el crispito

In doing a little research, I found a forum where people were discussing iPod price discrepancies between the US and the UK. The post by jhollington on 09-14-2006 at 05:36 PM has a very nice presentation of certain economic differences that are not considered in mere exchange rates (as I have done above).

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I've grown very tired of hearing this argument, since in reality it's actually not true, but rather an illusion based on the fact that international exchange rates do not reflect the pricing of consumer goods (nor wage parity), but rather are a reflection of the gross national product of the relevant nations.

The problem here is that the iPod only seems more expensive in the UK, but in reality it works out to the same price due to differences in the economy.

There is no direct equivalency between cost of consumer goods and exchange rates because the wages and cost of living is dramatically different. Product pricing is based on the earning power of the citizens of a country, not raw dollars.

To put it in simpler terms, general minimum wage in Ontario, Canada for an adult is $7.75/hr CAD. The minimum wage in the U.S. varies from state to state, but in California (which I'm using as an example since it's where Apple's corporate headquarters is located), it is $6.75/hr USD.

The National minimum wage in the U.K. for a working adult £5.35/hr (it's a bit more complex in the U.K., but that's the closest equivalent).

Now, the current CAD-GBP exchange rate is approximately 2.1, so that amount equates to $11.24/hr CAD (or $9.91/hr USD). Already see that we have a discrepancy in terms of actual money earned (in short, people in the U.K. make almost 50% more money per hour than people in Canada).

Now, the price of an 80Gb iPod in the U.K. is £259, in Canada is $399 CAD, and in the U.S. is $349 USD.

This means that to afford the same 80Gb iPod, a minimum wage worker in Canada would need to work for 51.5 hours and a minimum wage worker in California would need to work for 52 hours.

On the other hand, in the UK, a person making minimum wage would only need to work for 48 hours to afford the same iPod.

Therefore, an 80Gb iPod is actually slightly more expensive in Canada and the U.S. than in the U.K., and you don't hear us complaining..... :)

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Okay, so according to this link that Cristina sent me, the daily minimum wage in the capital of Mexico is MXN $52.59. At the current exchange rate, that is USD $4.81 per day, which, using an 8-hour workday, turns out to be USD $0.60 per hour.

The updated minimum wage for California (as used above) is USD $8.00.

Of course, not everyone works for minimum wage in either country, but this gives us a basis for comparison.

A resident of California, paying USD $1,947.42 ($1,799.00 subtotal + $148.00 tax), has to work 243.43 hours to buy one of these new MacBook Air models.

A resident of Mexico City, paying an adjusted price of USD $2,288.93 has to work 3,814.88 hours to buy the same computer.

Huh. Well, apparently that doesn't explain the difference!

I figured you'd be most pumped about the Time Capsule, given your desire for storage. But you've probably solved that by now with an Airport and hard drive.

[crispy says: Believe it or not, no. But they just came out with a new AirPort with integrated hard drive, and I'm all over it.]

The other day Judy and I were shopping at Superama. Gala apples were priced at 37.90 pesos/kilo. Today we were at the tianguis near our house. Gala apples were priced at 18 pesos per kilo.

Oops...not the apples you had in mind!

[crispy says: Before Christmas, we had some of the most wonderful apples from Chihuahua available, but now it's back to all US-imported stuff. And THAT kind of import seems overpriced too!]

Buh, yeah, Chris, Time Capsule is the Airport with integrated hard drive.

[crispy says: Oh, I just thought that was a modified version of Time Machine for laptops. Thanks for the correction.]