Friday, July 25, 2008

Champagne Taste

Mercer released its 2008 cost of living survey this week, a must see for expats and avid city travellers,

Oslo is in 4th place behind Moscow, Tokyo and London. New York is 22nd. Oslo keeps very interesting company for such a dull and uninteresting place.

The first Canadian city in the survey is Vancouver at 65th. This is of no surprise to me. Canadians are very cost conscious. It is the influence of our Presbyterian roots. What did the Scottish ever do for us eh? Well, in addition to golf, whisky and deep fried Mars bars, they instilled a sense of McScroogeness.

I never really paid attention to prices until I moved to Norway. I do now. Unfortunately in many situations one is offered little choice bar abstinence. This is a result of inefficient supply chains, subsidies and protection, lack of competition, and or tax. For example:

  • My litre of milk at the shop - $3 – Subsidies and protection
  • My bottle of beer at the pub - $8 - Tax
  • My takeaway pizza - $30 - Inefficient supply chain
  • My monthly cable sports subscription - $70 - No competition
  • My Volkswagen Passat - $80,000 - Total fucking economic incompetence.

A look at the average annual gross income offers a few insights:

  • 1st - Moscow - $12,000
  • 2nd - Tokyo - $45,000
  • 3rd - London - $60,000
  • 4th - Oslo - $75,000
  • 22nd - New York - $45,000
  • 65th - Vancouver - $47,000.

However, these numbers are distorted by tax and the currency exchange. When adjusted to Purchase Power Parity (PPP), the real purchasing power of the average consumer, most cities come in around the $30,000 level, except Moscow.

To be fair, Moscow has 87 billionaires. They are mostly ex-politicians, ex-KGB, and criminals and contribute greatly to the high cost of living. I doubt they are included in the official statistics as most are tax exiles. Who says there is no money in Communism, it’s just a matter of being at the right place at the right time.

In Norway, the cost of goods is generally twice as much as those in many western countries. Labour costs are also twice as much and you would expect this is the case so that people can afford the cost of goods. You would be wrong.

It is a tax generating system to keep the unemployment rate low. The slack is taken up by employing government spreadsheet jockeys to devise and calculate complex tax systems. Go figure.

I now have a great empathy for struggling families trying to make ends meet. Just speaking to people at the golf club and the yacht club in Oslo about their economic challenges has given me a great insight to how the other half live.

It would appear they have champagne taste, on a premium beer budget.


Note: All figures in USD.


kyknoord said...

I see Johannesburg ranked the lowest cost of living for the Europe, Middle East & Africa region. That's rather ironic, considering how many murders are committed there.

livingladolcevita said...

Excuse my while I weep into my low cost SA beer. And long, longingly, for a real salary.

A Life Uncommon said...

Wow, this economic info is news to me.

nursemyra said...

wow oslo is so expensive - guess I won't be visiting you there.

johannesburg here I come....

daisyfae said...

Ah - if my organization does send me off to Euorpe for a few years, they'll first have to normalize my salary to NYC. Here in cornhole, ohio, the cost of living is a bit less...

as a total geek, i'd like to see the first derivative of the numbers - that is, the 'rate of change'...

Zhu said...

I guess the most expensive city I know is Paris, mostly due to the crazy real estate. Hong King was expensive too, at least accommodation was, but eating etc. was okay.

Ottawa is fine for a capital.

Gary said...

Ouch, don't remind me! I KNEW paying 12 US$ for a box of pop tarts in Hong Kong seemed a bit ridiculous...

Shantanu said...

Yeah, there seems to be direct relation between high average salaries and cost of living. It would be interesting to see which one is the one and which one is the effect. You are spot-on about Russian billionaires; I guess there are more on the way now that the BP CEO has been kicked out of the country.

beaverboosh said...

kyknoord - tragic coorelation

dolcevita - you me both, except for the SA beer... I'm drinking SA wine...

a life uncommon - enjoy the west coast!

nm - you're breaking my heart, what about the tall bond blue eyed chiseled well hung boys?

df – too right! Interesting if you can get some sensible data – The wage data growth is often in line with inflation and offers little in terms of historic delta, other than if viewed over 10s of years…

zhu – too right, real estate is often the biggest factor in the basket of goods!

gary – WOW… Eat rice instead!

shantanu – Wages should be ‘pulled up’ to reflect the micro cost of living, often driven by property. Yeah, crazy place to do long term business!

ammaro said...

i used to live in london back in 92-96... i want go back and visit but it really is not worth it anymore!

beaverboosh said...

ammaro - London is my favy town on the planet. I am lucky in that I work there at least 1 week a month. But living there... takes a top Ibankers salary at my age!

Speedcat Hollydale said...

I have sale beer tastes on a Kool-Aid budget .... but I am really addicted to "Snake Eyes" soda. Ohhhhh what I wouldn't do, for a SNAKE EYES

I also like chicken

beaverboosh said...

speedcat - haha, LOL! Snake Eyes, but its sugar free! So is chicken

Joao said...

Remember that the dollar is to low for the moment.
The passat car costs around 70000 in Portugal when it should be around 45000, still a sh*t load of cash for us strugling to live with 1000 € month ( engineer's salaries) .
1 liter of gas is 1.5 € around 2.33 us, meaning 8.9 us a gallon.
Housing here is also very expensive. I'm considering leaving the country and going to a nordic country and i don't find the housing prices so pornografic as in here considerind the wages.

beaverboosh said...

jao - those numbers are PPP normalised though the Euro is high! Most North Americans find Europe very expensive, regarless of where the US dollar is!

Joao said...

Remember that there are many diferent Europes in Europe. I lived 12 months in Finland en 2000/2001.
A beer at a bar was around 5€ (before euros) and in Portugal 50 cent's ........ The solution was to wait for my parents to go to spain ( cheaper postal services and they live near the border) to send me packages of "real" food and bottles of scotch. Alcohol has always been expensive in Europe besides portugal,spain,italy and greece ( meaning the 3rd world of europe), which has a purpose since most of the population in the northern countries has a drunk violent bastard pulsing inside of them.
Ah!! the Scots are cool, every time they come to Portugal to play soccer, they drie out the country of boose, get their asses kicked at the game, continue the partie and are not violent at all. Just gotta love these guys!
But it's true americans find europe expensive, because the prices of living were (and i guess still are) very low. Just compare prices on food, cars and gas and you'll see the diference.

So tell me one thing: how are norwegians when compared to other nordics? I remeber the swedish were more happy,better well dressed then the finn's.

beaverboosh said...

well presented, affluent, and reserved... until the cognac and aquavit is free pouring... then the Viking spirit comes alive!

daisyfae said...

Hmmm.... viking spirits? Perhaps nursemyra and i should make a trip to Oslo afterall?