During last few years, I have traveled to a few relatively poor countries like Argentina, India, and Honduras. In all cases, I found that if I was looking for a safe, clean experience, be it a hotel or restaurant or spa, it is much more expensive than what I have experienced in United States or Western Europe. During my one-month stay in Buenos Aires, while a subway ride cost just a quarter, going out for a decent dinner was easily $40 or more. Here in the Boston area, I am so used to grabbing a quick lunch at most places for less than $10, but in Buenos Aires, it was impossible to eat at a decent cafe at that price (I do not eat street food and if a restaurant looks even a little run down, for health reasons, I avoid it). In Argentina, we did not shop anything (except for the groceries) but even t-shirts were $20. I have seen the same story repeated in India and Honduras.
Overpriced Brazil: In an article about Rio, I am told about "$20 for cocktails, $40 for entrees and $80 for children’s bathing suits...Rio has become a city where people talk without irony about how cheap the apartments are in New York....The rooftop pool at the Philippe Starck-designed Fasano hotel, where rooms go for $750 and more per night, overlooks the democratic panorama of Arpoador Beach on one side, and on the other a favela, or urban shantytown, setting up a scene in which plutocrats relax while gazing at the homes of laborers."
Expensive Honduras: In fact, several middle class people in San Pedro Sula told me that it was much cheaper for them to vacation and shop in Miami than to travel to a domestic destination like Roatan.
So what is going on? Here's what is happening:
Overpriced Brazil: In an article about Rio, I am told about "$20 for cocktails, $40 for entrees and $80 for children’s bathing suits...Rio has become a city where people talk without irony about how cheap the apartments are in New York....The rooftop pool at the Philippe Starck-designed Fasano hotel, where rooms go for $750 and more per night, overlooks the democratic panorama of Arpoador Beach on one side, and on the other a favela, or urban shantytown, setting up a scene in which plutocrats relax while gazing at the homes of laborers."
Expensive Honduras: In fact, several middle class people in San Pedro Sula told me that it was much cheaper for them to vacation and shop in Miami than to travel to a domestic destination like Roatan.
So what is going on? Here's what is happening:
- Competition is the foundation of American economy. Not only do we allow imports from anywhere, since we encourage entrepreneurship, anyone is free to develop a better value proposition and offer great prices. That isn't the case in these poor countries that suffer from nepotism, corruption, protectionism, and lack of competition.
- America, Japan and Western Europe serve the middle class. In most poor countries, on the other hand, there is small percentage (like our 1%) at the top and then everyone else is really poor. So the businesses that foreigners like me are likely to patronize exist either to serve the super-wealthy or the tourists, and that is why they can get away with extremely high prices.
- Obsession with exclusivity in poor countries. For us here in America, it is possible for even lower middle class people to dine in fine restaurants (for a special event) and I don't think it bothers anyone, except maybe a few snobs. In poor countries, the super-rich are obsessed with being able to maintain their distance from the masses and they are willing to pay a huge premium to stay in bubbles.