GillBates0's Journal: Insightful PPP/wage/exchange_rate related comments

It annoys me every time some smartalecky Slashdot "journalist" comments that the pay in other countries is only $5 an hour OMG, while failing to take into account the Purchasing Power Parity and other niceties that would actually make sense. A couple of posts from this story http://it.slashdot.org/article.pl?sid=06/04/30/0541254 ( "Life on the Other End of the Tech Support Line") that I wish to save for quick later reference.

The first by me: http://it.slashdot.org/comments.pl?sid=184468&cid=15231430

Ofcourse...
(Score:5, Informative)
by GillBates0 (664202) on Sunday April 30, @08:14AM (#15231430)
(http://slashdot.org/~GillBates0 | Last Journal: Thursday October 20, @02:54PM)
...comparing salaries in absolute Dollar terms (as the article summary does) makes _no_ sense, really without taking into account the Purchasing Power Parity [wikipedia.org]. In short, $1.00 would go significantly further in India than it would in the US.

As a rough of comparison, a loaf of bread which costs $2.50 in the US costs a little less than 25 Indian Rupees ($0.50). US $13000 is a little less than 600k INR [google.com] which by all means is quite a _comfortable_ if not princely salary to get by in India.

And another one my KFG: http://it.slashdot.org/comments.pl?sid=184468&cid=15231489

Re:Compartively..
(Score:5, Insightful)
by kfg (145172) FriendFriend of a Friend on Sunday April 30, @08:52AM (#15231489)
A "dollar" is what a dollar buys. It has no fixed value.

In third world economies a "dime" may well be "ten bucks," so long as you stick within the local economy for food, clothing and shelter. Living is actually quite cheap, which is why so many people from the first world choose to vacation/retire to the third. You may well find you can live, and live well, for a year for less than what it would cost you to spend two weeks at Disney/land/world/universe/whatever.

The rub is that things from outside the local economy, imports, are priced at what a "dollar" is worth where they are made, and can thus be beyond the means of someone who would otherwise be considered middle class. Things like a simple radio or portable television may require the investment of an entire community which otherwise lacks nothing needed for sustaining a good life.

One can see the same affect in the first world when comparing rural vs. urban living. I turned down $60k/yr in Manhatten awhile ago, because $60k in Manhatten cannot buy me what I could get working a cruddy retail job upstate.

When comparing disparate economies you cannot think in terms of dollars. You have think in terms of hours per pound of rice/place to sleep. When you do this you may find that lower wages are often greater wealth. Money is not wealth. It is an abstraction. What your money buys you is wealth. The "stuff" itself.

KFG