1/31/2004 » Econ

Stories on tech workers in India always talk condescendingly about 'ridiculously low' salaries by looking at currency conversion into dollars, without ever considering buying power in the same country.

You can write about a senior tech worker in India earning Rs. 150K/month as $36K/year in the U.S., which is low for that industry. Or you can put it in an accurate context, the same buying power as someone earning $120K/year in the U.S. That puts a very different spin on things.

Converting into dollars is useful when some form of currency arbitrage is going on, earning in one currency and spending in another, but not when both occur within the same country. The stories about Chinese villagers who 'only make $1.50 a month' are misleading. Read enough of them and you'd think they couldn't afford to brush their teeth, you'd never believe that country could build a skyscraper garden like Shanghai.

Similarly, snooty remarks about Indian software industry exports being far lower than in the U.S. don't encompass that industry's true buying power within the Indian economy.

Update: Arnold Kling is on the same wavelength.