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The greatest mystery in economics are things like this price difference. Why does one cost $5k and the other cost $55k? Some economics PHD should go and resea

The greatest mystery in economics are things like this price difference. Why does one cost $5k and the other cost $55k? Some economics PHD should go and research into this and figure out why there's such a huge price difference. It would be interesting if they would go beyond the usual "just so stories" and simple answers and chase the numbers as far down as they can.

ComodoHacker 10y ago
The answer in this case is indeed simple: cost of living. It's really about 10x difference.
- narrator 10y ago
  Why is food so much cheaper? Why is land so much cheaper? Why are utilities so much cheaper? What are they doing that makes everything so cheap? IMHO, this is really a phd thesis sized undertaking and would probably teach us a lot about the inefficiencies in our western system. It's also not just because they're underdeveloped. Some cities in developing countries, like Luanda, Angola, have some of the highest costs of living in the world.
  - usaar333 10y ago
    Land actually isn't that much cheaper, but the others are true. It also isn't a Western System issue; Japan is actually one of the most expensive countries in the world. A lot does come down to being underdeveloped. Or more specifically, living standards are lower, especially with the lower class (e.g. the poor in the US live far better than the poor in China). Take away all of developed nation's anti-poverty programs and minimum wage laws (that provide for floors on labor costs), combined with cost-inducing regulation that exists to protect human health and the environment, and yes, you would make products in the economy a lot cheaper.
  - nl 10y ago
    Note that Luanda is only outrageously expensive for ex-pats, if you want to live how you are accustomed to in the West. If you accept the lack of access to Western goods, then it is much more reasonable. Why is food so much cheaper? Why is land so much cheaper? Why are utilities so much cheaper? What are they doing that makes everything so cheap? IMHO, this is really a phd thesis sized undertaking and would probably teach us a lot about the inefficiencies in our western system. Have you ever been to one of these places? People are much poorer, and the standard of living is much lower. Things like utilities often don't exist, or or much less reliable than in richer countries. Some things are cheaper: branded clothes and foods are generally priced beyond the means of most, so people don't buy them. Transport is cheaper, because people don't own cars - they walk, or bus, or share motor-scooters. Accommodation is cheaper on a per-person basis, because 6 people in a single bedroom apartment is normal. A few exceptions exist of course - the US health system costs a lot more than anywhere else in the world given the health outcomes. Places like Chile and Cuba pay a lot less for health care, but sit above and below the US on tables of life expectancy[1]. There are also things like extreme inequality in some countries which can cause other distortions. But there generally really are no secrets - they live cheaper because they are poorer. [1] https://en.wikipedia.org/wiki/List_of_countries_by_life_expectancy https://en.wikipedia.org/wiki/List_of_countries_by_life_expe...
  - AnthonyMouse 10y ago
    > Why is food so much cheaper? Why is land so much cheaper? Why are utilities so much cheaper? Don't forget about currency manipulation. People in China are buying those things in yuan and then to do the comparison you're converting it to dollars at the manipulated exchange rate.
  - _nedR 10y ago
    I am no economist (I am pretty sure this a well studied and documented field), but as some one who has lived in both developed and developing countries, I imagine it is because people from third-world country accept much a lower standard of living than a person in the first-world country. This is pretty much reflected in every aspect of life to the littlest detail. Everything from quality and size of accomodation, to the vehicle you drive, the quality of food, roads, toilets, water, etc. A shop or an office or home, might be more shabby in a poor country than in a rich country. Even if functionally they may be the same, a higher level of expectation is there in a rich country. All this costs money, and it all adds up. Once the average Chinese citizen demands to have the same standard of living as his/her counterpart in the west, the price advantage will disappear.
- aurelianito 10y ago
  I find very hard to believe that it is just cost of living. I am more willing to believe that, instead of that, what happens is that people in China just expect to have less resources to live. This opinion is based on my observation of how wages work in Argentina, in comparison with the US. Food (eating the same food) is cheaper in the US, rent (renting the same kind of appartment) is cheaper in the US, going to the cinema (same movie!) is cheaper in the US, buying a car (the same car) is cheaper in the US, buying clothes (the same clothes) is cheaper in the US. Even thou, when I worked in a Boston based company they claimed that our salary should be lower because we had a lower cost of living. It is just that they can get away with paying us less. The chinese (or argentinian) cost of living being lower is a lie. It is just that we cannot do the things that USians expect and our salaries are reduced accordingly.
mSparks 10y ago
Its not a mystery at all. China has tons of free world class education based purely on academic ability and a couple of billion people educated to a world class standard. The US has virtually no education system, what does exist is expensive and not practically oriented. Basic supply and demand. US has high demand for skills and totally non competitive supply. (even in tech now, which is why they need the H1B visa thing) But dont expect it to get fixed. It's that way on purpose. https://www.youtube.com/watch?v=ILQepXUhJ98 https://www.youtube.com/watch?v=ILQepXUhJ98
- learc83 10y ago
  When I was in elementary school, we were warned that we'd have to start going to school on Saturday to keep up with Japan. Replace China with the USSR and your argument could be from the 1960s. Replace it with Japan and it could be from the early 90s. Do you see a trend here? Every few decades we have a new enemy that's going to destroy our economy. Business interests push these narratives to move students into fields that will drive down labor costs for their companies. H-1Bs exist for the same reason. Oh...and How many Americans enroll in Chinese Universities?
  - mSparks 10y ago
    well. japan destroyed us car manufacturing. and the ussr. despite everything. destroyed us global military equipement sales. China seems to be picking at a dead carcass tbh, not exactly much left to take. US is so scared of chinese tech advancement they have banned exports of high end intel chips there. but that hasnt stopped them taking all the top places of the worlds fastest supercomputers. As soon as a couple of Chinese unis overtake the ivy league colleges will there be anything left in the US except bones? would you even know whether they have already? perhaps you missed junes China maintained its No. 1 ranking on the 47th edition of the TOP500 list of the world’s top supercomputers, but with a new system built entirely using processors designed and made in China. Sunway TaihuLight is the new No. 1 system with 93 petaflop/s (quadrillions of calculations per second) on the LINPACK benchmark.
    - 10y ago

ComodoHacker 10y ago

The answer in this case is indeed simple: cost of living. It's really about 10x difference.

narrator 10y ago
Why is food so much cheaper? Why is land so much cheaper? Why are utilities so much cheaper? What are they doing that makes everything so cheap? IMHO, this is really a phd thesis sized undertaking and would probably teach us a lot about the inefficiencies in our western system. It's also not just because they're underdeveloped. Some cities in developing countries, like Luanda, Angola, have some of the highest costs of living in the world.
- usaar333 10y ago
  Land actually isn't that much cheaper, but the others are true. It also isn't a Western System issue; Japan is actually one of the most expensive countries in the world. A lot does come down to being underdeveloped. Or more specifically, living standards are lower, especially with the lower class (e.g. the poor in the US live far better than the poor in China). Take away all of developed nation's anti-poverty programs and minimum wage laws (that provide for floors on labor costs), combined with cost-inducing regulation that exists to protect human health and the environment, and yes, you would make products in the economy a lot cheaper.
- nl 10y ago
  Note that Luanda is only outrageously expensive for ex-pats, if you want to live how you are accustomed to in the West. If you accept the lack of access to Western goods, then it is much more reasonable. Why is food so much cheaper? Why is land so much cheaper? Why are utilities so much cheaper? What are they doing that makes everything so cheap? IMHO, this is really a phd thesis sized undertaking and would probably teach us a lot about the inefficiencies in our western system. Have you ever been to one of these places? People are much poorer, and the standard of living is much lower. Things like utilities often don't exist, or or much less reliable than in richer countries. Some things are cheaper: branded clothes and foods are generally priced beyond the means of most, so people don't buy them. Transport is cheaper, because people don't own cars - they walk, or bus, or share motor-scooters. Accommodation is cheaper on a per-person basis, because 6 people in a single bedroom apartment is normal. A few exceptions exist of course - the US health system costs a lot more than anywhere else in the world given the health outcomes. Places like Chile and Cuba pay a lot less for health care, but sit above and below the US on tables of life expectancy[1]. There are also things like extreme inequality in some countries which can cause other distortions. But there generally really are no secrets - they live cheaper because they are poorer. [1] https://en.wikipedia.org/wiki/List_of_countries_by_life_expectancy https://en.wikipedia.org/wiki/List_of_countries_by_life_expe...
- AnthonyMouse 10y ago
  > Why is food so much cheaper? Why is land so much cheaper? Why are utilities so much cheaper? Don't forget about currency manipulation. People in China are buying those things in yuan and then to do the comparison you're converting it to dollars at the manipulated exchange rate.
- _nedR 10y ago
  I am no economist (I am pretty sure this a well studied and documented field), but as some one who has lived in both developed and developing countries, I imagine it is because people from third-world country accept much a lower standard of living than a person in the first-world country. This is pretty much reflected in every aspect of life to the littlest detail. Everything from quality and size of accomodation, to the vehicle you drive, the quality of food, roads, toilets, water, etc. A shop or an office or home, might be more shabby in a poor country than in a rich country. Even if functionally they may be the same, a higher level of expectation is there in a rich country. All this costs money, and it all adds up. Once the average Chinese citizen demands to have the same standard of living as his/her counterpart in the west, the price advantage will disappear.
aurelianito 10y ago
I find very hard to believe that it is just cost of living. I am more willing to believe that, instead of that, what happens is that people in China just expect to have less resources to live. This opinion is based on my observation of how wages work in Argentina, in comparison with the US. Food (eating the same food) is cheaper in the US, rent (renting the same kind of appartment) is cheaper in the US, going to the cinema (same movie!) is cheaper in the US, buying a car (the same car) is cheaper in the US, buying clothes (the same clothes) is cheaper in the US. Even thou, when I worked in a Boston based company they claimed that our salary should be lower because we had a lower cost of living. It is just that they can get away with paying us less. The chinese (or argentinian) cost of living being lower is a lie. It is just that we cannot do the things that USians expect and our salaries are reduced accordingly.

mSparks 10y ago

Its not a mystery at all. China has tons of free world class education based purely on academic ability and a couple of billion people educated to a world class standard. The US has virtually no education system, what does exist is expensive and not practically oriented. Basic supply and demand. US has high demand for skills and totally non competitive supply. (even in tech now, which is why they need the H1B visa thing) But dont expect it to get fixed. It's that way on purpose. https://www.youtube.com/watch?v=ILQepXUhJ98 https://www.youtube.com/watch?v=ILQepXUhJ98

learc83 10y ago
When I was in elementary school, we were warned that we'd have to start going to school on Saturday to keep up with Japan. Replace China with the USSR and your argument could be from the 1960s. Replace it with Japan and it could be from the early 90s. Do you see a trend here? Every few decades we have a new enemy that's going to destroy our economy. Business interests push these narratives to move students into fields that will drive down labor costs for their companies. H-1Bs exist for the same reason. Oh...and How many Americans enroll in Chinese Universities?
- mSparks 10y ago
  well. japan destroyed us car manufacturing. and the ussr. despite everything. destroyed us global military equipement sales. China seems to be picking at a dead carcass tbh, not exactly much left to take. US is so scared of chinese tech advancement they have banned exports of high end intel chips there. but that hasnt stopped them taking all the top places of the worlds fastest supercomputers. As soon as a couple of Chinese unis overtake the ivy league colleges will there be anything left in the US except bones? would you even know whether they have already? perhaps you missed junes China maintained its No. 1 ranking on the 47th edition of the TOP500 list of the world’s top supercomputers, but with a new system built entirely using processors designed and made in China. Sunway TaihuLight is the new No. 1 system with 93 petaflop/s (quadrillions of calculations per second) on the LINPACK benchmark.
  - 10y ago