5 ms·

Financial secrets of the world's poorest people.

43 points by robg 17y ago

ovi256 17y ago
Nice analogy with startups : focus on cashflow, not assets.
pj 17y ago
When I was traveling in Krakow, Poland, I was living on 10USD a day, including lodging, food (really awesome food), transportation and entertainment. I still don't understand how a train ride away the same lifestyle would cost 50USD a day. Why? A lot of the numbers people use to describe how people live are misleading. In poorer countries, organizational structures are flatter. You pay the owner of the chicken for the eggs. This leaves out the money for the factory workers, the truckers, the marketing, the grocery store (and all its hierarchies), and profits for the shareholders who perform no labor at all. This is monetary waste. This waste increases prices for the consumer. This is true in a lot of countries outside the u.s. The food in the restaurant is cooked by the owner of the restaurant, not a wage earner. The efficiencies found by automation and commoditization of labor are lost in the waste of trickle down economics. Another aspect of life in poorer areas of the world - including many areas of the united states - is the barter that occurs between many individuals. I'll mow your lawn if you paint my house. I have the mower, you have the ladder and the brushes. This type of cooperation is lost in an individualistic society like the united states where everyone performs a role. The cashier, the delivery person, the accountant. In "poorer" societies, these roles are performed by a single person in many cases. This division of labor has, rather than increased productivity and decreased cost, in fact increased cost due to monetary waste at each exchange. Listen to Noam Chomsky describe the "real Adam Smith" and how he believes the division of labor will destroy the individual through wage slavery. http://www.youtube.com/watch?v=ugq86q9KyPE http://www.youtube.com/watch?v=ugq86q9KyPE I have not read "wealth of nations" myself, to verify Chomsky's opinion of Smith's work, but I have it on hold at the library and will soon. Think of it like physics. Just as energy is lost when it changes form, money is lost when it changes hands. The more hands through which that money passes between the producer and the consumer, the more money is lost to waste.
- ivankirigin 17y ago
  The efficiencies found by automation and commoditization of labor are lost in the waste of trickle down economics. Just because less money changes hands doesn't make the system more efficient. Poor people buy a lot less with a lot less.
  - sp332 17y ago
    No, he said the money changes hands fewer times - this (all else being equal, which it's not) does make things more efficient.
    - ivankirigin 17y ago
      An automated invoice is more efficient than handing over cash. Like you said, not all things are equal.
  - old-gregg 17y ago
    I lived on a $300/month salary (eastern europe) and it didn't feel like getting 20x less of what I'm getting now in US for $6k/month. I simply didn't have to pay $80 for a pack of 6 pills of fairly generic antibiotic which I had to pay another $70 for a 15-minute visit to a doctor just to get the prescription for. That's what... about $25 per pill? There, I simply walked into a pharmacy and paid about $2 for a jar that felt like a lifetime supply of exactly the same pills. Food was also dirt cheap at local farmers markets, and I also didn't have to pay $60/hour to car mechanic and the same big mac at local McDonalds was only about $0.5 So... no, "a lot less with a lot less" isn't even close to an accurate description. Moreover, middlemen do introduce inefficiency, especially in tightly regulated "markets" like the healthcare: I know a fair bit of how the medical equipment market in US works, and I can tell you that you'll get exactly the same pacemaker installed for about 60% less in Germany as compared to US: that's because your friendly regional salesman of Boston Scientific really likes to fly his own plane, and the doctor who put it in you really enjoys legalized kickbacks for "research purposes". The same applies to law and finance: bribing police or settling disputes by negotiating was a lot cheaper than going to court in US armed with a $400/hour lawyer, and without 30 year mortgages real estate market actually represented real market prices as opposed to being just a trading commodity [overpriced many times over] with a side effect of providing actual housing. Instead of paying $200K for a summer house, me and my dad built our own, small but cute 800s.f. cabin. Took us about one summer of weekends and less than $2K in raw materials. I'm not saying that life was fun in a 3rd world country, but measuring the cost of living is a very, very nontrivial matter, that's all.
maw 17y ago
The "savings club" mentioned is known in Mexico (and possibly elsewhere in Latin America and among Latin American immigrants in the states) as a "tanda". The one I participated in (against my better judgement -- my wife signed us up as a favor to someone we know who was organizing it) was run with eleven participants, and lasted one cycle. I paid MXN$200 every week and expected to get MXN$2000 towards the end of the cycle. I think this arrangement was fairly typical. Of course, the further back in the queue you are, the bigger the risk that others will drop out before it's your turn for your payout. From the outset, that seemed like a likely outcome to me, and it is indeed what happened. As a reasonably well off expat, MXN$2000 wasn't a big deal to me (what is a big deal is the lack of trust experiences like mine breed). However, since it is a lot of money to many people, there's probably money to be made offering what tandas do, and even paying a small amount of interest, without such risk being borne by the participants.

43 points by robg 17y ago

Nice analogy with startups : focus on cashflow, not assets.

pj 17y ago

When I was traveling in Krakow, Poland, I was living on 10USD a day, including lodging, food (really awesome food), transportation and entertainment. I still don't understand how a train ride away the same lifestyle would cost 50USD a day. Why? A lot of the numbers people use to describe how people live are misleading. In poorer countries, organizational structures are flatter. You pay the owner of the chicken for the eggs. This leaves out the money for the factory workers, the truckers, the marketing, the grocery store (and all its hierarchies), and profits for the shareholders who perform no labor at all. This is monetary waste. This waste increases prices for the consumer. This is true in a lot of countries outside the u.s. The food in the restaurant is cooked by the owner of the restaurant, not a wage earner. The efficiencies found by automation and commoditization of labor are lost in the waste of trickle down economics. Another aspect of life in poorer areas of the world - including many areas of the united states - is the barter that occurs between many individuals. I'll mow your lawn if you paint my house. I have the mower, you have the ladder and the brushes. This type of cooperation is lost in an individualistic society like the united states where everyone performs a role. The cashier, the delivery person, the accountant. In "poorer" societies, these roles are performed by a single person in many cases. This division of labor has, rather than increased productivity and decreased cost, in fact increased cost due to monetary waste at each exchange. Listen to Noam Chomsky describe the "real Adam Smith" and how he believes the division of labor will destroy the individual through wage slavery. http://www.youtube.com/watch?v=ugq86q9KyPE http://www.youtube.com/watch?v=ugq86q9KyPE I have not read "wealth of nations" myself, to verify Chomsky's opinion of Smith's work, but I have it on hold at the library and will soon. Think of it like physics. Just as energy is lost when it changes form, money is lost when it changes hands. The more hands through which that money passes between the producer and the consumer, the more money is lost to waste.

ivankirigin 17y ago
The efficiencies found by automation and commoditization of labor are lost in the waste of trickle down economics. Just because less money changes hands doesn't make the system more efficient. Poor people buy a lot less with a lot less.
- sp332 17y ago
  No, he said the money changes hands fewer times - this (all else being equal, which it's not) does make things more efficient.
  - ivankirigin 17y ago
    An automated invoice is more efficient than handing over cash. Like you said, not all things are equal.
- old-gregg 17y ago
  I lived on a $300/month salary (eastern europe) and it didn't feel like getting 20x less of what I'm getting now in US for $6k/month. I simply didn't have to pay $80 for a pack of 6 pills of fairly generic antibiotic which I had to pay another $70 for a 15-minute visit to a doctor just to get the prescription for. That's what... about $25 per pill? There, I simply walked into a pharmacy and paid about $2 for a jar that felt like a lifetime supply of exactly the same pills. Food was also dirt cheap at local farmers markets, and I also didn't have to pay $60/hour to car mechanic and the same big mac at local McDonalds was only about $0.5 So... no, "a lot less with a lot less" isn't even close to an accurate description. Moreover, middlemen do introduce inefficiency, especially in tightly regulated "markets" like the healthcare: I know a fair bit of how the medical equipment market in US works, and I can tell you that you'll get exactly the same pacemaker installed for about 60% less in Germany as compared to US: that's because your friendly regional salesman of Boston Scientific really likes to fly his own plane, and the doctor who put it in you really enjoys legalized kickbacks for "research purposes". The same applies to law and finance: bribing police or settling disputes by negotiating was a lot cheaper than going to court in US armed with a $400/hour lawyer, and without 30 year mortgages real estate market actually represented real market prices as opposed to being just a trading commodity [overpriced many times over] with a side effect of providing actual housing. Instead of paying $200K for a summer house, me and my dad built our own, small but cute 800s.f. cabin. Took us about one summer of weekends and less than $2K in raw materials. I'm not saying that life was fun in a 3rd world country, but measuring the cost of living is a very, very nontrivial matter, that's all.

maw 17y ago

The "savings club" mentioned is known in Mexico (and possibly elsewhere in Latin America and among Latin American immigrants in the states) as a "tanda". The one I participated in (against my better judgement -- my wife signed us up as a favor to someone we know who was organizing it) was run with eleven participants, and lasted one cycle. I paid MXN$200 every week and expected to get MXN$2000 towards the end of the cycle. I think this arrangement was fairly typical. Of course, the further back in the queue you are, the bigger the risk that others will drop out before it's your turn for your payout. From the outset, that seemed like a likely outcome to me, and it is indeed what happened. As a reasonably well off expat, MXN$2000 wasn't a big deal to me (what is a big deal is the lack of trust experiences like mine breed). However, since it is a lot of money to many people, there's probably money to be made offering what tandas do, and even paying a small amount of interest, without such risk being borne by the participants.