Lower Cost Arbitrages

I don't normally think about it in anything other than an economic sense, but spending some time in Shanghai is really making me feel the stark difference between a high cost market and a lower cost one.

In the first place, I exchanged a ridiculous amount of money before coming to Shanghai, which put into sharp relief what I had expected to spend in a week. But the prices here for food, accommodation and general shopping has just been absolutely ridiculous. It almost made me want to go crazy shopping. Almost.

• Good quality Chinese tea (tiekuanyin) for RMB 100 - £7
• All my snacks for RMB 39. That's about £2.70
• Good quality Chinese mushrooms for RMB 33. That's £2.30

It really takes some thinking about it to get a sense of perspective around what we get for our money anywhere in the world.

And that's not always easy when prices are rising, Shanghai is getting more expensive than Tokyo, and Singapore is probably slightly more expensive than Shanghai because of import limitations.

It didn't strike me fully until now that what we call a fair price is really subjective. We live in the places we live in, and take our purchasing power, after some time, for granted.

This probably helps explains why the fair trade movement is so much more apparent in first world countries which are high cost markets. Our ideas being in a high cost market of what a fair price is, is influenced to a high degree by our perceptions of what a £1 or a $1 can buy in our own countries and markets, not others.

Not that I'm against fair trade, mind. I fully support paying non-exploitative, fair market rates for the goods we buy. But I would also like to call to mind the use of the marketing campaigns like: "This man earns $1.50 per week for his coffee" and look at marketing campaigns for donations and grants in the same vein: "$1.50 per week from you... can help feed his family for a week".

I think I realize now the "multiplier" power our money can make in the markets that we buy in. While in the short run it makes me almost tempted not to bargain as hard as I otherwise would to, it puts into perspective that the small things we give up, can mean big things to people who receive them.

What stops them from actually receiving the full benefit, is a series of financial, logistic and socio-economic barriers that prevents us as consumers from buying the cheapest coffee in the world directly, and instead buying them from Starbucks or Tesco.

It makes me really want to find a way to overcome these barriers, and to exploit this arbitrage in a non-profit situation.