Job planners should watch and learn from local markets

Dawn breaks early in Larantuka, at the eastern end of Flores, 1,600 kilometres east of Bali. The fishermen come early with their catch, the farmers are at the market displaying their vegetables, and the ubiquitous ojek drivers (local motorbike taxis) are already circling the market looking for passengers.

Going to the local market is a good way to assess how a country is doing. Indonesia is a country of 242 million people, with more than 40 per cent under the age of 25. You can see the vigour of the youth, and how globally interconnected they are as they chat on their mobile phones while balancing on their motorbikes. In the buses, women talk on their phones to their grandchildren. Internet use is widespread; Indonesia has the highest number of users on Facebook in Asia.

The market works wondrously even in the most remote regions. Going down a dirt road, we passed a local on a motorbike. Our guide told him we were looking for local textiles. Half an hour later, the local came back with news that someone in his village would sell us some. We stopped by an old woman's home and she showed us two pieces of hand-woven, beautifully dyed cotton cloth. With half the village watching, we clinched a deal at a fair price for all.

Markets thrive on information, and, today, the old lady in the remote village knows the fair price of her labour. But markets also have structure and hierarchy. The best pieces go to Bali to be sold to collectors from Jakarta or Switzerland.

Markets concentrate in hubs, and it is often cheaper to buy direct in Bali than to try to hunt for the artefacts at their origin. Similarly, it is cheaper to buy better quality goods made in China in the US than in China itself.

Travelling in local markets is a better education about the functioning of markets than studying them in Chicago. Peruvian economist Hernando de Soto keeps reminding everyone that theories of markets evolved from developed markets, where they have forgotten how primitive markets work in practice. The majority of the seven billion people on the planet live in the poorer, developing world. Indonesia is an excellent example of the pressure of population growth on employment. Over four million Indonesians are born every year, putting a huge strain on urban infrastructure and job-creation efforts.

The next war will not be about trade or currency, but jobs. Between 1979 and 2007, the US shed nearly six million manufacturing jobs, replacing them with service industry jobs. Most of the manufacturing was outsourced to emerging markets with cheaper labour, principally China. But once the crash came in 2007, the US also began to look for manufacturing jobs, on top of retaining the high value added.