Little Business on the Prairie: Entrepreneurship, Prosperity, and Challenge in South Dakota

CNBC's annual survey America's Top States for Business ranked South Dakota No. 1 in 2013. Among the ten categories of competitiveness cited in the study, the criterion that business leaders consistently rank as most important -Cost of Doing Business- proved especially favorable for the state that attracts millions of visitors each year to the Shrine of Democracy, Mount Rushmore. In Business Friendliness, a measurement of the state's legal and regulatory climate, South Dakota came in No. 2. Also recognized in the survey was South Dakota's low tax burden- no individual or corporate income taxes and low sales and property taxes and low utility rates, wages and commercial rent costs. Further, South Dakota boasts low unemployment, strong state finances (surplus budgets), and a healthy housing market.

In his new study of entrepreneurship in South Dakota, Little Business on the Prairie, economic historian Robert Wright reviews the state's economic history through the lenses of its public policies, politics, and institutions of governance. The book demonstrates that an economy that suffers from palpable disadvantages, like long distance from major markets and low population density, will still thrive if it is governed efficiently. In other words, crucial public goods like education, infrastructure, and justice should be provided at minimal cost, and entrepreneurs should not be burdened with excessive regulatory and tax expense.

Economic performance suffers when governance is poor and public goods are provided at an unnecessarily high cost. This Wright shows by comparing South Dakota to other states and by examining the economies of the state's Indian reservations. Public goods provisions on reservations is spotty and generally very poor and, not surprising, reservation economies lag far behind that of the state even though individual Native Americans have shown considerable entrepreneurial skill. Little Business on the Prairie concludes with Wright's prescription for confronting the economic and governance challenges that lie ahead for South Dakota.