts, it becomes clear that the image of the communal Indians was nothing more than a myth. Not only did many tribe members possess private property rights, but they also had an informal legal system that secured these claims. Making many of the previous claims of collectivism nothing more than a misconception.

The curious reader may question why the veracity of our understanding of the economic history of American indigenous tribes is so important? After all, the poverty that afflicts most of the reservations in the United States is a contemporary problem. How is reflecting upon the past going to be useful in solving the economic woes of the tribes? The problem becomes that many scholars and policy analysts utilize tribal tradition and customs for governing economic policy on the reservations. One particularly salient example is in the controversy surrounding the privatization of tribal lands. Per Carpenter and Riley (2019) the privatization of tribal lands ignores the historical and cultural perspective of tribal members (p.13) [2]. Following us, a policy prescription would impose an economic course of action few tribes have any interest in (p.16)[2]. Would only serve to destroy the communal tendencies that are common among American tribes (p.21) [2]. Both authors also suggest that privatization would invite the purchase of native lands by nontribal members (p.15). Only operating to exacerbate the present and past economic struggles of American Indians that resulted from the transfer of lands to non-Indians (p.14)[2]. Demonstrating that from the perspective of Carpenter and Riley a policy that deviates from historical collective arrangements will only serve to do more harm than good.

This paper seeks to dispel the myths and fallacies concerning the historical views of Native American property rights. Justifying government intervention in the economic affairs of the tribes based on faulty claims of historical collectivism hold little merit. Beyond the historical accuracy of such claims, there are also profoundly detrimental economic consequences of accepting this false economic history. If we subscribe to Hernando de Soto’s Dead Capital Theory [3] it becomes evident that the situation facing Native tribes is very similar to that of developing nations. The land in Indian country is not being utilized to its fullest capacity. The determination of the best use of such economic assets is constrained by the guardianship relationship between the tribes and the United States government. The genesis of this land trust dynamic being born out of the Dawes Act of 1887, when the federal government first intervened in the distribution of tribal lands (Canby, 1989, p.19-21) [4]. The waters of Indian land allocation has only become more muddied by subsequent amendments and legislation. Placing restrictions on assets that are already at the disposal of the tribes, creating barriers to extracting “surplus value” from what they should rightfully possess (FERNANDES, 2002, p.6) [5].


  2. CARPENTER, KRISTEN A. & RILEY, ANGELA R.  Privatizing the Reservation? (2019). UNIVERSITY OF COLORADO. Pages 13-16, 21.
  3. Retrieved November 17th, 2020.
  4. CANBY JR., WILLIAM C. American Indian Law: In a Nutshell 2nd edition. (1989). WEST GROUP PUBLISHING. Pages 19-21.
  5. FERNANDES, EDESIO. The Influence of de Soto’s The Mystery of Capital. (2002). LINCOLN INSTITUTE OF LAND POLICY. Page 6.

Another Blind Spot of Neo-Classical Economics

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Neo-Classical economics attempts to add a layer of scientific rigor to a subset of the social science that has had a long history of utilizing verbal reasoning and observation as focal points of its methodology. While the modern-day intellectual progeny of  Alfred Marshall may enthusiastically advocate for the treatment of economics as a near-hard science, that does not mean there aren’t any detractors. The Austrian School of economics has been resolute in their longstanding criticism of Neo-classical methodology. It stands to reason that controlled models cannot perfectly mimic the dynamic conditions of economic exchange. Alone by holding the assumption of ceteris paribus economic models fails to accurately reflect realistic conditions. The cadence of bustling bazaar in Casablanca represents the ever-changing ebbs-and-flows of a complex system. A collective ecosystem of trade was a few variables that remain constant. Except for the informal norms of commerce and the locally enforced laws. Anything else cannot be predicted with absolute certainty and is subject to approximate in the face of uncertainty. Even an oversimplification in the form of an economic model cannot lead us toward any definite predictions. Rather provide us with a two-dimensional silver of the truth.

In chapter three of economist Robert Higgs’s seminal book Crisis and Leviathan delivers quite the blow to Neo-Classical methodology in the analysis of political ideology. In this chapter, Dr. Higgs strives to provide a framework for interpreting ideology and how it relates to the growth of government. Higgs particularly scrutinizes Mancur Olson (while a New Institutional Economist, he was very influential in the development of Public Choice Theory). Olson touches upon the free-rider issue of collective political action. The efforts put forth by one individual actor are relatively inconsequential when compared to the actions of the group. Higgs provides the example of an organized band of political activists writing to a congress about a specific issue. Odds are the elected official will respond similarly regardless of receiving one or hundreds of letters from these mobilized citizens.  A similar analogy can be made towards voting. The vote cast by an individual voter is merely a drop in the bucket (p.39).

From the standpoint of rudimentary economic calculations and reason, it would be rational to question if it is worthwhile to contribute to this political cause in any capacity. Any “collective-goods” spawned from political activism can be enjoyed with relatively little cost to most constituents (p.40). Making it irrational to be anything but a free-rider (p.40). Leading us to Olson’s Iron Law of Collective inaction. Per Higgs, there were only two exceptions to Olson’s law. These exceptions include the provision of an excludable incentive for participation and are coerced into directing efforts towards the collective good (p.40). Per Olson’s analysis anything outside of these two contingencies would not entice actors to avoid the spoils of being a passive advocate.

Olson commits some of the perennial sins that mar Neo-Classical analysis. The span of variables that can be plotted on a utility function provides us with a provincial view of all that can encompass an individual’s perception of well-being (p.41). Reducing all of the human desires into an oversimplification. Embodied in homo economicus the theoretical economic agent in all models. Who is oblivious to social graces and the finer nuances of the human condition (p.41). In terms of the political-economic analysis of the growth of government if the unquantifiable element of ideology would need to be linked to the utility function (p.41). There are purely qualitative motivations that guide our behavior that is not necessarily “rational” in the economic sense. We seek a group association. We tend to enjoy the epicurean delights a sitting outside with a glass of wine and watching the sunset over Cascade Lakes in the light breeze of the summer evening. Indulging our tastes for aesthetics and luxury. From the lofty vantage point of linear production models or the assumption of rational consumption cannot provide a complete explanation.

Ideology provides such a degree of satisfaction that cannot be forced into the mold of cardinal units for quantifiable analysis. Higgs mentions the characteristics of “solidarity” and “identity” being satisfied by ideological association (p.42). Referencing Russell Hardin’s example of young men during World War II joining the military. They made this tradeoff in a manner that would be concluded as irrational from the reasoning of Neo-Classical economics. Due to all of their cohorts joining the armed services and being deployed for combat in foreign theaters, making military service “.. the most important experience of their generation..” (p.42). Immortalizing the stoic image of the “silent generation’s” unwavering commitment to the war effort. Elements of group identity and social pressure which are conspicuous realities of political group membership are glossed over by dispensing of qualitative analysis.

Robert Higgs dives even further into the depths of group identity and ideology. Political party members and activists from communities of “like-minded” individuals. Through adhering to group norms and values they obtain “invisible membership cards” (p.42). For instance, even though gun owners are mostly like a subgroup of either Conservative or Libertarians, they tend to have their microcosm in the political sphere. Some individuals are one-issue voters, meaning they may not necessarily conform to either assumed right-wing ideology. However, the one issue voting gun enthusiast will be happy bedfellows with other pro-gun lateral Second-Amendment friendly camps. There are certain indicators of the group identity of gun advocates. They may be wearing an NRA t-shirt. Sporting tattoos depicting the phrase Molon Labe.  Even having witty bumper stickers denouncing gun control on the back of their cars and trucks. Typically, members of this political identity are well versed in the inner-mechanics of fire-arms. Also, surprisingly knowledgeable regarding local and federal gun laws. There are qualitative characteristics that define ideological groups and subgroups. These commonalities at times can present pressures towards conformity. On the flip side, they also foster a sense of community, bond, and camaraderie.  All are variable generally absent from the analysis of a  hard-nosed economist hell-bent on reducing all phenomena to quantifiable graphs and regressions. Endearing terms used to refer to in-group members such as Christians calling each other “brother” and Communists shaking hands with their “comrades” is lost in the mix (p.43).   

Abolish The Electoral College: An Argument of Convenience

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It felt like just yesterday droves of indignant voters were decrying the Electoral College as an unjust institution.  Any attempt to verify or even discuss the election results precipitously degenerated into a circus sideshow event. These calamitous episodic displays of hysteria were four years ago. Another Presidential election cycle has come and gone. It superficially appears as if the candidate with the electoral and the popular vote won their seat in the Oval office. All must be right in the world. Karma has been restored. The cosmos is back in alignment. Hopefully, the tantrums and other displays of poor deportment will subside.

The pacified consensus has been magnified by the utter silence on the front of the Electoral College debate. Many would counter this criticism by stating that the candidate with the popular vote won, why do we need continue to reevaluate this system? From a utilitarian standpoint, there is some credence to this dismal. To be fair it is something of an anomaly (having only occurred in this nation’s history five times). The irony being many who are relatively unconcerned now regarding the Electoral College were some of the most vociferous critics of the institution back in 2016, How can an individual be so passionately inclined to denounce this institution four years ago to now possessing a tepid acquiesce of its existence? It possibly the masses have changed their opinion regarding the Electoral College and its role in determining national elections? The probability of this occurring is highly unlikely. What is more probable is that those who disliked the 2016 president-elect utilized it as a point of contention to delegitimatize the conditions under which he assumed office. In other words, there was little concern regarding the Electoral College. The public outcry was nothing more than political opportunism. A feeble attempt to use this fact to mobilize the impeachment campaign.  Rather than a principled stance against the voter’s voice being muted by an institutional safeguard.

An individual who fundamentally opposes such the Electoral College will do so regardless of who sits in office. Hardly anyone with strong convictions on issues ranging from gun control to abortion is going to change their position based upon slight alterations to the political climate. Why is such ideological promiscuity viewed as being consistent? This shift could be attributed to voter fickleness. However, I am more persuaded by the notion that this is a byproduct of political bias. Opponents of the populous right-wing candidate took every strategic angle they could to oust him from office. The first line of attack was to gripe about the institutions that made his victory possible. The murmurs of protest and despair were highly visceral and reactionary. Few were questioning the inner-mechanics of this electoral apparatus nor made any legal arguments against it nor provided any arguments of any technical fortitude. Resorting to vague and sweeping statements about how this system was nothing but perverted. With little in the way of facts and figures substantiating these emotionally charged claims.

Now that Joe Biden has secured victory and he has won the popular vote, all I now hear are crickets! No one seems to care. The same people exalting the position that the Electoral College is an anachronism— nothing more than a hangover from the era of powdered-wigs, are curiously silent. Odds are they are content with the elected official who will soon grace the Whitehouse. Giving the observant political spectator the impression, these individuals truly didn’t care about the Electoral College. The genuine aims of these invested interests and the duped masses were to contest the presidency of Donald Trump at all costs. Trump was far from perfect. He made grandiose promises, he was dishonest, and weaponized entitlements as a bargaining chip in his risky game of political brinksmanship. Then again, these actions are no different than those taken by any politician. If anything, this behavior could be seen as an attempt to assimilate into his new role. All of this is par for the course. What set him apart from the establishment was his lack of finesse or tact. Most politicians treat their true agenda like a high stakes poker game. Trump was dumb enough to reveal his hand. Machiavelli didn’t expound upon the strategic intricacies of “statecraft” for idle conservation. The polished statesman understands the truth-and-perception gap intimately and strategically. Blatantly ignoring these nuances of political norms made Trump a target. Making the motivation to mobilizing the average voter to create a stir top priority. Early on the most salient targets were stress the potential of Russian meddling and deride the Electoral College. Now that a “real politician” has won the election, abolishing the Electoral College has fallen off the agenda.

If someone sincerely believes that the Electoral College was a hindrance to our society they would hold this position regardless of which one of the hollow and spineless marionettes became commander-in-chief. Unfortunately, it seems as if for most of these aggressive opponents this was nothing more than an argument of convenience. Nothing more than low-hanging fruit. That they blithely used as a lazy argument to advance their agenda. Anyone with clout doesn’t care if the vote of a regular constituent carries any weight in an election. However, if you can control public perception you win the game. That’s all political process is a puerile and trivial game with no room for principles, ethics, or wise policies.     

Is Fractional Reserve Banking Ethical Part V: Conclusion and Compromise

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The debate over whether Fractional Reserve Banking is ethical to proceed over approximately a decade (the late 1980s/ early 1990s to the early 2000s). Resulting from subsequent papers repudiating the previous claims over the researchers on the other side of the issue. It should be noted that in these series of retaliatory papers that technical arguments were presented in tandem with ethical justifications for or against this practice. For the sake of brevity, I chose to focus on the ethical considerations of the topic. However, this does not exclude a potential technical comparison of Fractional Reserve Banking in the future. 

To any reader who has never thoroughly examined nor given a second thought to Fractional Reserve Banking, I hope reading this series of essays was illuminating. Fractional Reserve Banking is arguably the most prevalent banking system globally. Yet, something that impacts our lives daily we never think to question its inner mechanics let alone whether it is ethical. The ethics of banking extend beyond whether the patrons are benefiting at the expense of someone else, either through easy access to loans or interest payment on savings. There are potential ramifications to the economy. 

Distortions in the credit market are precisely the impetus for business cycle calamities such as the cataclysmic burst of the Housing Bubble in 2007. Providing loans backed up by fiduciary media is nothing more than a house of cards waiting to fall done. Artificially manipulating factors such as prices, interests, and money supply can only facilitate the misallocation of resources. Such indicators operate as unspoken signals to consumers and entrepreneurs. Due to this fact, these distortions create an illusory image of the loan market and naturally economic agents respond accordingly (p.108). A fact that both George Selgin and Lawrence White are too quick to refute and dismiss (p.102). This carries the implications of defrauding the economy as a whole versus being isolated to the bank’s customers. Even if you are the type to limit all your transactions to precious metals or cryptocurrency, it is worthwhile to read up on this topic.

Summary of Compelling Arguments From the Austrian School:

It is difficult to say whether the Free-Bankers or the Austrians are on the right side of the debate. Both camps provided some truly convincing arguments. The Austrian opposition notes how ownership can only legitimately be taken on by one person and Fractional Reserve Bank obfuscates this immutable law of property ownership. From a contractual standpoint, that the agreements between banks and clients in such an argument are illegitimate. Since the terms are not only unclear to the typical layman but are a categorical misrepresentation. Presenting fiduciary media as actual money. The disingenuous nature of this faulty contract is only compounded by the fact that these claims for money are based upon the banknotes that are not back by currency or specie. Attempting to redeem them for actual currency is analogous to using a deed for a boat and attempt to claim ownership of a house. Also that it is a false analogy to argue that any devaluation of present money caused by the issue of fiduciary media is no different than an increase in the supply of a good due to protection or harvesting. 

This is because the increase in the supply of lumber from harvesting more oak trees is derived from legitimate market processes and in-turn does not seek to directly devalue anyone else’s property. Also, that in no way can Fractional Reserve Banking represent the Demonstrated preference of bank clients. Demonstrated preference can only be expressed with one’s property. Fractional Reserve Banking by its very nature disrupts this relationship.

Summary of Compelling Free-Banking Arguments:

The Free-Bankers also bring up some compelling moral defenses in favor of Fractional Reserve Banking. They are even bold enough to directly claim the practice is not fraudulent. Through a banking client electing to accept the terms of service regardless of their understanding, the contract is still valid. It would be one thing if these banks purported to practice 100 percent reserve banking, but function as a Fractional Reserve institution. These contracts are formulated between consenting adults, it would be antithetical to the principle of individual freedom to prohibit such arrangements. The real trouble comes from government interference. One only needs to look at the large array of protections awarded to backs through the FDCI to see the true culprit in shielding unsavory banking practices from insolvency or litigation. Also, the ignorance or the naiveté of the consumer is not a reasonable justification for banning a product or service. Even though the risk of a bank run is present, it is a relatively rare occurrence from a historical standpoint. If faced with a potential bank run the bank can issue an option clause suspending redemption, solving the issue through valid contractual recourse. Speaking of redeeming bank deposits. A customer assumes the risk of not being able to redeem money when they agree to open an FRB account. They assume the risk. In turn, for the opportunity cost of having their liquid money held and the potential risk of a bank run/ insolvency, they receive an interest payment. Overall, patrons must prefer Fractional Reserve systems to 100 percent reserve banking. There have never been any governmental decrees in modern history that all banking must be done via a Fractional Reserve System. Despite its flaws, ultimately, the people prefer being paid interest payments versus having to pay warehousing fees.

Can There Be a Compromise?

There are certain aspects of both arguments that appear to be flawed. The Free-Bankers are too lackadaisical when it comes to distortions in the credit structure enabled by Fractional Reserve Banking. The Austrians to some extent seem too rigid in their interpretation of property ownership. Under many of their arguments likening the practice to a Ponzi scheme. Yet, to be conceptually consistent would not these same economists also take issue with multi-level-marketing? Then again it could also be counter-argued that MLM schemes and Fractional Reserve Banking while present similar confusions, property rights have much greater degree clarity in MLM arraignments.

Back in 2000, the economist Jorg Guido Hulsmann wrote an article in the Independent Review refuting the Fractional Reserve practice of creating “money”. Hulsmann (see page 108) much like his anarcho-capitalist counterparts Hoppe and Block are opposed to government intervention. If FRB is morally and technically flawed how can we address the issue of it short-comings without introducing state involvement? In this twenty-year-old article, Hulsmann presents a summary of points previously made by Hoppe and Block that would alleviate some of the issues relating to the categorical confusion. It should be noted that Hulsmann in that these suggestions for informal rules and norms of banking presume no state involvement in banking. Also, the author details the intimate relationship between the FRB and the government. Going so far as to refer to it as a “handmaiden” of government (p.108). Making it easy to infer that Hulsmann believes that the intertangled marriage between Fractional Reserve Banking and government is an unbreakable bond. However, let’s take these suggested conditions as theoretical and contingent upon a banking system free of regulation. See his suggestions below:

“…Fractional reserve banks would have to use a different language than they commonly use because words such as “deposit” are deceptive. They would have to make it clear that money “deposited” with them is, in fact, a credit of unspecified duration. And the “banknotes” they issue would have to be presented not as money titles but as some sort of very liquid IOUs..”

            “..On the “FR notes,” one would have to find a promissory note of the following type:

 The FR Bank promises the holder of this note to try to redeem it out of its gold reserves. Because FR notes are not 100 percent covered by gold presently in our bank, in case we cannot redeem, the following rules apply. . . .  (p.108)”

Is Fractional Reserve Banking Ethical -Part IV: The Defense of Fractional Reserve Banking

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Part I: Click here.

Part II: Click here.

Part III: Click here.

It is quite clear at this point that followers of Austrian economics view Fractional Reserve Banking as nothing more than a Ponzi Scheme. However, proponents of the Free Banking School (arguably an outgrowth of the Austrian School) believe that this practice is legitimate providing there isn’t any government interference in banking. Even the uninitiated observer will admit that this contingency is a highly unrealistic one. In the modern era, banking continues to be a heavily regulated industry. Free Bankers may have a relatively cogent ethical argument from a theoretical standpoint. After all, it is the responsibility of a mentally competent adult to be aware of the terms of service for any product or service they choose to receive. Ignoring the fine is not an exculpatory factor. Either from a legal standpoint or from an ethical perspective. Also, to be conceptually consistent one should scrutinize multi-level marketing schemes. Such a business model mirrors similarities to Fractional Reserve Banking. Hence why opponents liken it to a Ponzi scheme or pyramid scam.

Argument #1: It Isn’t Fraud.

From the Free Banking perspective, Fractional Reserve Banking is not a fraud. If the banking establishment makes it clear that the services provided constitute Fractional Reserve Banking, then the arrangement is legitimate. This is because the terms of the contract were not violated (p. 87). It would be problematic to present your services as 100 percent reserve banking if it encompasses the practices of the Fractional Reserve System. Fraud would entail a misrepresentation of the bank’s services. 

Taking any measures to prohibit this system of banking is antithetical to the principle of individual freedom. Any such interference would  be obstructing an existing contract between consenting parties. Doing nothing more than disturbing the economic liberty of freedom of contract, which is a pillar of private property rights (p. 87). Individuals who oppose the practice find the freedom of contract argument to be farfetched as few patrons have a firm comprehension of what Fractional Reserve banking entails (p. 88). The naivete of the consumer does not sully the legitimacy of the arrangement. Even Murray Rothbard himself has stated that historically banks have rarely retained a 100 percent reserve system (p.88). Why? Most likely because the banks clients preferred a Fractional Reserve system. If customers prefer an interest payment on their savings versus a maintenance fee for warehousing, so be it (p.88). The market for banking services has responded accordingly.

Circling back to the issue of misrepresentation of services, even the hardline naysayers believe that such a banking system could be admissible under certain conditions. Most notably if there was the further elucidation of the specific details of fractional reserve services. A long-standing concern of economists such as Hans Hermann Hoppe and Walter Block being that such ambiguity makes the practice fraudulent. Creates categorical confusions between money and fiduciary media (p.20-28). Professor Block asserts that the redemption requirements need to be clarified to set aside the concerns of fraud (p. 89). Whereas Block’s counterpart Hoppe stresses that banking institutions should present a warning regarding the suspension of redemption. He analogizes this precautionary courtesy to an option clause. Unfortunately, this concern does not comport with the facts of history. As is evident by the Scottish period of Free-Banking in which specie payment was suspended for decades (p. 89-90).

Another argument that grapples with the question of whether FRB is fraudulent pertains to the ability of the banks to fulfill redemption obligations. Keeping low percentages of reserves on hand turns money redemption into a gamble. However, this concern is inconsequential. Historically even in the absence of government intervention few banks have failed to fulfill any redemption obligations to patrons (p.90). For one, solvent banks are not prone to bank runs. Even in the event, a solvent bank runs out of currency, they can issue an option clause to temporarily suspending redemption. Resolving the issue through contractual channels (p. 91).

Argument #2- The Concerns Over Third-Party Effects Are Not Substantial

The most salient third-party effect or “spill-over effect” confronting the practice of Fractional Reserve Banking is a decreased likelihood of successful redemption. Obviously, in a Fractional Reserve Banking system, the more money that is lent out the fewer reserves the bank will have on-hand. Resulting in adverse consequences for the individual demanding to withdraw money from their account. It should be noted that the depositor agrees to this argument upon opening a bank account. Therefore, by signing on the dotted line of the terms and services of the bank, they choose to assume the risk (p. 93). Despite the risks, bank patrons continue to bank with these institutions. Alone based upon the Rothbardian theory of Demonstrated Preference the individual bankers must benefit from this arrangement. After weighing the benefits concerning the costs (p.93). 

The spill-over effects of Fractional Reserve Banking are not solely confined to banking transactions. The practice has also been claimed to create other distortions throughout the economy. Through how loans are funded it compromises some say the credit structure is compromised. It should be noted that the risks are somewhat minimal. If anything it aides the economy by providing a larger stock of capital (p.94). The issue with this criticism is that much of the instability in the economy comes from the intervention of central banks and governments and not Fractional Reserve Banking. This form of banking is not prone to instability or “cylindrical over-expansion”(p.94). These claims underestimate the fact that the amount of “nominal money” issued offsets the “.. changes in the velocity of money..”. Fractional Reserve banking works to alleviate the disequilibrium and “ business cycle consequences”. Hoppe and the company also assert that any injection of fiduciary media will ultimately result in a business cycle. However, if the increase in fiduciary media is matched by demand a disequilibrium will not arise (p.101-103).

Argument #3: The Popularity of Fractional Reserve Banking.

The popularity of Fractional Reserve Banking is another factor to contend with. Banking customers have demonstrated their preference for FRB. Historically, few banks have remained a 100 percent reserve system. However, customers continued to do business with these institutions (p.95). Contributing to this popularity has been the incentive of banks paying interest on deposits versus requiring a warehousing fee (p.95). Banking patrons also held faith that their bank had sufficient funds to fulfill withdrawal demands. Bank runs were generally triggered by other factors signally insolvency to bank clients. Countries such as the United States with greater propensities towards bank insolvency tend to have many protective laws shielding the banks from market pressures (p.95-96). It should also be noted that back in the 1800s when banking legislation was being discussed in the press the banking system was openly described as a fractional reserve system (p.96). Not only fully informing the average constituent of the details of the Fractional Reserve system, even with this knowledge doing little to dampen its prevalence (p.96).

The use of Fractional Reserve Banking has never been compulsory. There has never been any laws or penalties compelling banking in the United States to levitate towards this specific banking system (p.97). Patrons voluntarily assume the risk of engaging in this variety of banking for the trade-off of being rewarded with an interest payment (p.97). The argument that clients are unwittingly tricked into patronizing an illusory form of banking is dismantled by the fact that banks compete for business. Nothing is stopping an enterprising individual from persuasively selling 100 percent reserve services (p.97).

Is Fractional Reserve Banking Ethical: Part III- Concluding Arguments Against Fractional Reserve Banking

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Part I. Click Here

Part II. Click Here

Fractional Reserve Banking is Fraud:

If fractional reserve banking does not represent a legitimate contractual transfer of property then it must be fraudulent. However, Selgin and White precede with their ethical justifications for this form of banking. Touching upon a previous criticism levied by Hans Hermann Hoppe regarding how in the process of creating money titles what was intended to be a transfer between two parties ends up introducing third-parties (p.28). Both of the free-banking proponents dismiss this claim on the fact that “… spillovers from the others’ actions to the value .. property is an inescapable free-market phenomenon…” (p. 29 [p. 92-93] ). When these “third-party” effects veer into devaluation of another individual’s property they cannot be so easily dismissed. In terms of the context of fractional reserve banking, the devaluation of property is not equivalent to an increase in the supply of a commodity through production or harvest. It is categorically different (p.29). The difference is that an introduction of a greater supply of a commodity through market processes does not harm anyone’s property. However, the introduction of more money titles without an increase in the money supply has a “diminution” effect on the value of all the money held in the bank (p.30). This is done at the expense of all those holding money. They are the individuals who suffer from the debasement of the purchasing power.

The Appeal to Popularity Does Not Justify the Practice:

We are all familiar with the appeal to popularity fallacy. Unfortunately, Selgin and White deploy this faulty argument in favor of fractional reserve banking. Maintaining the stance that would not be commonly used if it wasn’t beneficial (p.30). All because a system is commonly used doesn’t automatically make it ethical or beneficial (p.30). If one is to utilize Rothbardian arguments to justify the methods of banking institutions we must evaluate this within the lens of his theory of demonstrated preference.  Which is best defined as “…actual choice reveals, or demonstrates, … his preferences are deducible from what he has chosen in action” (p.2). Selgin and White attempt to adapt this concept to an ethical defense of fractional reserve banking. This always the case? What about instances where the government monopolizes services such as defense and surveillance services? Hoppe et al. make this distinction in their repudiation of Selgin and White’s attempt to apply to demonstrate presence theory to an ethical defense of fractional reserve banking. After all, institutions shielded from market competition by government forces do not reflect individual preferences. Rather is the byproduct of a “territorial monopoly” (p.31). The theory of demonstrated preference only truly applies in instances where no coercion by the state is present. All because most countries have standing armies does not mean that this is the preferred method of allocating defense services.

Beyond demonstrated preference requiring conditions free of the monopolistic forces of the state, it must also be demonstrated with the rightfully obtained property. This because the theory “… presupposes…” legitimate “… property rights…”. These preferences of how to uses, retain, depose, etc. can only be demonstrated with one’s property. Anything else does not have a positive contribution to the general welfare of society (p.31). When we acquire property  due to the fact we are the one sole owner we obtain total jurisdiction over this property (p.32). Enabling us to truly demonstrate our preference. For example, If I wish to purchase a propane tank and use it for target practice on my ranch in the middle of the Sonoran Desert, it is my right to do so. As I (in theory) exclusively own the land, the propane tank, and the gun due to the rightful transfer of the lands and objects through several purchases. Through using my rightfully procured property in such a manner displays my true preferred use of these items. The practice of creating money titles in a fractional reserve banking does not demonstrate people’s preference for this system. Due to the ambiguity of rightful ownership of the currency in the vault. Rather demonstrates the demand for counterfeit money. As these money claims that are treated as being equal to currency are not being made in proportion to the notes on hand (p.33). Selgin and White hold that despite these considerations, fractional reserve banking is still ethical. Instead, it’s the government that presents a problem in the banking sector (p.34). This argument underscores the fact that in most instances this variety of banking systems were set up and supported by governments (p.34). This is only solidified by the point that legal institutions such as the courts and legislators will act by benefiting this system of banking. Most government institutions count on fractional reserve money creation for income (p.35).

Do We Need Laws to Force Us to Wear Masks?

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Ever since the number of COVID-19 cases began to grow in the United States the debate over whether to mandate wearing masks in public has raged on. Frequently devolving into a debate over political ideology rather than a discourse based on hard science. Naturally, those who believe mask-wearing to be an effective precaution against spreading the virus favor compulsory laws enforcing this practice in public. However, could it be possible that people still opt to take precautionary measures even in the absence of fine or other penalties? Better yet, couldn’t owners of private institutions such as stores, restaurants, and entertainment venues implement their preventive measures as conditions of patronizing their establishment? After all, the incentives are present to want to avoid any unnecessary risks and to keep their customers healthy to ensure a steady stream of business in these uncertain times.

In the state of Arizona, the issue of mask-wearing mandates has been left up to the local governments.  Most municipalities have opted to require masks while occupying indoor venues at the risk of facing a hefty fine. Back in June the city of Phoenix purposed a $250.00 for individuals repeatedly refusing to wear a mask. The suburb of Chandler, Arizona imposes a fine of $100.00 or 30 days in jail for mask-related infractions. Residents and visitors in the towns and cities located in Pinal County are not subject to mask requirements but are strongly encouraged to wear masks. One would assume that in these communities that are immune from such restrictions that the image of bare-faced shoppers must be a ubiquitous scene in the local grocery store. Such an assumption would be incorrect.

Even in the absence of formal constraints, most stores require that all customers wear masks. Generally, posting a sign on the front door forewarning prospective patrons of this precondition. Not only are the stores and eateries of the communities of towns such as Maricopa, Casa Grande, and so on filled with mask-wearing customers, but many establishments are taking measures not required by any municipality in the state. Employees are constantly cleaning. The local grocery store has never looked more pristine. Frankly, many of these changes in the cleaning and sanitizing schedules of the local business are long overdue. These shrewd business owners are proactively responding to the potential concerns of their clients. Anticipating that customers may avoid doing business if masks are at their brick-and-mortar location they have elected to require masks. In addition to urging patrons to wear masks, they also are making concentrated efforts to increase sanitation efforts. Even placing markers indicating the presence of six-foot gaps to maintain social distancing. The smell of bleach and other disinfectant products fill the entryway of the grocery stores. The local Walmart is even wiping down and sanitizing the carts! A sight that few would have ever predicted a year ago. All these preventive steps are taken without any laws, penalties, or ordinances. Completely implemented through apolitical channels.  

This micro-level self-governance on the part of local business propitiators and franchisees demonstrates the power of profit and loss mechanisms. Due to the business owners having a stake in the company they own and operate it is in their best interest to put the customers first. If the customers are comfortable, happy, and healthy it will be mutually beneficial for both parties. The customer will continue to obtain the goods and services they need and want. Simultaneously, the stores and restaurants will continue to receive business which will keep them afloat. Establishments that are insensitive to the needs of their customers will invariably see a dip in sales. This would hold even if we were not amid a pandemic. The entrepreneur must adapt to the present climate. That may mean investing in more cleaning supplies and sanctioning mask-wearing requirements for their establishment. Business proprietors who do not respond to customer concerns about the virus will be effectively punished by market forces. Through a sullied reputation, lackluster sales, and even insolvency. While constrained by federal, state, and local laws business owners by their possession of the enterprise still retain an immense amount of authority to create the rules governing their store. Having the ability to formulate the policies that govern the direction of the business enables them to better serve their customers. Displaying how to profit loss mechanisms can direct precautionary measures even in the absence of laws.

Business proprietors responding to these market pressures is an example of polycentric decision-making.  A system where multiple “decision-making units” with some degree of independent action subscribing to the same set of rules. Filtering the development of safety measures through the government attempts to use a one-size-fits-all approach to the pandemic. Whereas, individual shop owners can tailor their precautions to the specific concerns of their regular customers. Versus obtusely applying rules that may not even be effective or pertinent to how COVID-19 is impacting the region. Direct customer input about the absurdity of funneling customer traffic through two entries instead of three, can be an example of ground-level adjustments that can be made through business owner governed safety procedures when compared to those that are government-sanctioned. Avoiding the red tape and lethargic process of passing legislation or town ordinances provides fluidity that is necessary in dynamic times. A fluidity that is lost in the typical overarching and top-down approaches that are generally favored in regulations.  

Those cynical of the arguments that favor market pressure over formal regulation underestimates the power of the invisible hand. In jurisdictions where there are no regulations in forcing mask-wearing store owners not only require masks but are going the extra mile to ensure sanitary conditions for their customers. Most skeptical of the market being able to push such strives towards private solutions to the COVID-19 outbreak tend to cite avarice on the part of business owners. Without formal regulations, most will skimp on investing in extra precautionary measures due to the additional cost of enacting such changes. The willingness to make such changes is what separates a prudent businessperson from a fool.  The long-run profits from investing more in meeting alleviating the concerns of your customers will quickly outpace the minor cost.  Making a refusal to independently adjust to these changes shortsighted.

Is Fractional Reserve Banking Ethical Part II: Contract Theory and the Naysayers

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See Part I: Click.

Introduction to Part II:

The key arguments against fractional reserve banking being a moral system came from a 1998 paper co-authored by Austrian economists Hans Hermann Hoppe, Jorg Guido Hulsmann, and Walter Block. The white paper entitled Against Fiduciary Media was a response to a previous paper written by George Selgin and Lawrence H. White. Hoppe at al. crafted a repudiation against  Selgin and White’s 1996 paper In Defense of Fiduciary Media or, We are Not Devo(lutionists), We are Misesians. In which both scholars provide a normative and positive defense of fractional reserve banking. Even utilizing Murray Rothbard’s Title-transfer Theory of Contract to defend the practice. However, this application of the Rothbardian contract theory did not sit well with Hoppe and the company. All being devoted and unwavering followers of Rothbard believed that Selgin and White’s interpretation of Title-Transfer Theory of Contract to be incorrect. Making their justification of fractional reserve banking on grounds of contract theory to be inherently flawed. It is worth noting that Hoppe was a direct protégé of Murray Rothbard and even owed his career and position teaching at the University of Nevada, Las Vegas to the late Austrian economist.

Rothbard’s  Title-Transfer Theory of Contract:

Before claims that Selgin and White did not faithfully adhere to or misinterpreted Title-Transfer theory, it is important to thoroughly explain this concept. A reader without a firm comprehension of this idea cannot adequately determine if free-banking proponents of fractional reserve banking suffer from profound confusion. The proceeding section will provide a brief overview of this theory. Hereby providing the reader with the requisite background information to justly assess this debate.  

Before diving into Rothbard’s theory, it is important to note his ideological disposition.  Murray Rothbard was the modern father of an ideological subset of libertarianism known as anarcho-capitalism. Rothbard and his followers hold that there should not be limited government, but rather no government. All services and products can be produced by private industry with no necessity for government intervention. This even includes services that have been traditionally provided by the government. This includes defense/security services, law enforcement services, charity, resource management, infrastructure, private legal adjudication, and so on. Rothbardians even go so far as to assert that the government possesses a monopoly on such services. It is imperative to understand this aspect of Rothbard’s political economy and political philosophy. It illustrates the fundamental philosophical precepts that govern his theory of contract.

Rothbardian Contract Theory is expounded upon in his 1982 book The Ethics of Liberty. Rothbard derides that the concept that all contracts in a just society need to be enforced( P.133). He draws a sharp line of delineation between “promised” and “conditional” contingencies in matters of exchange. Per his logic, the utilization of legal channels to enforce a promise is wholly illegitimate. Constitutes the use of government force in a situation in which no property has been transferred. Making it equivalent to state enforcement of morality (p.133-134). The reason why the property needs to be involved for a contract to be valid pertains to the distinction between what is intrinsically alienable and inalienable to the individual. This has to do with the fact that a person cannot alienate their own will or relinquish control of their mind and body to someone else. Humans can quite easily dispense with tangible property, including money (p.135). Due to the fact enforcing a promise is a compulsion because it interferes with the free will of the individual. It is not technically a breach of contract. On the other hand, if the agreement included a transfer of property for non-compliance then it would be another story.

In instances of conditional contracts and agreements, noncompliance is equal to a form of theft.  One salient example Rothbard provides is the circumstances of service providers receiving advanced payment but never providing the service (p.137). For example, if I were to offer to paint your house and I received an advanced payment of $300.00 and never show up your house that is theft. One contractual contingency that can shift a promise to a conditional agreement would be a performance bond clause within the agreement.  For Rothbard’s example, if a movie theater has a meet and greet event with a famous actor, they can put into the agreement a clause where the actor agrees to pay the theater a sum of money for abdicating this obligation (p.137). Since a property can be transferred and not the will of the actor this is an ethically binding agreement. However, failing to fulfill a property-related obligation is not always necessarily deemed as implicit theft. In instances where a creditor provides immunity to a debtor who cannot pay their bill this is legitimate (P.144). Why?  The creditor reserves the right to forgive debts due to the fact they are the ones who transferred their property under the condition of repayment. Please note that this scenario details circumstances in which the credit lent out their funds.

It should be noted that a Rothbardian conception of contractual property rights does not preclude someone from selling off a portion of their property. For example, if I own 100 acres of land in Montana. It is well within my rights to transfer you 5 acres for $20,000.00. Concurrently, retaining my claim on the residual 95 acres of land. This does not mean that mean I in any way still own those 5 acres. Through the sale of this land, I have effectively transferred ownership to you. In turn, I have relinquished by entitlement to the lands sold.

Page 146:

“Another important point: in our title-transfer model, a person should be able to sell not only the full title of ownership to the property but also part of that property, retaining the rest for himself or others to whom he grants or sells that part of the title. Titles, as we have seen above, common-law copyright is justified as the author or publisher selling all rights to his property except the right to resell it.”

How The Free-Banking Argument For Fractional Reserve Banking Violates Contract Theory:

Selgin and White claiming that fractional reserve banking is consistent with Title-Transfer Theory suffer from some blind spots. Blind spots that are fully magnified by Hoppe et al. One of the fundamental chinks in the armor of the Free-Banking argument is that fractional reserve banking inherently violates Title-Transfer Theory. It assumes that two people can own the same piece of property simultaneously (p.21). By the very nature of how fractional reserve banking engages in lending, it creates ambiguity regarding ownership. Through issuing more promissory notes both the bank and the customer assume ownership of the same banknote, which is fraudulent by nature (p.22).  Creating more claims to money against the present supply of money will not create more money (p.22). Rather, will only serve to redistribute the present supply of actual currency from client to client without increasing the amount of money in the vaults (p.22). Effectively creating fiduciary media (money-substitutes issued by a bank that is not backed by gold or paper money) out of thin air without transferring assets or liabilities (p.22). As detailed in Rothbard’s theory, we can sell off a portion of our property. However, we relinquish our own once we transfer it to the party purchasing it.

This illusory arrangement also conflates property with property titles (p.23). Treating and categorizing banknotes( fiduciary media, money claims) as money (physical property). This only enables this fallacy to continue. Keeping in tune with the Austrian tradition the Regression Theorem states that all money had a prior use value (p.34-36). For instance, tobacco and nails at various times in human history have been used as money. Meaning that these banknotes cannot be money in the actual sense, but a claim or title to money. Through this categorical fallacy, the banks can divorce titles from ownership resulting in the redistributive practices of fractional reserve lending (p.23). Even going so far as to promising future entitlement to goods against present goods that may or may not be fulfilled. It would be honest to label these claims to future goods or debt claims, but not a claim to money (p.24).

An inquisitive observer may question why it is dishonest or even outright fraud to categorize future claims to money as money titles or even as money? Hoppe et al. frame this from the standpoint of we cannot claim or transfer ownership from a title to a car for anything but a car and the same applies to money (p.25). If we were using more precise language what banks and customers have truly agreed to is debate claims versus money titles. Per the authors of  Against Fiduciary Media Selgin and White adopted a hyper-subjective interpretation of contracts to side-step this discrepancy (p.26). The misrepresentation engaged in by practitioners of fractional reserve banking extends beyond labels of goods, but to actual quantities as well. By treating fiduciary media as money, it creates the false perception that clients own more than what they truly due on paper. The fabricated money quantities do not reflect the amounts present in the vaults of the bank (p.27). Free-banking proponents may believe that fractional reserve banking isn’t so much the problem, rather government intervention. As long as the withdrawal requests are fulfilled it cannot be tantamount to fraud. However, even without state interference, the transfer practices of fractional reserve banking blur the lines of definitive ownership (p.29). Making the system incompatible with upholding property rights or just contract enforcement.

Is Fractional Reserve Banking Ethical- Part I- An Introduction

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The norms of modern banking are something that most of us take for granted. Few ever question the inner mechanics of such transactions we engage in daily. However, banking has been steeped in a fog of mystery due to complex operations and seldomly failing to fulfill any obligated services. Beyond questioning the functions or internal workings of modern banking even fewer people recognize that most people are participating in a fractional reserve banking system. In a random survey of average people, you will be hard-pressed to find anyone aware of what fractional reserve banking entails nor any intimate understanding of its implications. That is to be excepted considering this is a niche area of expertise that is truly the domain of an economist, banking/ financial specialist. This assumption relieves us of any responsibility to cultivate a better understanding of these systems. After all, this is best left to the experts. How do we know whether there any inherent risks associated with fraction reserve banking? Do we just assume that due to the fact it is the most common banking system that it is the most effective and secure? Better yet, is it even a moral system of banking, or is deceptive by design and tantamount to fraud?

Over the past several decades, a controversy has been brewing among monetary economists concerning fractional reserve banking, Modern economic theorists of the Austrian School who are generally hard money advocates, find fractional reserve banking to illegitimate to its core. Equating it fraud and perceiving it to be antithetical to a free market in money. Whereas free-banking (an economic school that is arguably an outgrowth of the Austrian School) do not see fractional reserve bank as immoral. Rather, such institutions could not only ethically co-exist with 100 % reserve banks but also flourish. Any ethically questionable operations were the byproduct of government intervention and mutually exclusive from the banking practice (p.8). While their Austrian counterparts insist that the practice not only supports the monetary objectives of the state but owes its existence to the state (p.9, p.15-17).In this series of essays, we will examine the ethical arguments for and against fractional reserve banking. To present an unbiased account of the controversy.

What is Fractional Reserve Banking?

Before we can embark upon discussing the ethics of fractional reserve banking is important that we define what it is. On a high level, fractional reserve banking is a system in which banks are required to only hold a fraction of money deposited as reserves. This is done to enable banks to make loans. The recipient of the loan receives a transfer of deposited money upfront which they are expected to pay interest on. The bank customer who deposited the money that was lent out theoretically will receive the money-back in their account with sustained interest. This is done to expand the economy through “freeing capital for lending”. This is done without the depositor relinquishing their claim to this money. Effectively creating more money titles than physical money held on reserve at the bank (p.3)  The foundation of this banking system is fastened to the assumption that most customers with savings accounts will not simultaneously withdraw all of their savings at once. Otherwise, this could lead to what is known as a bank run. A phenomenon where the bank as completely depletes their liquid reserves. Since they are only mandated to hold a relatively small portion of reserves on hand.

Reserve requirements typically hovering around 10 % (presumably applicable to central banks).  Most reserve requirements are contingent on the bank’s size. Banks holding less than $15.2 Million in reserves are exempt from maintaining reserve minimums. The requirement of 10% reserves is applicable to banks holding over $100.2 million in deposits. Per the Garn-St Germain Act  banks are free from any reserve requirements for their first $2 million held. This legislation was initially passed by the Regan administration as a means of relieving pressure on banks as the federal reserve significantly increased interest rates. Banking institutions that hold excess reserves or amounts of deposited money above reserve requirements are entitled to interest payments. Under the Financial Services Regulatory Relief Act of 2006, these interest payments are allocated by the Federal Reserve.

As mentioned above fractional reserve banks issue more money titles than currency on hand. Through this process, they engage in form of indirect “money” creation. The loan itself treats the money titles as being equally as valid as actual currency notes. When the loan is issued the bank “credits” the borrower’s account with an amount equal to the loan, mimicking a transfer of physical cash. The methodology of money creation on the part of fractional-reserve banks has been distilled down to a science. Guided by the money multiplier principle. This concept broadly describes how “.. initial deposit leads to a greater final increase in the total money supply”.  More specifically how much commercial bank money ( demand deposits that can be utilized for credit and debit purposes, basically your residual after reserve requirements) using a defined unit of central bank money. Central bank money is any medium of exchange that these institutions acknowledge as being money. The correct proportion of “money” creation is determined by the below equation:


M=  Money Multiplier, R= Reserve Requirement

Pueblo Lands

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Just a fun fact regarding the Pueblo tribe that originally resided in the U.S. Southwest. This tidbit of information is specific to the Pueblos domiciled in New Mexico. The “… lands were acquired under fee under Spanish rule…”. Once the territory of New Mexico was annexed by the United States under the Treaty of Guadalupe Hidalgo (1848) in the aftermath of the Mexican War (p.272). This transferred right to the lands to the tribe versus the United States government holding the legal title.

Unfortunately, the technical aspects of the land own by New Mexican Pueblos are now minimal. As the tribe is presently in a trust relationship with the U.S. Government. See United States V. Sandoval (1913) (p.273). The tribe cannot “alienate their lands without the consent of the United States per United States V. Candelaria (1926) (p.273). Water rights for Pueblo lands are as applied by Winters Rights and are not different ( New Mexico V. Aamodt) from those of any other tribe (p.273).

Side Note: 

I may not be a trained lawyer. However, I am a Classic Liberal. That means I hold individual rights and property ownership in high regard. After all, I am following in the tradition of John Locke, and so on. If we strip away all the social justice rhetoric surrounding the government’s treatment of the tribes, there are a lot of violations of natural property rights. This opinion may not be based on past case precedence, but rather on unified philosophical principles. By the Treaty of Guadalupe, the tribe has legally transferred the right to their lands. While subsequent legislation may subordinate the strength of this previous agreement, did the tribe ever consent to the trust relationship with the United State’s government? From a purely a priori combined with some of the rhetoric surrounding past and present tribal/U.S. relations it would be fair to surmise no.

The legitimacy of the present guardianship dynamic between the New Mexican Pueblo tribe and the United States is suspect at best. Effectively, this arrangement transfers Pueblo lands to the federal government for relocation to the tribe. Many who are not as privy to the philosophical implication of property rights may find this alteration to landownership to be inconsequential or even a mere technicality. Taking such a superficial stance on this issue undermines property rights. Rightfully attained property should not be transferred to another party including the government without consent. This issue somewhat mirrors the overextension of civil asset forfeiture in cases of narcotic sales or instances of eminent domain. There may be laws on the books that provided legal justification for such actions. However, it is morally or philosophically justifiable? Could these laws be legitimate due to the fact they are unjust? Depending on your disposition towards property rights the answer can be a resounding no. Through this tacit acceptance of law equating moral correctness, we accept many unjust laws as being legitimate. This in turn transforms the Bureau of Indian Affairs into an institution that is more of an imposition than a facilitator of tribal rights. Inverting property rights, thereby shifting it from a negative right to a positive right. The BIA had the potential to operate in a manner that served to legitimately uphold tribal property rights. Like more bureaucratic departments within the government, it managed to make a bad situation worse. Instead of taking on the role of a property rights arbitrator between Indians and non-Indians, it became a property rights dispensary. Creating a perverse dynamic in which there is an inference that the Pueblos no longer own the land. When it was historically transferred to them by treaty. If this is true then the government has no business managing the land at all. Unless their property rights are being infringed upon. For example, non-Indians encroaching upon their water rights. There is a profound categorical confusion in attempting to protect property rights by first violating them. Making it appear as if it more of the pretext for circumventing Native property rights than defending them.

How to Quantify Indian Water Entitlements: A Lesson From the Ak-Chin Tribe

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One controversy that continues to afflict Indian water rights is that the Winters Doctrine does not provide clear quantifiable limits of water usage entitled to Native tribes.  Typically, legally define water usage limitations by survey and legal recognition is an extremely costly route to take for the tribes (p.286).  The most economical route tends to be through negotiations, administrative action, or legislation (p.286). One such example of this was the Ak-Chin tribe located approximately an hour south of Phoenix, Arizona. Ultimately, resulting in the development of the Public Law 95-328 (1978).

This law was spurred by the drastic decrease in the water table for the Ak-Chin reservation. This being something a substantial blow to the community as at the time they were primarily an agricultural-based economy. It was found that this decline in the water table was the result of the federal government failing to “prevent the mining of groundwater”. Due to this abdication of duty on the part of the U.S. Government, it was held liable to build a spring well and delivery apparatus from federal lands to meet the required amount of water entitled to the tribe through Winters Rights. The law set in motion that an interim supply of water is provided by 1984. That a permanent supply is allocated by no later than 2003 (p.6). The provision of water would be supplied through the Central Arizona Project Aqueduct (p.6). This has resulted in the Ak-Chin tribe expanding their” irrigated agriculture by 10,000 acres” resulting in an improvement in economic conditions on the reservation by 1991 (p.13). Because of the 1978 act and 1984 amendment. By 1993, the tribe had next to no unemployment and no social services expenditures (p.3).

The 1984 amendment provided more than just the interim supply of water needed for cultivation purposes. $15 million was provided for purposes of obtaining usable water. $ 28.7 million was also transferred to the tribe for economic development. The date for the permanent supply of water shifted to 1988 (p. 7).  The amendment expanded water consumption entitlement to “75,000 and 85,000 acre-feet, depending on precipitation levels each year (p.8). This amendment was deemed controversial at the time because it reallocated unused water from the Gila River Project to tribe versus “other state appropriators ” (p.8).

Then came the 1992 amendment to the water activities for the Ak-Chin Tribe. This amendment allowed off-reservation leasing of the Ak-Chin water supply. Considering the ever-evolving nature of American Indian Law there was then the 2000 amendment. Designed to provide great clarity on leasing requirements for Ak-Chin water. Manifesting itself in S. 1913- Ak-Chin Water Use Amendment Act of 1999.


    (a) Short Title.–This section may be cited as the “Ak-Chin Water

Use Amendments Act of 1999”.

    (b) Authorization of Use of Water.–Section 2(j) of the Act of

October 19, 1984 (Public Law 98-530; 98 Stat. 2698) is amended to read

as follows:

    “(j)(1) The Ak-Chin Indian Community (hereafter in this subsection

referred to as the `Community’) shall have the right to devote the

permanent water supply provided for by this Act to any use, including

agricultural, municipal, industrial, commercial, mining, recreational,

or other beneficial use, in the areas initially designated as the

Pinal, Phoenix, and Tucson Active Management Areas pursuant to the

Arizona Groundwater Management Act of 1980, laws 1980, fourth special

session, chapter 1. The Community is authorized to lease or enter into

options to lease, to renew options to lease, to extend the initial

terms of leases for the same or a lesser term as the initial term of

the lease, to renew leases for the same or a lesser term as the initial

term of the lease, to exchange or temporarily dispose of water to which

it is entitled for the beneficial use in the areas initially designated

as the Pinal, Phoenix, and Tucson Active Management Areas pursuant to

the Arizona Groundwater Management Act of 1980, laws 1980, fourth

special session, chapter 1.

    “(2) Notwithstanding paragraph (1), the initial term of any lease

entered into under this subsection shall not exceed 100 years and the

Community may not permanently alienate any water right. In the event

the Community leases, enters into an option to lease, renews an option

to lease, extends a lease, renews a lease, or exchanges or temporarily

disposes of water, such action shall only be valid pursuant to a

contract that has been accepted and ratified by a resolution of the Ak-

Chin Indian Community Council and approved and executed by the


    (c) Approval of Lease and Amendment of Lease.–The option and lease

agreement among the Ak-Chin Indian Community, the United States, and

Del Webb Corporation, dated as of December 14, 1996, and the Amendment

Number One thereto among the Ak-Chin Indian Community, the United

States, and Del Webb Corporation, dated as of January 7, 1999, are

hereby ratified and approved. The Secretary of the Interior is hereby

authorized and directed to execute Amendment Number One, and the

restated agreement as provided for in Amendment Number One, not later

than 60 days after the date of the enactment of this Act.


Indian Water Rights

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Depending on climate water can be as valuable as gold. Under certain conditions, it can be even more so valuable. Water is essential to life and crucial for regular consumption, bathing, irrigation of crops; it is truly the lifeblood of civilization.  If it was for the fertile banks of the Nile river or the rich and saturated soils of the fertile crescent (Tigris and Euphrates) rise of Egyptian and Mesopotamian empires would have never been possible. Water rights for Native Americans have in recent decades become a crucial touchpoint in the federal guardianship dynamics between the tribes and the U.S. government. While rights to water source appropriation generally fall under either riparian or appropriative conditions, how this is applied to Indian Tribes is slightly more complicated. A running motif that is common throughout American Indian Law. Despite the immense amount of complexity facing Indian water rights, considering it is a life-sustaining resource such matters must be sorted out.

Standard Water Rights For Non-Indians:

As mentioned above, water rights traditionally have fallen into one of two legally recognized categories. This includes riparian and appropriative rights to non-navigable bodies of water for consumption purposes. Riparian water rights tend to be applied in the “water abundant” regions of the United States. Particularly the Eastern seaboard of the United States.  Under riparian water rights, owning land or property that borders on a lake or a stream enables the right of the owner to “reasonable use” (p.277). The right to use is directly connected to land ownership. During times of drought the quotas for consumption among the entitled appropriators are reduced proportionately (p.227). Under the conditions of appropriative water rights, the entitlement to water utilization is not tied to ownership of surrounding lands. It is connected to whoever first can put the water to beneficial use. First come, first serve to harvest dynamic. This variety of water rights determination evolved in the western United States back when most of the land was federally owned. Mines were generally constructed far away from usable water sources meaning that transportation of potable water was costly (p.278). Resulting in the development of a first use policy to ascertain the primacy of water rights.  Meaning that “… water rights are not appurtenant to the land…” (P.278). Making precise dates of water appropriation extremely important. Older appropriators possess a greater deal of certainty in the right to utilize water from a specific source (p.278).

Law governing water rights tend to be formulated by the federal government and shaped by “local custom” (P. 279). Congress adapts legislation so that it conforms to the customs and historical practices of the region. This tends to be reflected in laws such as the Desert land  Entries Act (1877) and  43 U.S.C.A Sec. 321-25 (p.279). Appropriative have been applied to the non-navigable bodies of water in CA, OR, WA, NV, AZ, NM, ND, SD. While the framework for these laws has been formed in federal law it is generally governed by state law.  An example being California Oregon Power Co. V. Beaver Portland Cement (1935) (p. 279). How the states handle water rights varies dramatically state by state. Colorado is a 100 % appropriative system. California and Oregon are mixed systems.  The priority of use and “periods of non-use resulting in forfeiture…” of rights varies by states (p. 179).

Development of the  Winters Doctrine

The basis for tribal water rights evolved out of two cases which have resulted in the contextual rules that are now known as the Winters Doctrine. The first case that provided the foundation of this legal doctrine was Winters V. United States (1908). The Fort Belknap Reservation in Montana was created based upon an agreement. In the middle of the geographical territory of the reservation ran the Milk River.  When the land was set aside for the reservation nothing was detailed regarding water rights.  Then non-Indian settlers began building dams with was disrupting water usage on the reservation.  The Supreme Court ended up ruling that the water rights for the reservation were held by the 1888 agreement allotting to the tribe. Treating the right to water usage part and parcel with having the reservation established near a natural body of water (p. 280).

The second case further developing the scope and parameters of the Winters Doctrine came decades later in 1963. This came in the ruling of Arizona V. California (1963). The issue became the U.S. government attempted to establish water rights for tribes residing near the lower Colorado river by executive order. The court held that at the time of the establishment of these settlements water rights were established. Complaints among non-Indian settlers came about the quantity of water allotted to the natives. Citing a sparse Indian population in the “foreseeable future” (p.281). This was rejected on grounds by the SCOTUS that the reservation was “entitled to enough water to practicably irrigate every acre of the reservation” (p.281).

Conclusions of the Winters Doctrine (Winters Rights) (p.282)

“ 1.  Winters’ rights are creatures of federal law, which defines the extent.

2. Establishment of reservation by treaty, statute, or executive order implies reservation of water rights within the boundaries of tribal land.

3. The water rights are reserved as the date of creation of the applicable portion of the reservation. Competing users with prior appropriation dates under state law take precedence over the Indian rights, but those with later dates are subordinate.

4.  The quantity of water reserved for Indian use is that amount sufficient to irrigate all the practicably irrigatable acreage of the reservation.

5. Winters’ rights are not lost by non-use”.

Public Law 280- Only Making Matters Worse

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Navigating through the complex web that is American Indian Law one is bound to come across Public Law 280.  Passed in 1953 by congress, it seeks to grant state authority for matters involving Indian litigants. Effectively reducing federal involvement in such matters. However, will this was a radical shift it was not a complete relinquishment of federal intervention in tribal affairs. As it did not end empower the states with complete jurisdiction. It did not end the land trust relationship between the federal government and the tribes (p.176). The tribes also continued to retain sovereign immunity (p.176).  See California V. Quechan Tribe  (p.176). This shift in jurisdictional authority was not openly welcomed by the states. Congress granted law enforcement to the states without any appropriations to fund such efforts (p.177). The tribes were irked by the fact that state jurisdiction was extended over tribal affairs without their consent (p.177). Unquestionably making federal authorities the bootleggers of this legislative arrangement.

It is important to note that the extent to which a state possesses authority over tribal affairs has varied. The varying levels of state responsibilities have been spelled out in subsequent revisions to the law. Six states were even allotted authority over specific crimes committed by Indians on tribal land.

18 U.S.C.A  Section: 1162a: (P. 178-179).

Alaska- Criminal and civil Jurisdiction over all natives except for those belonging to the Metlakatla tribe

California- The state has been provided criminal and civil jurisdiction over all Indians.

Minnesota- Jurisdiction has been extended to the state except for members residing on the Red Lake Reservation

Nebraska-  The state has been provided criminal and civil jurisdiction over all Indians.

Oregon- Jurisdiction has been extended to the state except for members residing on the Warm Springs Reservation.

Wisconsin-  The state has been provided criminal and civil jurisdiction over all Indians.

In effect enabling the states to have the same authority to enforce the law insider the reservation as they do off of Indian land (p.179).  To prevent any legislative inconstancies Chapter VI, Sec D, Supra; of Public Law 280 includes the verbiage “.. by or against Indians..” (p.179). Handing over full law enforcement authority to the six listed states, minus any noted exceptions. Despite the overreach of state authority over tribal matters, this amendment does not clearly distinguish the role of tribal law enforcement. It is assumed that the tribes can only formulate laws that “…complement state..” (p.180). However, in regulatory areas that are not specified in Public Law 280 such as hunting/fishing rights, tribal regulations, and taxation “… the state lacks general powers…” (p.180). It is slightly reassuring to see that in the context of tribal jurisdiction that “taxation without representation” is being adhered to.

As previously mentioned, Public Law 280 also extends fully civil jurisdiction to the six states listed above.  In other words, the states have been empowered to rule on disputes involving Indians that transpire on Indian soil. This power vested in  28 U.S.C.A. Section 1360a. This amendment side-stepping the ruling in  Williams v. Lee (1959) which resulted in a ruling that the states do not hold adjudicatory power over civil matter arising in Indian country (p.181). However, under section 1360b prohibits the states from making judgments regarding Indian trust lands (p.181). Providing a relatively minor check on state power over tribal affairs.

Odds are congress could not foresee many of the challenges presented by Public Law 280 and its subsequent amendments. Providing the astute observe with a shining example of legislative hubris. One of these noteworthy and burdensome controversies is whether city or county ordinances as civil laws of the state. Questioning whether such municipal laws apply to Indian lands that fall within the town’s geographic boundaries (p.182). The ruling in Rincon Band of Mission Indians V. County of San Diego that “general applicability” extends to state laws and not local ordinances (p. 182). Only adding fuel to the fire, the Ninth Circuit Court expressed that congress “… imposing detailed local regulations upon Indians..” hinders their ability to self-govern (p.182). The Supreme Court has not directly ruled that applying local laws to the tribes is outside of the scope of Public Law 280. However, the SCOTUS has “expressed doubt” that the law enables local towns and counties to do so (p.183).

The second major conundrum conjured up by this superior piece of legislation  (sarcasm) is if the states have the right to enforce the law why wouldn’t they have the power to legislate laws applicable to the tribes? Per the language of  Public Law 280, the states have the power to decide cases, but not explicitly granted the power of legislation (p. 183). There is a portion of the law in which it could be interpreted as granting legislative power to the states.  Stating that “ … the state shall have the same force and effect within… Indian Country as it does elsewhere within the state” (p.183). The SCOTUS ended the intense debate in the ruling of Bryan v. Itasca County (1976). In this scenario, Minnesota County attempted to assess taxes on personal property that was owned by Indians on Indian soil (p. 183). It was argued that since the property being taxed was not trust lands, it was with n the power of the state to collect such taxes. However, the SCOTUS ruled the intention of the civil provisions under Public Law 280 was to enable the states to resolve disputes. However, extending this power to taxation veers outside of the intended scope of the law (p.184-185).

Public Law 280 managed to further complicate the matter of jurisdiction in Indian affairs. The law is inherently unjust, due to the lack of consent on the part of tribal and state governments.  For the applicable tribes in the six referenced states, they have lost more autonomy over governance within Indian territories. The states ended up inheriting higher law enforcement expenditures and more headaches. The matter of jurisdiction was already complex before 280 passing. It only serves to compound an already convoluted situation.  By adding additional intricacies, merely to relieve the federal government from duties that have been traditional held under its jurisdiction. Typically, federalism does appear to an attractive solution to most legal conflicts. Not so much under these circumstances.  The feds are only passing the buck on a mess they created.