What does it mean, in economic terms when some reporter says sumting like?

Question

"so and so has to live on only $10 per month" ( in some unbelievably poor 3rd world country )
obviously that is impossible in usa.
so how exactly does $10 in a poor country translate into how much buying power it has??

isnt food and gas etc all relative to supply and demand, even when its in a really poor area? so therefore $10 could theroetically pay rent, buy food, toys etc..

could sum1 give simple explanation how this works?
Also, why does the news say stuff like this if it doesnt really make sense??

Answer 1

i agree with univee.

A note on poverty. I think its not that there is no poverty in the states but one cannot "generalize" poverty. I have been to places where ppl are so poor that when you look at the way these ppl live thier lives you would be wondering whether the so called "poverty" in most of the industralized countries is really "poverty" at all.

Answer 2

Unfortunately, the resources available in a good economy are obsolete in 3rd world countries. The economies of third world countries do not have facets to the same resources to provide the phones, electricity and food as, say, some do in America. The $10 a month they speak of is likely only providing the money for survival, in some cases less. That $10 has the same buying power as it would in a strong economy. That same strong economy would have a market to support those (more expensive) resources needed (utilities etc....) On the other hand, in third world countries, the resources are very limited because there isn't a structured market to support companies or businesses which bring in or increase the flow of money. The main reason is because the majority of their governments and/or authorities are corrupt. They want to, and sometimes do, control everything including the supplies. This crumbles the country's supply and demand. (This is why the utilities cost more in other countries. It is because they HAVE the supply and demand rule) Now, if the people—those they've oppressed for years and years—were given any sort of power to rise up out of their oppression the authorities would have a civil war on their hands. They could lose their power. Some countries are already there.

Usually when the news says something that doesn't make sense it is due to three things (1) Ratings (this is a reason they make off the wall comments, to create a stir). (2) They are WRONG! Don't put it past them. (3) They assume too much. (There is a level of knowledge that the news companies assume the watcher has and they often over shoot it) I hope I've been some type of help!

Answer 3

Okay let me tell you as a resident of a poor country (the Philippines) who has talked to many of the rural poor. A typical family may be living in the farm, they either own or they renting. Rent is only for cultivation - residential land is free. There is no running water in their house - they may draw it from a village tap, which is free, or for which they pay say 25 cents a month. They seldom go to the market to buy meat. Instead they rely on their rice harvest - stowed away somewhere in their makeshift hut - and get vegetables from their own garden, occupying a few dozen square meters beside their house. Or they could just buy cheap local vegetables from the market. If cash is really gone and they have no vegetables, then it's rice and fish sauce (which is really really cheap). Education is free, but the kids have to walk to school - if it's too far, forget it. Clothes are available from the cheapest sections of the market, sometimes second hand clothes - a T-shirt can go for a dollar or less. Health care is out of the question - the mommy gives birth at home with the help of the village midwife (a trained birth attendant). Of course there are various grades - some are able to afford the daily 20 cent ride to and from school; some are able to buy better clothes; some may even afford the low fees in the government clinic. But yes, 10 dollars a day for a family is survivable, but no reserves - somebody gets pneumonia, or there is a serious drought, it could very well mean death.

Answer 4

I've lived all over the world, and I can tell you, people elsewhere are poor, compared to Americans. Yes, there is a little flexibility of values like you describe, where ten dollars is posed as a relative concept.

But I have been in places where people lived so badly it might even make a Republican cry.

Americans are lucky. Lucky to be ablt to live in a country rich enough that we can afford to buy a pair of sneakers made in a poor country for a total cost of .57 cents in materials and labor, and buy it over here for a hundred dollars or more.

Whatever the reporter said that confused you in regard to another man's ten dollars, I assure you the poorest american is wealthier than more other people.

Answer 5

Yes things like food and clothing are subject to supply and demand wherever they are. Other things, however, like petroleum products, vehicles, electronics, are not as likely to fluctuate and would be considered as luxury items in third world nations. So the world's extremely poor can live on sums that we couldn't fathom because (a) the absolute essentials are cheaper due to economics and (b) they are not buying any of the luxury items we've come to take for granted.

And it goes to show, that even though the cost of living keeps going up and up, if we really work on buying only the things we need to stay alive, we can live pretty well on our incomes here.

Answer 6

Comparisons of income levels between countries should use "purchasing power parity (PPP) exchange rates" instead of market exchange rates. That person living on $10 per month does not actually earn his income in dollars. He earns local currency what ever that might be, for example, Indian rupees. The market exchange rate (1 rupee is worth about $.024) can be used to convert his income in rupees into dollars.

However, the market exchange rate only reflects the prices of goods traded between India and other countries. The World Bank came up with the idea of PPP exchange rates. These are calculated by finding out how much a fixed basket of goods and services would cost in each country. If the basket costs $100 in the US and 3,000 rupees in India, then the PPP exchange rate is that one rupee is worth $.033 rather $.024

Generally, using PPP exchange rates increases income levels in poor countries when converted to dollars. To put it another way, using market exchange rates usually understates the true income levels in poor countries.

Answer 7

Poor is a relative term---somewhat. The cost of food and clothing in poor countries is very low. Housing and transportation may also be cheap. Of course these things do not compare with our housing. They may live in a mud hut. They may not have a need to be transported anywhere.

Answer 8

Do you mean "All your base are belong to us"? That was a reference to an internet meme centred on an old game called Zero Wing, chiefly notable for the hilariously poor English translation of its intro sequence. Google "All Your Base" for the flash movie that started it all.