No matter how many cities and countries I’ve looked at, the same cost to salary “balance” keeps appearing, it’s either high expenses and high salaries or low expenses with low salaries, but overall the percentage of how much you get to save per month is usually similar proportionally speaking, assuming you have an average salary and average life style.
Take Switzerland as an example, it might be a simplification, but it seems that the main reason why Switzerland has such insane salaries is because it also has insane costs (in absolute numbers), though proportionally speaking (ie. how big of a % you spend on bills, how much % you get to save,etc.) it’s not that different than a poor country in the Balkans like mine.
A person living in Switzerland and a person living in the Balkans can both spend 80% of their monthly salary and have 20% remaining, but obviously 20% in the Balkans is like 100$ or less or it’s +1000$ for a Swiss salary, so a Swiss person could afford an expensive vacation every month, while a person from the Balkans would have to save up for almost an entire year for the same thing once.
Which leads me to a logical question, if high salaries come from high costs and if that also means that the absolute amount of how much we get to save it also much higher (even if it’s percentually the same), why don’t we purposely inflate prices and salaries, so that the 10% or whatever we manage to save up, also inflates?
After all, the same exact products and same sizes of apartments have higher costs the closer they are to a large city, which translates into higher salaries the closer you are to a large city, regardless if it’s Switzerland, America or Brazil, so we are already doing this, aren’t we?
Because the higher dollar (or whatever) amounts would not translate to increase in actual purchasing power. You’d just wind up with lower-valued currency.
That’s what would happen if we printed more money, but making the costs higher isn’t the same thing, since the total amount of money that exists in circulation wouldn’t change at all.
Cities are a good example, the same exact things you buy in stores tend to cost more in cities, than they do in rural villages and people tend to have higher salaries working the same exact jobs, yet that doesn’t mean the value of the currency is any different.
Also doesn’t improve what you can actually get for the money. Just throwing more currency into circulation doesn’t mean you have more value backing it.
That depends on exactly what you mean by " the value of currency". It may not devalue the dollar compared to some other currency if a quart of milk (and everything else) costs twice as much as NYC as it does in Boise - but my dollar is not worth as much in NYC as it is in Boise if I can only buy half as much.
Maybe a Swiss person could afford an vacation every month in the Balkans that’s expensive by Balkan standards but probably not one in Switzerland, where the employees will be highly paid and the vacation will cost more.
Why would you want to do that? Suppose you could snap your fingers and everybody in your country was suddenly earning twice as much money, and everything was twice as expensive. You’d be working the same job, living in the same apartment, buying all the same stuff, and saving 10% off your salary. So in all those things, there’d be no real change.
Other things would change. Any money you had saved up before snapping your fingers would buy half of what it did before. If you travelled or bought things from outside your country, it would cost half of what it did before. When foreigners visit your country, or buy things produced there, they are now twice as expensive.
Who are “we”? What is “our” purpose with this action? And have you taken into consideration that “high” and “low” are relative terms, so whatever changes “we” create only make sense if they don’t happen to everyone. Who are the “others” we expect to leave behind/exploit in this scenario?
Take New York City or San Francisco, for example. Costs are high because there is a high concentration of wealthy people and high earners in finance, tech, law, media and so on. But no one is paying school teachers or cops significantly more than they would pay in rural Iowa. Maybe a bit more, but not the same salaries they are paying law partners and investment bankers.
By the same token, you don’t really have those high paying jobs in rural areas. If they raised prices significantly, most people wouldn’t be able to afford it.