Nadine- I can't speak for India, but what there are a few things that often overlooked when talking about purchasing power of people living in 2nd/3rd world countries: (don't know if anyone posted these)
(1) Very few (young people/couples) go out and purchase new homes/appartments with their own income....Either, they continue to live at home (paying no rent)...in fact, this ALSO goes on in many "1st World" countries...Japan, Germany (to some extent), etc..or
In other cases, parents/grandparents BUY the appartment for the young couple/single...saving them a rental payment...Additionally, the transfer of wealth (life savings) from old to young occurs more frequently, sooner, and in larger amounts in some countries outside the U.S.....
(2) In many countries, taxes are either not paid or underpaid..
(3) In many countries, people do not save at all...they spend everything they have as soon as they get it....The general thought is: If I get in trouble, I always can go to a family member and get bailed out (place to live, food, etc.)..No individual pool of 3 months savings, or 401K plans, etc...
(4) Much of the economy in these countries is barter....my wife is from Latin America, for example, in her family..there are docters, dentists, a pilot (!), auto dealer...she would never pay to go to the dentist, docter, etc....we can fly for free to many vacation sites (!)...It doesn't stop there...Often times, services are provided within an extended network of friends, as well...This, in additon, to other barter arrangements that you can negotiate in everyday in far more situations that you and I could ever realise...
(5) Some people in these countries do not pay car insurance, health insurance, other things..in some cases, this is provided by the government....in some cases, the risk is taken....figuring again, someone (family or government or friends) will bail me out...
I'm sure I've left some things out, but take 1/4 of your income, add back 1-5...it is surprising how much disposal income is there...even if one earns 1/4 or less of a standard U.S. wage...
BTW- The above was not meant as any sort of judgment of how things work in these countries...These systems work amazingly effectively, IMO...they are extentions of the close-knit family/friend circle which grew out of a simpler time... |
