Khaki Economist: Bill Easterly and the happy-clappy rice farmers

The main problem with governing over Indonesia, for there is a main problem, is it doesn't really exist. Owing to its colonial past, its difficult geography, and a great fertility which for centuries allowed many Austronesian tribes to exist more or less independent of one another, Indonesia is made up of some 300 distinct ethnic groups, each in a different valley, on a different island, with different aims and different outlooks. One of these, met by Dutch missionaries in the Western Sumatran jungle in the sixteenth century, and by us last week, has maintained quite a distinct culture. The Dutch then were surprised at the Minangkabau people's level of advancement. They were already with schooling, the written word, fenced agriculture, a matriarchal property system, and, unlike their Batak co-islanders, didn't enjoy barbecued man. Today, the Minangkabau carry on many of their ancestral habits: the child takes the mother's name; property is passed from mother to daughter; and traditional buildings are ubiquitous amongst the Soeharto-era concrete. And they are proud of it. Tour companies everywhere offer a more matriarchal experience, with more bull-horned buildings, and less of that Javan crap.


Thought the Minangkabau have continued some tradition, the tour companies don't advertise the other great cultural influence—that which rubbed off during the 350 year Dutch visit. As missionaries, the Dutch were useless: there's a mosque on every corner. But below every portrait of Susilo Banbang Yudhoyono, their president, sits a vase of fake tulips. There are entire villages of Dutch-style country houses, dotting the mountain trails. And dozens of towns, peculiarly, light their main shopping strips with large neon windmills.


A long swim off the West Sumatran coast, in the direction of Sri Lanka, lies Nias island, where the story could not be more different. On arriving, the Dutch found a megalithic (large rock worshipping) society, and, undeterred the Nias' national sport was leaping over large stones, almost converted them to Protestant Christianity. Compared with selling daughters for pigs, building houses without nails, and leaping over rocks for fun, the Lutheran and Dutch Reformed churches didn't offer the Nias much excitement. As compensation, the islanders continue their traditional—probably heretic—lifestyles, simultaneously worshipping spirits and rocks alongside Allah (for that is what they call H-m), and attending mass on Sundays as joyous, songful, cheating monotheists. Culture trumps religion. Every single time.


Culture also, every time, trumps economic rationality. This makes the job of development economists, who are trained to make guesses about how slightly rational people act, more difficult. Thankfully, most people, most of the time, behave in ways that look vaguely rational. This allows economists to be of a little value. But when a culture places great value on the irrational, as in Nias, the development economist must face a whole lot of (can I say `human questions' without inferring economists, who are smart, don't normally ask them?) human questions.


A famous paper came to mind, while I was interviewing a rice farmer, while swiping away at big anopheles mosquitoes, while larvae scooted around the stagnant paddy next to us. In the paper, Bill Easterly and Ross Levine*, two economists, showed of all former colonies, current livelihoods can largely be explained by latitude, crop makeup, and their propensity for disasters. Colonisers, so it went, would export their solid institutions to easily habitable colonies, like Australia and Canada. The unfortunate colonies where (wimpy) European colonisers would catch typhus, or tapeworms (like Burundi, where 280 in every thousand colonialists died every year), would have `extractive institutions' forced upon them. These allowed the most efficient exploitation of colonies, which, lets face it, was what the game was all about.


Nias is poorly positioned to be `easily habitable'. In the past while, it has had a large tsunami (which did more damage in Aceh, just across the way), and a few large earthquakes. The larger of these was the twelfth largest ever, lasting more than two minutes, and raising bits of the shoreline two feet. Together, these killed about 1000, though improved the surf, increasing Lagundri's famous seven-second right-hander to nine seconds. The island has also a healthy population of Anopheles, which spread malaria, an impenetrable jungle covering, and your regular cash crops—cocao, rubber and rice. None of these attributes, unfortunately for Nias, lend themselves to making development easy.


The story, though, is not all sad. While Aceh, described by a UNDP worker we interviewed as a "sexy aid destination", gets most attention, a little development aid has trickled on. Most of this seems to have gone into improving the agricultural methods of farmers, which, I admit, sounds dull, but is actually very exciting. The techniques popularised in the 60s and 70s by CNIAR, an agricultural research body credited sometimes with the world's not being in perpetual famine, never really caught on in Nias. The development organisations there want to reverse this, and bring farmers from the twelfth century into the present. The problem is, many of the farmers we spoke to were unsure the present was a nice place to be.


Our rice farmer, whose parents, grandparents, and great-grandparents were also rice farmers, was introduced by the UNDP to a new breed of rice, from Java, which yields twelve tonnes per hectare, three times per year. This compares favourably to her Nias variety, which yields five tonnes a hectare twice a year. After its first harvest, she ate some, decided it tasted different to her old variety (though the difference wasn't apparent to our translator), and replanted her Nias variety, willingly forgoing twenty-six tonnes of rice per hectare per year. The ten tonnes produced are bartered at market for pigs, and carrots, buying her a poor life.


The rice farmer, though, has it easy, because even in a barter market prices can change. Our rubber farmer wasn't as lucky. On Nias, the only Mercedes Benz are driven by partai bosses, and fly partai flags from their bonnets. In return for bribes (I presume), ethnic Chinese merchants are somehow exclusive in their buying produce from certain regions. The rubber farmer had the option to sell her rubber, extracted in the same inefficient way her grandfather did, to one of these, and one only. Economists call this situation, where these is only one buyer, `monopsony', and fear it like any other market failure. The price paid to her does not change, and is about a quarter of the price offered on the mainland. She lives today in a poverty caused by corruption, culture, and tradition.


Naomi Klein and her leafletters would have us believe the world was hunky-dory before the West came along and began exploiting the poor. Don't worry. The poor have perfected the art of exploiting themselves.


Markets don't fail. People do.