# Why is life in rich countries way too expensive? **URL:** \ **Category:** Factual Questions\ **Created:** [January 8, 2016, 12:03pm UTC](https://boards.straightdope.com/t/why-is-life-in-rich-countries-way-too-expensive/742485 "2016-01-08T12:03:43Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [January 8, 2016, 7:36pm UTC](https://boards.straightdope.com/t/why-is-life-in-rich-countries-way-too-expensive/742485/21 "2016-01-08T19:36:39Z")
> [@Nava](#): > > You consider two cars for one butt “normal”? It’s not abnormal in California. People collect cars here, and even those who don’t often have three cars for two people, one being a commuting car and one being an SUV for going to the mountains. ---
**Author:** ![bump](https://avatars.discourse-cdn.com/v4/letter/b/7c8e57/32.png) [@bump](https://boards.straightdope.com/u/bump)\ **Post date:** [January 8, 2016, 7:54pm UTC](https://boards.straightdope.com/t/why-is-life-in-rich-countries-way-too-expensive/742485/22 "2016-01-08T19:54:41Z")
> [@Nava](#): > > You consider two cars for one butt “normal”? One per cheek? ---
**Author:** ![hibernicus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hibernicus/32/2802_2.png) [@hibernicus](https://boards.straightdope.com/u/hibernicus)\ **Post date:** [January 8, 2016, 8:34pm UTC](https://boards.straightdope.com/t/why-is-life-in-rich-countries-way-too-expensive/742485/23 "2016-01-08T20:34:50Z")
I just want to comment on the price of electricity in particular, since you chose that as an example. Hungary’s retail electricity and gas prices are not determined by market forces, but are mandated by the government. For political reasons the price is set at a low level, such that utilities cannot operate profitably and are forced to sell up to cut their losses. This creates a favourable environment for renationalisation of the electricity and gas industries. Incidentally, Norway’s electricity price isn’t very high; it’s about 25% below the EU average. It only appears high by comparison with the artificially low price in Hungary. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [January 9, 2016, 5:46pm UTC](https://boards.straightdope.com/t/why-is-life-in-rich-countries-way-too-expensive/742485/24 "2016-01-09T17:46:14Z")
> [@Voyager](#): > > In Germany taxes and prices were relatively high, but people got a ton of vacation and benefits like high unemployment and good maternity leave relative to the US. Emphasis added. That’s a benefit??? 🙂 ---
**Author:** ![SmartAlecCat](https://avatars.discourse-cdn.com/v4/letter/s/67e7ee/32.png) [@SmartAlecCat](https://boards.straightdope.com/u/SmartAlecCat)\ **Post date:** [January 9, 2016, 6:36pm UTC](https://boards.straightdope.com/t/why-is-life-in-rich-countries-way-too-expensive/742485/25 "2016-01-09T18:36:01Z")
> [@John\_Mace](#): > > Emphasis added. That’s a benefit??? 🙂 Money they pay you if you get unemployed. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [January 9, 2016, 8:14pm UTC](https://boards.straightdope.com/t/why-is-life-in-rich-countries-way-too-expensive/742485/26 "2016-01-09T20:14:27Z")
> [@John\_Mace](#): > > Emphasis added. That’s a benefit??? 🙂 Besides the obvious, the way Germany was pushing austerity they must have thought it was - for Greece and Spain, anyhow. ---
**Author:** ![Dajn](https://avatars.discourse-cdn.com/v4/letter/d/c2a13f/32.png) [@Dajn](https://boards.straightdope.com/u/Dajn)\ **Post date:** [January 9, 2016, 10:16pm UTC](https://boards.straightdope.com/t/why-is-life-in-rich-countries-way-too-expensive/742485/27 "2016-01-09T22:16:18Z")
Life is just one big scam after another. That’s why knowledge is power and why morons like me buy a small house to help my mom out for 105k in 2004 that is valued at 75k in 2016. I still owe 80k on it. Guys like me get scammed because I never properly educated myself. I am working on that. Don’t let people scam you and take advantage. Read every book you can and learn as much as you can. Than maybe one day you can be the guy that has the advantage. ---
**Author:** ![psikeyhackr](https://avatars.discourse-cdn.com/v4/letter/p/97f17d/32.png) [@psikeyhackr](https://boards.straightdope.com/u/psikeyhackr)\ **Post date:** [January 10, 2016, 3:25am UTC](https://boards.straightdope.com/t/why-is-life-in-rich-countries-way-too-expensive/742485/28 "2016-01-10T03:25:49Z")
It is supply and demand. Control the supply and manipulate the demand. Americans are stupid brainwashed consumers. A man who told me he “Loved Cars” did not know a cam shaft from a crank shaft. Look at the German and American fighter planes form WWII. Why are we redesigning cars every year 46 years after the Moon landing? Why does anyone care what the junk looks like. Double-entry accounting was invented in Italy 700 years ago. What Western country makes accounting mandatory in school? The worker/consumers are supposed to be dummies. [http://www.toxicdrums.com/economic-wargames-by-dal-timgar.html](http://www.toxicdrums.com/economic-wargames-by-dal-timgar.html) psik ---
**Author:** ![Zach29](https://avatars.discourse-cdn.com/v4/letter/z/e0b2c6/32.png) [@Zach29](https://boards.straightdope.com/u/Zach29)\ **Post date:** [January 10, 2016, 8:24am UTC](https://boards.straightdope.com/t/why-is-life-in-rich-countries-way-too-expensive/742485/29 "2016-01-10T08:24:12Z")
What it really has to do with is the cost of labor, and the cost of land. Both of these drive up the cost of living, in very indirect ways. In heavily populated regions the primary cause underlying the higher cost of living is the price of land. Labor costs more when the workers have to be paid more to afford housing, and businesses have to charge higher prices when the rent is higher. In rich countries there are many wealthy people who want to live in the chic cities. There’s a lot of competition for limited space where all the good job opportunity is. ---
**Author:** ![Zach29](https://avatars.discourse-cdn.com/v4/letter/z/e0b2c6/32.png) [@Zach29](https://boards.straightdope.com/u/Zach29)\ **Post date:** [January 10, 2016, 8:32am UTC](https://boards.straightdope.com/t/why-is-life-in-rich-countries-way-too-expensive/742485/30 "2016-01-10T08:32:44Z")
As to why things are not “better” one place than another, there is a sort of economic equilibrium. In terms of wages, skilled workers will not “demand” much more than they need to live a comfortable life. Competition in the labor pool keeps the price of labor at the equilibrium point, if any one individual demands more than this, there will always be other individuals willing to work for less. That is why the rate of savings isn’t much higher than the cost of living. On the other hand, if the American middle class was as thrifty as poorer Eastern Europeans, they would probably be able to put substantially more money into their savings. ---
**Author:** ![botsgotme](https://avatars.discourse-cdn.com/v4/letter/b/91b2a8/32.png) [@botsgotme](https://boards.straightdope.com/u/botsgotme)\ **Post date:** [January 10, 2016, 5:12pm UTC](https://boards.straightdope.com/t/why-is-life-in-rich-countries-way-too-expensive/742485/31 "2016-01-10T17:12:00Z")
How about Brazil? if you are rich in Brazil, you can afford a domestic servant, cook, chauffeur, gardener, etc. but Brazilian industrial costs are very high, and Brazilian made products are not competitive (it is estimated that it costs VW or Brazil 16% more to build a car in Brazil, versus Mexico). yet unemployment in Brazil is very high (over 14%), and wages are very low (minimum slaraies are something like US$ 700/month). ---
**Author:** ![robert\_columbia](https://avatars.discourse-cdn.com/v4/letter/r/e79b87/32.png) [@robert\_columbia](https://boards.straightdope.com/u/robert_columbia)\ **Post date:** [January 10, 2016, 6:03pm UTC](https://boards.straightdope.com/t/why-is-life-in-rich-countries-way-too-expensive/742485/32 "2016-01-10T18:03:36Z")
> [@Nava](#): > > It isn’t. > > You’re comparing prices from country X against salaries from country Y. > > If salaries in country X are twice as high as those in country Y, for the same job, and price for the same item is twice as high in X as in Y, then the cost in terms of “% of salary” is the same in both locations. > > This is why people who have emigrated to richer countries can save what amounts to peanuts in those countries’ terms, send it back home, and back home it becomes a very large amount. Conversely, your reaction when looking at prices from other locations. > > Moving from the US back to Spain, my boss was fretting because my salary would be lower. But a smaller % of that lower salary got me 3x as much house… > You may want to look up the concept of “macdonald dollars”… > [@naita](#): > > In Oslo people have higher salaries, but that includes the clerk in the grocery store, the taxi driver, the man who delivers the groceries to the store, the farmer, etc. Which means prices for goods and services are also higher. > > When comparing the prices and salaries in different countries you have to take into account that they aren’t independent factors. Right. The “cost of living” and average incomes have a strong correlation. When one is high, the other is usually high too, and when one is low, the other one is, on average, also similarly low. The “exploit” that Nava mentioned is market arbitrage. This is possible because of the high costs associated with moving to another country. If anyone could move anywhere they wanted at any time, the average incomes and average costs of living of various places would start converging. Some disparities would probably remain due to social clustering and/or geographical factors (e.g. climate, distance to farmland, local accessibility of raw materials, etc.), but it would be more like the differences between living in, say, Florida versus Alaska than the difference between living in Vietnam versus the UK. ---
**Author:** ![even\_sven](https://avatars.discourse-cdn.com/v4/letter/e/dfb087/32.png) [@even\_sven](https://boards.straightdope.com/u/even_sven)\ **Post date:** [January 10, 2016, 6:54pm UTC](https://boards.straightdope.com/t/why-is-life-in-rich-countries-way-too-expensive/742485/33 "2016-01-10T18:54:23Z")
> [@robert\_columbia](#): > > Right. The “cost of living” and average incomes have a strong correlation. When one is high, the other is usually high too, and when one is low, the other one is, on average, also similarly low. The “exploit” that Nava mentioned is market arbitrage. This is possible because of the high costs associated with moving to another country. If anyone could move anywhere they wanted at any time, the average incomes and average costs of living of various places would start converging. Some disparities would probably remain due to social clustering and/or geographical factors (e.g. climate, distance to farmland, local accessibility of raw materials, etc.), but it would be more like the differences between living in, say, Florida versus Alaska than the difference between living in Vietnam versus the UK. The primary reason why people don’t move to countries with higher wages is not the high cost of moving. It is because they are legally restricted for doing so. The price of labor is kept high in rich countries through immigration regulation. ---
**Author:** ![botsgotme](https://avatars.discourse-cdn.com/v4/letter/b/91b2a8/32.png) [@botsgotme](https://boards.straightdope.com/u/botsgotme)\ **Post date:** [January 10, 2016, 7:07pm UTC](https://boards.straightdope.com/t/why-is-life-in-rich-countries-way-too-expensive/742485/34 "2016-01-10T19:07:47Z")
> [@even\_sven](#): > > The primary reason why people don’t move to countries with higher wages is not the high cost of moving. It is because they are legally restricted for doing so. The price of labor is kept high in rich countries through immigration regulation. Which is why the rich LOVE to employ illegal aliens…for lawn care, nannies, house cleaning, etc. They will work for less, and (because they pay no taxes), they can work for less. Most of the Washington DC elite use illegal labor, not knowing that they are supposed to be paying SS, health insurance, withholding taxes, etc. That would be “too expensive”. ---
**Author:** ![robert\_columbia](https://avatars.discourse-cdn.com/v4/letter/r/e79b87/32.png) [@robert\_columbia](https://boards.straightdope.com/u/robert_columbia)\ **Post date:** [January 10, 2016, 7:10pm UTC](https://boards.straightdope.com/t/why-is-life-in-rich-countries-way-too-expensive/742485/35 "2016-01-10T19:10:05Z")
> [@even\_sven](#): > > The primary reason why people don’t move to countries with higher wages is not the high cost of moving. It is because they are legally restricted for doing so. The price of labor is kept high in rich countries through immigration regulation. Thanks, and I thought of that, but decided that immigration restrictions counted as “costs”. You are right. ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [January 10, 2016, 7:25pm UTC](https://boards.straightdope.com/t/why-is-life-in-rich-countries-way-too-expensive/742485/36 "2016-01-10T19:25:05Z")
> [@botsgotme](#): > > They will work for less, and (because they pay no taxes), they can work for less. Where do you imagine illegal aliens pay no taxes? They pay billions of tax dollars every year [cite](http://www.itep.org/immigration/). ---
**Author:** ![Nava](https://avatars.discourse-cdn.com/v4/letter/n/da6949/32.png) [@Nava](https://boards.straightdope.com/u/Nava)\ **Post date:** [January 10, 2016, 8:24pm UTC](https://boards.straightdope.com/t/why-is-life-in-rich-countries-way-too-expensive/742485/37 "2016-01-10T20:24:09Z")
> [@botsgotme](#): > > They will work for less, and (because they pay no taxes), they can work for less. The taxes thing has already been adressed, but lots of aliens (not only illegal ones) are also willing to live in conditions many Americans seem to find unconceivable. Sharing houses. Sharing bedrooms with someone who’s not their SO. Even “hot bed”, taking turns on the bed. I was willing to do the middle one as a poor immigrant; I wouldn’t do it “back home”. For more than 3 years of the 4 I lived in Miami, I didn’t own a car. I had occasional access to one for two of those years (my landlady’s car), but I used it maybe once every two months and often it would be with her in it (I’d drive her to the doctor and we’d stop for groceries on the way back, for example). Many of my foreign friends were also car-less; the Americans couldn’t wrap their heads around it. We had in our favor that we lived and worked right next to a Metrorail station, mind you, but so did our American coworkers. ---
**Author:** ![gaffa](https://avatars.discourse-cdn.com/v4/letter/g/e68b1a/32.png) [@gaffa](https://boards.straightdope.com/u/gaffa)\ **Post date:** [January 10, 2016, 10:14pm UTC](https://boards.straightdope.com/t/why-is-life-in-rich-countries-way-too-expensive/742485/38 "2016-01-10T22:14:27Z")
One thing I’ll never understand is why so many people don’t move within the US, particularly why programmers are in California with it’s insanely high rents. We’re talking about a job that can be done anywhere with electricity and an internet connection. I’ve done plenty of computer work for people I have never met in person, with all contact via e-mail. Is it just employers insisting that they have to see the person working for them, even though they are paying high rates for office space and the employee is spending most of their wages on housing as well? ---
**Author:** ![doreen](https://avatars.discourse-cdn.com/v4/letter/d/858c86/32.png) [@doreen](https://boards.straightdope.com/u/doreen)\ **Post date:** [January 10, 2016, 11:54pm UTC](https://boards.straightdope.com/t/why-is-life-in-rich-countries-way-too-expensive/742485/39 "2016-01-10T23:54:00Z")
> [@gaffa](#): > > We’re talking about a job that can be done anywhere with electricity and an internet connection. I’ve done plenty of computer work for people I have never met in person, with all contact via e-mail. Is it just employers insisting that they have to see the person working for them, even though they are paying high rates for office space and the employee is spending most of their wages on housing as well? Even employers that don’t have a problem with the concept of remote work sometimes don’t want to deal with having to comply with the laws of multiple jurisdictions. Everything from withholding income taxes to suddenly having to collect sales taxes in every state where an employee works remotely to disability insurance payments to workers comp policies. So there are employers that will allow people to work remotely only from states where they have offices, or where employees already commute from (for example, a lot of NYC employers already have employees living in NJ). While this can help some with housing costs (even within NY and CA, some places are less expensive than others) it’s not generally going to allow someone to live in Mississippi or Idaho while working for a company in the Northeast or California. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [January 11, 2016, 4:23am UTC](https://boards.straightdope.com/t/why-is-life-in-rich-countries-way-too-expensive/742485/40 "2016-01-11T04:23:32Z")
> [@botsgotme](#): > > Which is why the rich LOVE to employ illegal aliens…for lawn care, nannies, house cleaning, etc. They will work for less, and (because they pay no taxes), they can work for less. Most of the Washington DC elite use illegal labor… Since this is GQ… cite? [Previous page](https://boards.straightdope.com/t/why-is-life-in-rich-countries-way-too-expensive/742485.md?page=1) [Next page](https://boards.straightdope.com/t/why-is-life-in-rich-countries-way-too-expensive/742485.md?page=3)