PNG: Going below zero.

A few thoughts on the developing world, from a nation that isn't: Papua New Guinea (PNG).

Subsistence agriculture is tricky for classical economists. Working from a neo-classical point of view that has shaped the largest international development insitutions since the Bretton Woods agreement, subsistence living -- growing or collecting what you need on your own land, and taking a pass on the cash economy -- is a sort of baseline. It is the tabla rasa upon which development begins.

To techocrats sweating out the details of currency exchange and monitary supply from cubicles in Berlin or Washington or Tokyo, subsitence economy is like dark matter: We know it exists, but none of our instruments can detect it.

To villages that may go years without contact with outsiders or a national government, I imagine that the whirlwind of data in a Bloomberg ticker would seem quite a bit less real than the day-to-day work of pulling yams from the ground. But the subsistence economy in Papau New Guinea is not at all a blank slate. In a country of fantastic cultural and political diversity, these economies show quite a bit of complexity.

In this confusion, tragedy lurks: Despite village life's seeming naivete, subsitence is not a floor from which an economy can only grow, but a system in political and economic equilibrium, refined over millenia and by its own terms, highly efficient. In the South Pacific, village gardens provides a decent living to people, without the need for 60 hour workweeks. At least, it used to.

Change is here, brought on by haphazard national-level governing colliding with a world economy thirsty for PNG's lush natual resources. With is have come disruptive shocks to the economic and social life of PNG. While the economic tigers in Singapore, Thailand and coastal China rip along toward long term GDP growth, the rewards of development haven't materialized in PNG. But stunningly violent crime, AIDS and an unraveling of family life have certainly arrived. Things are bad here, and appear to be getting worse.

As it turns out, PNG's traditional subsitence economy was a long way from the bottom. So where do we go from here?... THat's another post.