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Friday, July 9, 2010

The Not So Wild, Wild West: Property Rights on the Frontier

An Outstanding Book on the American West

I remember very well the images of the American West I received as a child. Movies, TV shows, and books convinced me that the West was excitingly wild and violent, with wars and gunfights as staples of everyday life. No doubt millions of others have grown up with the same idea, and a corollary—that the West was tamed by the extension of government into the region.

Guess what: it’s a fable.

In their book The Not So Wild, Wild West, economists Terry Anderson and Peter Hill masterfully demonstrate that the West was not at all like the common view. Not only was violence not particularly prevalent, but stable socioeconomic relationships arose spontaneously before there was much governmental presence. In fact, Anderson and Hill repeatedly show, the arrival of government usually made matters worse, as politicians and interest groups were able to upset the arrangements that people had worked out to maximize the benefits they could derive from the land and its resources and to minimize conflict.

Writing from the vantage of the New Institutional Economics, the authors explain that “cooperation dominated conflict because the benefits and costs of institutional change redounded to small, well-defined groups or communities. As long as new institutions evolved locally and voluntarily, the costs of conflict and the benefits of cooperation were internalized by the decision makers.” Whether the issue was cattle, mining claims, water, or anything else, people were remarkably good at devising efficient rules and structures in order to make the most out of the conditions they faced. In a nutshell, the American West was a laboratory in which Hayekian ideas about the benefits of spontaneous order were put to the test and found to hold true.

Anderson and Hill look at the West from numerous angles, all yielding fascinating insights. Their chapter “Property Rights in Indian Country” dispels the myth that Indians lived in a kind of socialistic utopia with no taint of private property. Depending on their circumstances, which varied greatly in different regions, Indian tribes developed property-rights institutions ranging from communal to “systems hardly less individualistic than our own.” Indian cultures devised private property where resources required long-term investments and care to avoid what we now call the tragedy of the commons. Among the Paiute, for example, groves of pinon trees were treated as family property subject to inheritance, and there were rules against trespass. The romantic leftist notion that American Indians prove the superiority of socialism has lain in intellectual ruins for years. If you need a cogent refutation (perhaps to use against teachers who use the Chief Seattle myth to push students into opposing capitalism), you can’t do better than this book.

What about all the warfare with Indians? Most readers will be surprised to learn that there wasn’t much of it in the eighteenth and well into the nineteenth centuries. In those years, trading and negotiation were the norm, and warfare was rare. The famous Indian wars of the 1870s and 1880s had to do mainly with the arrival of the regular U.S. Army. Anderson and Hill observe that “Maintaining a standing army, as opposed to raising local militia, shifted the cost of fighting to others and predictably increased the number of battles.” For one thing, the incentives of the Army were aligned with combat—the more there was, the more the chance for higher rank and pay. The authors quote General Sherman, who once lamented how hard it was to “make a decent excuse for an Indian war.” More important, those who were interested in taking Indian land could spread the cost and risk among the rest of the population, and didn’t hesitate to do so. The book makes it clear that the problem wasn’t “the white man,” but rather that some white men were in a position to make others bear the cost of aggression.

Rationality rather than conflict was similarly the role with frontier-mining claims and the allocation of water rights. The book also has a wonderfully insightful chapter on the economics of wagon trains. The authors’ discussion of the irrationality, inefficiency, and utter folly of federal intervention in the natural order that had previously arisen should be imported into college economics and public-policy courses.

The Not So Wild, Wild West is a beautifully written and printed volume that teaches us much about the American West, but also about human nature and the economic way of thinking. Congratulations to Terry Anderson and P.J. Hill for an outstanding book.

  • George Leef is the former book review editor of The Freeman. He is director of research at the John W. Pope Center for Higher Education Policy.

  • Peter J. Hill is George F. Bennett Professor of Economics at Wheaton College (Illinois) and a Senior Associate of the Political Economy Research Center (PERC) in Bozeman, Montana.