Moon Laws

In rec.arts.sf.science Eivind Kjorstad wrote:
You're correct, but you use words with many syllables, which may, in
this case, hamper understanding. Here's my take:

When a statistic says that a chinese makes $500 when you correct for
purchasing-power, what it means is this:

The chinese gets a salary that -in-china- buys aproximately the same
amount of items and services as $500 would in USA.

It does -not- mean that he could exchange his salary for dollars and end
up with 500 of them. Infact where he to do that he'd end up with
aproximately $170.

$170 in china buys about the same amount of -stuff- as $500 in USA,
that's what purchasing parity means.

Thanks, that is a good explanation.

Offcourse this depends -hugely- on what items an services are included
in the standard basket, so it's not really an objective measurement. I'm
certain a haircut costs -less- than 1/3rd in china from USA, while the
price-difference for for example a modern computer is much smaller.

It's not objective, but for comparing relative wealth it is still better
than comparing nominal GDP. Knowing how much you each can buy is much more
useful than knowing what you each can exchange your money for, even if
it's still vague. Like any comparison between countries, it has to be
taken with a grain of salt.

To illustrate, when I'm in China I hardly think about the cost of eating
in a restaurant because it's ridiculously cheap, whereas I try to avoid it
in the US. On the other hand, I have an expensive hobby, and on a really
bad weekend I can easily spend more than my Chinese waiter would make in a
month on it, but it doesn't drive me into bankruptcy (yet!).

Somehow it doesn't surprise me that our enterprising multi-billionaire
is unaware of this. Seems about par for the course.

His modus operandi seems to be to choose the assumptions and statistics
which are most favorable to his cause. The fact that some of them end up
being just plain wrong when used for those purposes is just a trifling
problem.

--
Michael Ash
Rogue Amoeba Software