Comparing Income across Countries in USD is Detached from Reality: 2
In the previous post of this series, I pointed out that comparing total or per-capita GDP or GNP of countries in USD (or any other west-european currency) is now an exercise in stupidity and self-delusion. Using healthcare as an example, I showed readers that countries with per-capita healthcare as little as 1/10th of the USA (after adjustment for purchasing power) have higher average life-expectancy and better health outcomes than the USA. In fact, it looks even worse for USA if you don’t adjust for purchasing power.
One of the most fundamental and direct measures for quality of life in the world is now, therefore, irreversibly divorced from spending in USD another west-European currencies. Towards the end of that post, I also made commented that many other basic and direct measures of life quality such as quality of education, housing and general standard of living around the world are increasingly, and now very visibly, not linked to their price in USD.
In other words, the most important proxy measure of power that western countries (especially the USA) use to gauge their relative power and dominance in the world is now worse than useless. But how did we reach the tipping point and when.. at least approximately? Let me explain that through one example in this post.. will talk about more in subsequent post of this series.
For a long time, even small triumphs and success of Indians living in the west (especially the USA) were widely celebrated in Indian media and society. This occurred in spite of many of the later denying or obfuscating their ancestry. Similarly, Indians who lived in the west (especially the USA) were treated with a certain degree of respect when they visited India- which they did largely to feel better about their second-class status in the west. In my opinion, the peak of real-life adulation for Indians living in the west occurred during the late 1990s-very early 2000s. But then something changed.. irreversibly.
Sometime around the mid-2000s, I noticed a change in the way people in India started seeing those living in the west and perhaps more importantly- themselves. This change first manifested itself as a far more critical look at Indians living in the west and was more pronounced in the younger generations. Basically, people in India gradually stopped celebrating the achievements of Indians in the west and started being more critical about the attitudes exhibited by those people towards themselves. But it did not stop there..
Increasingly, educated and affluent Indians stopped seeing residency in the west (especially the USA) as a goal to be reached under any circumstances. It was, more and more, a conditional thing- based on them having a decent job and working conditions. Also, moving back and forth between two (or more countries) based on the best deal available to them became the default mode of operation. To put it another way, having a good career and making money had replaced moving to the west as the main goal of many upper-middle class Indians.
But why did that happen? and what changed?
The short answer is that the quality of life possible in India changed a lot between the late-1990s and today. The slightly longer answer is that a large part of the respect and adoration of people in India for their relatives living in the west was linked to their superior material possessions. As some of you might know, a number of stupid and paternalistic government policies prevalent in India between 1947 and late-1980s had stunted the quality of life possible in that country. That changed dramatically after 1989.. and the result (so far) has been beneficial to most people in that country, but especially to its upper-middle class and increasingly its middle-class.
Therefore, the kind of people who might otherwise want to immigrate to the west can now enjoy all the material goods and services enjoyed by their counterparts in the west- and then some more. This prosperity and equal (or superior) access to material goods and services is also why they no longer look up to or celebrate Indians in the west. I mean.. ask yourself, would you tolerate a self-hating asshole if you had nothing to gain from doing so? But what does this have to do with comparing income across countries in USD? As it turns out.. a lot!
See.. the income of Indians with an upper-middle class lifestyle might seem more comparable to the working class in USA if you measure it in USD. However, it is very clear that their lifestyle and access to material goods and services is identical or better than those defined as upper-middle class in USA. But why is that so? and why was that not the case in the past?
Well.. it comes to who makes things and provides services. Comparing quality of life and power in the world in USD (or other west-European currencies) was feasible only as long as they were the sole providers of such material goods and services. As you know, that is simply not the case today. Most of what you consider high-tech and necessary for a high quality of life (from computers and smart phones to chemicals for making drugs and other useful stuff) is no longer made exclusively in the west- IF they were made there in the first place.
Consequently, the cost of many material goods (and services) that define a high quality of life are often far less expensive in the rest of the world. Moreover, the price of other essentials such as quality healthcare, quality medications, quality food, quality shelter is much lower in non-wetsern countries. The net result of these changes is that the upper-middle class, and increasingly middle-class, in non-western countries enjoys a quality of life that is equivalent to those the west. Did I mention that their disposable income and net worth (even when measured in USD) now often surpasses those of their supposed equivalents in the west?
To summarize this post- most of the existing delusions.. I mean beliefs prevalent in USA (and the west) about its relative power and dominance vis-a-vis the rest of the world are based on a metric that is now worse than useless.
What do you think? Comments?