Jonathan's Soapbox

This page first posted 26 November 1998.

Price of Life.

The question that comes up repeatedly is: "Is it really cheaper in California?".
The answer depends upon the exchange rate, of course. On the whole, food costs about the same number of dollars for the same end result, meaning that Australia is significantly cheaper on that score, once you take an US64c=A$1 exchange rate into account. However, salaries are also more comparable on local dollars, so food is about the same fraction of income. The honest answer is "No", it's not cheaper here. Engineers, however, are better recognised in the US (and central Europe) than in Australia or England. This means that engineers fare better here. (And so viewed from here, Australia's pathetic international showing in marketing technology, despite its excellent record of invention, comes as no surprise.)

Some things are significantly cheaper. All forms of alcohol are cheaper, only two-thirds the cost. Spanish onions are almost the same as all other sorts of onions. Cars are cheaper. Appliances and electronics (microwave ovens, refridgerators, printers, audio, video, cameras, computers, etc.) are cheaper. Gas---petrol---is hugely cheaper. Clothes can be cheaper; better use is made of remaindered or discontinued goods, especially clothes, which are sold at excellent prices in stores that specialise in such deals. There are food stores that do the same, quickly moving goods near its use-by date by offering it at prices 30% below normal. These aren't dark, eclectically-stocked shops, they are full-scale supermarkets--and you might not ever work out why they are cheaper.

On the whole pricing is more dynamic, shaped by competition. Last year's models fall in price as the new come out, perishables drop by a factor of two or more if it looks like they might perish otherwise. The price asked for something depends upon the environment in which you buy it: Macy's in the mall are much more expensive, but their sales assistants know what they are doing; in the discount sites (usually off the main routes) they can often barely recognise what they are selling.

Real estate is more expensive. Here in SR, it costs the same as Sydney, in the valley it can be much higher. Santa Rosa is to San Francisco as Gosford is to Sydney, giving you some idea how much more real estate costs. Housing is very different. The process of purchase is very different, but of comparable cost. The houses, however, are mostly wood, because it does not fall down in earthquakes as easily as stone or brick, and it's much lighter if it does. Houses tend to fall in value as they age, architectural considerations aside, although land tends to rise faster than buildings depreciate. Houses are most commonly single story, for the same earthquake reasons.

Rent is commensurately more expensive; with current interest rates, below 7%, rent will pay interest on a mortgage at 80% or more of the value of the property. With tax incentives, the government is positively bribing you to buy your own home.

Books are cheaper. I would not like to be doing these comparisons against my situation in the UK. The price on the back of one of the books we browsed in the bookshop late last night read: US$34.94, UK28.95. There's about 2 US$ per pound Sterling!

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