I’m very confused why purchasing power varies so dramatically internationally. like why are there countries where everyone has very low wages but everything is also really cheap so it balances out? prima facie, huge disparities like this should get evened out by arbitrage.
the simple explanation is that some labor can only be performed locally, labor mobility is limited (immigration laws, people don’t like moving, etc), and transportation costs for goods exist (shipping and tariffs).
however, global shipping is ridiculously cheap. and the economy increasingly consists of white collar jobs which could in theory be done remotely. for example, it seems it mind boggling to me that a top tier SWE/RS in the bay area is worth 10-100x more than one in India or Vietnam. like sure, someone being in the same timezone is great, and Zoom sucks, and so on. but for that price delta surely you could pay people to live nocturnally, construct apartments with bright lights synced to Pacific Time, invest in much better video call technology like that Google Beam thingy, etc?
maybe one possibility is that labor mobility is not actually that low for the very toppest tier people, and so if someone is actually worth that much then getting them good immigration lawyers is a trivial cost relative to their value/cost. so the market for the best people is very efficient and they all brain drain to the bay area the first chance they have. and so the lower salary of outsourcing is partly illusory at the highest levels, because the distribution of talent is very different across different localities, due to agglomeration effects.
I’ve worked completely nocturnally before. it wasn’t the best experience in the world, and probably wouldn’t have been sustainable in the long run, but there are a lot of jobs out there that are way more demanding (submarine, space, oil rig).