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McDonalds — Transcript

by Andrew Johnson · 9,045 words · 1,313 segments · language en · Watch on YouTube

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0:05hello welcome
0:07back
0:09so next thing we want to talk about is
0:11something called purchasing power parody
0:15PPP we've already talked a little bit
0:17about this but when we're talking about
0:21um GDP and gni
0:24but to really understand how PPP Works
0:28purchasing power parody
0:30it means it should be called purchasing
0:33power they should call it purchasing
0:34power or buying power but they don't
0:37they call it PPP purchasing power period
0:40so I had a friend come to visit me I I
0:42had a friend who just came from a trip
0:43to
0:44Portugal and uh I said hey how'd you
0:47like your trip in Portugal he says oh it
0:49was a lot of fun right so Portugal's a
0:51great place to go in a holiday I guess
0:53I've never been to Portugal but anyway
0:55uh I've heard that Portugal is one of
0:56the cheapest places in Europe especially
1:00Western Europe to go on holiday because
1:02things are just really really cheap
1:04there and so I asked him about this and
1:06I said hey I hear that your money just
1:09goes forever and Portugal it's the
1:10cheapest place in Europe and he says oh
1:14no everything's in Euros you're
1:17everything's expensive it's all in Euros
1:20right I wish I could spend US dollars
1:22but I had to use
1:24Euros he does he missed the point right
1:27he's talking about Europe Euros versus
1:31exchange rates and purchasing power
1:33parody they're different so euros and
1:37dollars are the same thing they're units
1:40of measurements here's here's a here's a
1:42question for you which weighs more a
1:45kilogram or 2.2
1:49pounds well they're the same aren't they
1:51a kilogram and 2.2 pounds are the exact
1:54same mass right which weighs more a ton
1:58of cotton or a ton of lead
2:01a ton is a ton a ton dep is a unit of
2:03measurement so if something's in dollars
2:06or they're in Euros or they're in Yan or
2:10they're in
2:11dong it doesn't matter that's a unit of
2:14measurement
2:16right yeah yeah so to understand it just
2:20because it's in yours doesn't make it
2:21more expensive it doesn't make it less
2:23expensive it's just in those those
2:27units so let's look at Exchange rates
2:30right kind of should make it a little
2:31bit
2:32clearer in
2:342018 which was worth the most
2:39$1.86
2:41EUR 22,000
2:44dong 6.4 Yuan a129 Canadian dollars 67
2:51rupees 12 South African rand or 880,000
2:56Venezuelan boulevards
3:00well they're all the same bees are all
3:03the same right I I went to Vietnam few
3:06years ago and there when my friend says
3:08hey you're gonna love Vietnam I go
3:11really I probably will and actually I
3:13did it was a lot of fun but and they
3:15said you're gonna love Vietnam because
3:17the money money just goes forever do you
3:20know $1 is 22,000 dong so you can buy a
3:24lot of stuff in Vietnam wait wait wait
3:28$1 is is$
3:3122,000 they are the same thing right so
3:34you can buy a
3:36car for
3:39$22,000 do you think you can go buy a
3:41car for 22,000 dung in
3:44Vietnam no a dollar is 22,000 it's a
3:48unit of measurement it's the same
3:52thing which is more a ton of cotton or
3:54ton of lead they're both the same which
3:56is more valuable a ton of cotton or ton
3:59of lead or a ton of gold gold that's
4:02what we want we don't care about the the
4:05units I'm not going to trade a ton of
4:07lead for I'm sorry I'm not going to
4:08trade a ton of gold for a ton of cotton
4:12no but they're both weigh the same don't
4:14they instead I want to know the
4:16purchasing power parody the buying power
4:20right so we already talked about if you
4:22go to Paris the land of
4:24wine in Paris you can go to a 7-Eleven
4:29and and buy a decent bottle of wine it's
4:32drinkable for less than a bottle of
4:36water think about that yeah Paris is a
4:40lot of fun right so Paris you you can
4:43pick up this bottle bottle of wine cost
4:45almost nothing right so you think wow if
4:48wine is cheap that must be mean so
4:51everything must be really really cheap
4:52in Paris that must be like a really
4:54cheap and fun place to go it's fun it
4:58isn't cheap in fact it terribly
5:00expensive Paris
5:05is it's very expensive right you can't
5:08look at the price of wine and say oh
5:11that means that the hotels are going to
5:12be cheaper and transportation's going to
5:14be cheaper and food's gonna be food is
5:17terribly expensive beer is actually
5:20pretty expensive but wine is
5:23cheap okay okay so I don't care I I
5:27can't look at one product can I I can't
5:30say oh because Paris has cheap wine that
5:34means everything is cheap clothing is
5:36cheap Louis Vuitton you think Louis
5:39Vuitton is cheap no right so instead we
5:44have to look at something called a
5:46basket of
5:47goods so purchasing power parity is a
5:51theory that measures the prices at
5:53different locations using common goods
5:56not a common good because you can't tell
5:57with one thing but Goods to contract the
6:00real purchasing price between the tri
6:03currencies so let's look at let's look
6:05at a basket of goods instead of looking
6:08at one product I can't really tell
6:10anything about it right so maybe
6:12something else is really really
6:13expensive there someplace it's really
6:15really cheap I can't look at one product
6:17but I can look at a whole group of
6:20products a basket of goods and I can
6:22compare how much that basket of goods
6:25costs in one country to another country
6:29right then I can tell the buying power
6:31right so let's say let's look at a
6:33basket of goods we have a car okay get a
6:35car for
6:36$10,000 right television set get a TV
6:40for
6:41$500 right refrigerator get a
6:45refrigerator for about
6:47$1,000 and 10 chickens you can get 10
6:50chickens for
6:51$50 so that in the United States means
6:55that this basket of goods cost $
6:5811,5
7:01$150 now if I go buy this same basket of
7:05goods in
7:06Europe at the current exchange rate at
7:10parity which means if everything was
7:11equal if the buying power in the United
7:13States dollar in United States is the
7:16same as the buying power of the euro in
7:19Europe then that means that it would
7:21cost
7:229,9 three Euros at the current exchange
7:26rate right so in other words it cost
7:3111,550 in the US or
7:3499,900 in the EU right that's a parody
7:39would we ever want to go to Europe and
7:41buy these products if they're the same
7:43price as they are in the United States
7:46the answer is not really right you you
7:49don't want to do it but what if we could
7:51get this same basket of goods in Europe
7:55for 8,000
7:57Euros then you say yeah let's go to
8:00Europe buy this basket of goods bring it
8:03back into the United States and sell it
8:05and make money that's make make make a
8:08good profit on it hey that's pretty cool
8:10right what if this same basket of goods
8:14cost 10,000
8:17EUR well we know that it's more
8:19expensive isn't we definitely don't want
8:21to buy it over there so that's at parody
8:25right so we look to see how much this
8:27basket of good so let's say you want to
8:28buy this basket of Goods in
8:31Vietnam
8:32now it's it's not going to cost if you
8:35convert from US dollars to dong you're
8:38going to see that your money goes a lot
8:40farther you could buy a lot of stuff in
8:43Vietnam with you can buy more with that
8:45$1 which is 22,000 dong you can buy more
8:49with that $1 than you can in
8:51Belle right so we look at this basket of
8:55goods and we can say hey where should we
8:56buy stuff from right or I can predict if
9:00I'm GNA go on a holiday or a business
9:02trip I can predict pretty accurately how
9:06far my how expensive everything's going
9:08to be right so if I go to India I know
9:10that you can get a car for way less than
9:12$10,000 I know in group he converted to
9:16US dollars so I say hey maybe I I don't
9:19have to save so much money but let's say
9:21I'm GNA go to Norway where everything is
9:24expensive well everybody drives a Tesla
9:25so that should tell you something right
9:28Tesla
9:30taxis right so by looking at this basket
9:33of goods I can predict a lot of stuff
9:35there's a problem though there's one big
9:37problem are cars the same all over the
9:41world no no no so in the United States
9:45we have well some people have pickup
9:46trucks other parts of the world no such
9:49thing as a pickup truck right so the
9:51cars are different right so in uh India
9:54they have a Tata which is this little
9:56death trap of a car that you I don't
9:59think you could drive them in the United
10:01States I'm pretty sure that they're
10:02illegal because they're just really
10:04really unsafe versus yes so cars are
10:07different televisions are different too
10:10aren't they so some so I've been some
10:13places like I was in uh Zambia and in
10:16Zambia they had little TV sets yeah they
10:20they live in little Huts but they also
10:23all the Huts had TV sets but they were
10:24little tiny TV sets you go to a typical
10:27home in Belleview Washington
10:30Washington they're the size of a wall or
10:34an elephant or something like that
10:35they're huge aren't they right so those
10:37are different refrigerators are
10:39refrigerators in China the same as they
10:41are in Belle no they have smaller
10:44refrigerators in China right we have
10:47refrigerators you can sleep
10:49in big difference what about chickens
10:52chickens are all over the world they are
10:54all over the world except for Antarctica
10:56I don't think Antarctica has but yes
10:58chickens are all over the world but
10:59they're different chicken is a chicken
11:02is a chicken no not at all for instance
11:05my wife lives in lived in central China
11:09and I go to visit her parents on their
11:11farm and they have these little tiny
11:13chickens they're like maybe a foot tall
11:15and they're skinny and they're really
11:17really
11:18quick and my wife says you ever had a
11:21Chinese chicken and I
11:23go uh I I don't know she says we got to
11:28get one so it's they she ran around and
11:31grabbed a couple of chickens and my
11:34mother-in-law cooked the chickens for me
11:36that's so I got to eat this chicken now
11:37what was weird is the skin on the
11:40chicken was
11:41black no black it wasn't dyed it just
11:45well it was dead of course I
11:47mean they killed the chicken and then
11:50they pulled the feathers off of it but
11:51then what was left this dead chicken
11:54with no feathers was black right the
11:56skin was
11:57black when was the last time time You'
11:59gone to you've gone to a Safeway and
12:02seen a chicken with black
12:05skin we don't have them here right
12:07they're different right so we raised
12:09chickens right I I had some chickens and
12:12they were called meat chickens and they
12:14were about this big they're white and
12:19they're exactly what you think of the
12:21chicken but they were monsters Right In
12:24fact when they would walk they go th thp
12:28th they're really easy to catch because
12:30if they walk too fast they tip over and
12:33yes you'd see that these chickens would
12:35tip over all the time they're completely
12:38different than the Chinese chickens
12:39they're both chickens but they're so
12:41different so that's the problem with the
12:43basket of goods they're different in all
12:46these other countries so we need to come
12:48up with a basket of goods that's the
12:51same all over the
12:54world we need a basket of goods that I
12:58can I can go to almost any country in
13:00the world and they had this same
13:02identical basket of
13:05goods and they said hey wouldn't it be
13:07fun wouldn't it be fun wouldn't it be
13:09interesting if you could buy one
13:12product that represents a basket of
13:15goods so one product that's made out of
13:17a bunch of stuff and it's always the
13:20same everywhere in the world then
13:22instead of looking in a basket of goods
13:24and have to figure out how much that
13:25stuff costs right parody the purch in
13:29power buying those things I could just
13:31look at one product and I can predict
13:34what my buying power is in that
13:38country that's pretty
13:41cool so they said how do you find a
13:44baset Goods it's always the same there's
13:47one product that everybody who's
13:49listening to me has
13:52used and it's all over the world now
13:55there's some countries it's not in but
13:57almost every country in the world has
13:59the same basket of
14:03goods and this basket of goods is to all
14:07beef patty Special Sauce lettuce cheese
14:09pickles onions on the sesame seed bun
14:13you say any that's a Big Mac yep that's
14:16a Big
14:17Mac all over the world I've traveled all
14:20over the world right a Big Mac is always
14:24to all be P sa cheese pickles and bu
14:29always right I have people say no it's
14:31different in my country no it is not a
14:33Big Mac is a Big Mac is a Big Mac right
14:36it's always to all be Patty special so
14:39then you're thinking Andy how come you
14:40know the ingredients of that what that's
14:42kind of weird well actually when I was a
14:44little kid the TV commercials were for
14:47big Maxs and they go to all beef patty
14:49specials you talk to anybody who's old
14:51and has no hair like me and they will be
14:54able to tell you everything that's in a
14:55big ma because we had that drilled in
14:57our head right but it's always the same
15:00say no I've gone to countries that are
15:02different a Big Mac is always the same
15:06it's always a Big Mac right now they do
15:08have some local versions they have the
15:11the Angry Big Mac and in Japan they have
15:14a triple Big Mac and I saw this little
15:18guy eating a triple Big Mac in Japan
15:21right so yes they we don't have triple
15:23big Maxs here although we did have the
15:26Double Quarter Pounder Big Mac which was
15:30like one of the worst foods you can ever
15:31possibly eat for you right might taste
15:34good yummy and salty and fat but
15:37anyway but a Big Mac is a Big Mac and I
15:42said but but they're different in my
15:43country okay do they have two all beef
15:46patties Special Sauce lettuce cheese
15:49pickles onions seed
15:51bun yeah but they taste
15:53different maybe maybe
15:56not oh yeah they taste different uh I'll
16:00show you why that's not correct did you
16:02know that your taste buds actually
16:03change when you you're in different
16:05environments so for instance if I I give
16:09you tomato juice so I gave my wife I
16:12bought some tomato juice once for my
16:13wife and she she'd had never had tomato
16:15juice and she tasted it she says H that
16:19is terrible now I was doing this for a
16:21reason so I said this we were going to
16:24we were flying to Africa later uh that
16:27week and I wanted her to drink tomato
16:28tomato juice here then we get on the
16:32airplane we're up the sky flying and I
16:35ordered a tomato juice and I gave it to
16:38my wife and she says I told you I don't
16:40like tomato juice I said try it just try
16:44it it's not what you expected and she
16:47took a taste of it she says that's good
16:50I go yeah tomato juice tastes wonderful
16:53on an airplane because you're at a
16:55higher altitude and you're I don't know
16:58it just tastes different right when you
16:59eat one type of food and then followed
17:01up with another type of food doesn't it
17:03taste different right do you want to eat
17:06pickles and ice cream well maybe you do
17:07eat pickles and ice cream but you got
17:09the point there's certain foods that
17:11just do not go together right and so
17:14what happens with the Big Mac is you've
17:15been eating some of the local food you
17:17started to get that taste in it then you
17:19eat the Big Mac and it taste different
17:20but they're always the same and I'll
17:22prove it to you why it's always the same
17:23because they want it to be always the
17:24same and is but anyway so you can always
17:27find a Big Mac
17:29so they said let's compare this basket
17:32of goods Big
17:33Mac around the world and it was
17:36originally supposed to be a joke right
17:37they
17:39said this let's because the Big Mac's
17:41always the same because it is always the
17:42same right and uh so let's look at the
17:46price of a big Ma and compare how much
17:48that costs in US dollars in different
17:51countries of the world and for the US
17:53dollar to to determine how much it costs
17:55in the United States they took an
17:57average between New York City Chicago
18:01San Francisco and Atlanta so if you when
18:04I show you some prices you're GNA said
18:06Big Mac doesn't cost that amount because
18:08they took the average between those four
18:11okay so they had What's called the Big
18:14Max Big Mac index so let's look at Big
18:19Mac index
18:30Big
18:33Mac
18:38index the Big Mac
18:41Index right it was originally done by
18:43The Economist here let's pop open
18:46Wikipedia I hate Wikipedia yeah I know
18:49I'd be quiet so the Big Mac index was
18:53put up with the economists saying oh
18:55let's determine PPP in these different
18:57countries and it turned out that it was
18:59almost a perfect basket of goods they by
19:03looking at the price of a Big Mac in US
19:06dollars in other countries you could
19:09predict very accurately how far your
19:12money goes which is kind of
19:16crazy
19:18so let's see
19:22here let's see if this will show it put
19:26there purchasing power parody tells us
19:29the same thing oh come on it's not
19:33giving me the there's a real cool slide
19:36here I'm GNA pause just for a
19:50second so I'm back here so here's a Big
19:54Mac index you can see there's a whole
19:56bunch of them but this just gives you an
19:57idea right so if I look at the price of
20:01a Big Mac in
20:03Switzerland yes they have Big Macs in
20:05Switzerland you go to Switzerland you
20:06get a Big Mac they're expensive right
20:09and if if a Big Mac is expensive what
20:12else do you think is expensive in
20:14Switzerland everything Switzerland is a
20:17beautiful country but it is so expensive
20:20to go you would not play so you go to
20:23all these beautiful little Swiss
20:24Villages and they have uh jewelry stores
20:28and you say okay it's a jewelry store
20:30right so the these aren't Rolex jewelry
20:33store these like cardier and things like
20:35that yeah like $80,000 for a watch in
20:39Little Village so you're going through a
20:41little village and you see an $80,000
20:44watch yeah now you see all sorts of
20:47stuff it's really really expensive to go
20:49there right on the other hand if you go
20:52to Japan you're going to see that the
20:54price of a big bank is less in US
20:57dollars
20:58so if you know that Japan is cheap if if
21:01the Big Mac is cheap in Japan other
21:03stuff is probably more likely to be
21:05cheap now there's some things are going
21:07to be more expensive of course but
21:09there's going to be a lot of stff wait
21:10do we buy a lot of stuff from Japan yes
21:13we do why do we buy stuff from Japan
21:16because they they can make it cheaper
21:18than we
21:19can oh China Big Mac is even cheaper in
21:23China do we buy Chinese products yes
21:26right when I go to China I don't take
21:29much I usually take a suitcase that's
21:32almost
21:33empty and what do you think my suitcase
21:35looks like when I get back home it's
21:39full because you can go there and you
21:41can buy your dollar your purchasing
21:43power in China goes a lot farther than
21:46it does here in the United States and
21:48I've had people say oh no things are
21:49more expensive in China some things are
21:52right so if you want to get a a real
21:55North faac backpack it's going to cost
21:58you a lot more right but if you want to
22:00get a knockoff North Face backpack it'll
22:04cost you 20 bucks of course it might not
22:07stay together by the time you get home
22:09but it's really cheap remember I told
22:11you about that that had bowl of noodles
22:13in central China cost almost nothing now
22:16there are places where it's expensive
22:18but in the general that's the reason we
22:20buy Chinese products is because they're
22:22cheap now there's one problem with this
22:26thing with this list there's one problem
22:29and that's
22:31India India says wow it's
22:33$265 for the Big
22:36Mac it is not
22:38$22.65 in US dollars for the Big
22:41Mac because they don't sell Big Macs in
22:45India why because the Hindus believe
22:49that uh cows are sacred and so you go
22:53I've been to McDonald's in India they do
22:56not have the Big M instead said they
22:58have something called the Maharaja
23:01Burger I've eaten one
23:04once I ate half of it I was
23:08starving I didn't eat the other half
23:11it's not the same thing and they go oh
23:13it's the same thing and some people love
23:15it okay you can love it it's not the
23:17same thing okay uh South Africa South
23:22Africa is a wonderful place to go if
23:24you're if you can afford the plane
23:26ticket South Africa is really really
23:29first off is profoundly beautiful you
23:32just won't you think you know what what
23:34Africa looks like by watching television
23:37you don't it's like watching somebody
23:39eat ice cream and never having ice cream
23:41tasted ice cream yourself it's you can't
23:44it's it's it's it's beautiful right also
23:47your money goes forever when you're down
23:49there oh so you're zooming around you're
23:51seeing all these elephants and stuff and
23:53your money just goes for everything is
23:54so cheap I loved it I I wish I'd been
23:58smart enough to see this chart before I
24:00went to South Africa so I went I was in
24:02Cape Town capee town is a beautiful city
24:04it feels a lot like Seattle for Africa
24:07it feels like if you took Seattle and
24:09dumped it down there in Africa that's
24:11what Cape Town feels like it's a
24:12beautiful city um and they have it's
24:16ocean it's got a waterfront just like we
24:18do and it's got this really cool Marina
24:22right right there in the center of Cape
24:23Town so if you know anything about
24:25marinas usually marinas you know where
24:27they keep boats
24:28in their little stalls usually they have
24:30nice restaurants nearby and this was no
24:33different right so they all these big
24:35monster Yachts on all the way around it
24:38there were all these little um
24:40restaurants but they were fancy
24:41restaurants you know the title right so
24:44I went there for lunch I decided I'm
24:46gonna Splurge so I went for lunch at one
24:49of these fancy
24:51restaurants and I ate way too much I
24:55drank way too much I sat there for I I
24:58the most expensive things on the menu I
25:01was I just picking I had to go home and
25:03take a nap after I finished to give you
25:05an
25:06idea it cost me $8
25:11us now that's fun that's a lot of fun
25:15right and so you can go you can go and
25:17look at different uh Big Mac scales so
25:20here's another
25:21one this gives you a little bit more
25:24information this is a little dated this
25:26is a little out of date but say
25:28Switzerland see Brazil that's an old one
25:32yeah I wondered yeah so anyway you get
25:35the idea so if you gonna go on a holiday
25:37someplace find out where they are what
25:40the price of a Big Mac is and it will
25:41give you an estimate it's not perfect so
25:43for instance you go to
25:46India according to the India according
25:49to our Big Mac scale India is really
25:51really cheap right now there's a problem
25:54though India the hotels are either super
25:59expensive by their standards
26:02or scary you won't go to them so in
26:07India basically if you're doing
26:10business if you're doing business in
26:12India you uh you say wow it's gonna be
26:15everything's going to be really really
26:17cheap there it really isn't because you
26:20have to stay at a nice hotel you can't
26:22find one for less than
26:23$200 and well you can but you don't want
26:26to go to those hotels
26:28um so you can't really predict your
26:30holiday although a lot of stuff is
26:32really really cheap in India um so so
26:36it's not perfect but it's a good start
26:39it's a good start so now we're talking
26:42about McDonald's you're never going to
26:44look at McDonald's the same way after
26:45you have this class so McDonald's
26:48decides they wanted to go to
26:50Russia yeah so McDonald's was one of the
26:53first Western companies Western
26:56businesses to go to Russia
27:00and they were very very successful so
27:02this was what it was the Soviet Union at
27:05the time but then it became
27:09Russia so
27:11here's what it looked like when they
27:13opened their first store in Russia by
27:18the way these guys are standing in the
27:21rain can you and you don't see this P
27:25this picture is kind of misleading
27:27because the line actually goes around
27:29the block and way around and so people
27:32are standing in line for hours to get a
27:36Big Mac and
27:38Fries can you comprehend that hours to
27:42get a Big Mac and Fries no no let's
27:43think about this you in the Soviet
27:47Union you've heard about McDonald's you
27:49know it
27:51exists but you've never had it and now
27:54they just open up
27:58don't you want to try
28:00it well I I wouldn't stand in line for
28:02hours and hours and hours really no I
28:06wouldn't I'm really do you remember when
28:09they opened the Chick-fil-A in
28:14Belleview this is Belle and we're ly
28:16people are standing in line for hours
28:18and hours and hours to get a bad chicken
28:21sandwich yep because they never had
28:24Chick-fil-A now the people who did not
28:26stand in the line were people who had
28:28had ch- play- in other parts of the
28:29world right I had it in Florida oh it
28:32wasn't very good but I was in I'm like
28:35going you guys don't know what you do
28:38yeah they do because they had never had
28:39it before also it gets more interesting
28:43it took the average so this was in
28:45Moscow right it took the average
28:48moscovite about a week's salary to have
28:52lunch at
28:56McDonald's can you imagine
28:59standing in line for hours in the rain
29:01and the cold to spend a week's
29:06income on a burger and fries and maybe
29:08milkshake I don't
29:10know wow maybe cherry pie too I don't
29:15know yeah people did people did because
29:18they never had it you want what you
29:20can't have that's the way everybody
29:23is so there's some more McDonald's lines
29:30now they had some problems though with
29:33the uh the the McDonald's in Russia had
29:36some problems one of the problems was
29:39with potatoes so they don't have
29:42potatoes in Russia they do have potatoes
29:45in Russia right what famous Russian
29:49product do you know that is made from
29:52potatoes and don't say
29:54pancakes WKA woodka made out of pot sure
29:58they've got plenty of potatoes in Russia
30:00but potatoes are kind of
30:03like
30:05bananas potatoes and they're kind of the
30:07same so if bananas when you go to the
30:09store you see all bananas are this long
30:12and they're
30:13green
30:15yellowish and they're all the same
30:17everything and you think that's a banana
30:20bananas can come in so many different
30:22I've seen bananas that are this big I've
30:25seen bananas that are like three feet
30:26long I've seen SE red bananas I've seen
30:29purple bananas I've had sweet bananas
30:32where they're just pure sugar I've had
30:33them where they're bitter and you I had
30:36seeds where go you're crunching on the
30:38seeds on the banana they're all sorts of
30:40types of bananas potatoes are the same
30:43way turns out the
30:45potatoes that make good
30:47vodka don't make the best french fries
30:51and McDonald's likes to keep their
30:53french fries consistent right fact all
30:56their food is consistent consistent stly
30:58bad but they want it to be bad they want
31:01their food to be bad they do I'll get
31:03you there right but they don't want you
31:05to have a fine dining experience at
31:07McDonald's there's a reason they're
31:09doing that there's a reason their food
31:11tastes so bad but so now they can't get
31:15potatoes that makes them because they
31:16want their fries to taste the same all
31:17over the world and they the Russian
31:19potatoes didn't work so they had to fly
31:21them in from Idaho so they get it mostly
31:24from a company called Simplot which is
31:26in Idaho and and they flow fly the
31:29potatoes to Moscow now let's think about
31:32we we know that flying is the most
31:34expensive way to ship anything well
31:36except for Rockets I guess Rockets are
31:38more expensive but flying flying is
31:40number two let's think about a
31:42potato it's mostly water it's very heavy
31:47right and how much is a potato
31:50worth want to have fun go to the grocery
31:52store and find a bag of potting soil
31:57dirt
31:58and find a bag of potatoes and see which
32:01cost more dirt or
32:05potatoes the dirt costs more than the
32:07potatoes right so now you're flying a
32:10product that is cheaper than dirt
32:13literally cheaper than dirt and you're
32:15flying it on an airplane because it's
32:17going to go bad if you go ships Plus
32:20moscow's in the center of the country
32:22and Idaho kind of cords the ceration
32:24more so so but is there a lot of profit
32:27in french fries yep so they did even
32:30though they're they're they're not
32:31making as much money as that they
32:32expected they're still making money
32:34because it's french fries right they had
32:36troubles with
32:37buns buns buns see McDonald's doesn't
32:41make their own hamburger buns they get a
32:43local bakery and tell them how bad to
32:45make them right they say here's how we
32:47want our hamburger buns to look and if
32:50the bakery can make it to their
32:51standards they say not better not worse
32:54to their standards then they say okay
32:57will buy your buns nobody in in Moscow
32:59at this time nobody made hamburger buns
33:03but they don't eat bread in Russia they
33:04bread just not hamburger buns nobody
33:07knew how to make hamburger buns so they
33:09had to start their own Bakery making
33:11hamburger buns now that's not one of
33:14their core proficiencies is it right
33:17that's not comparative advantage that's
33:19not what they're good at but they can do
33:21it if you have to do it and they had to
33:23do it so they made the
33:25bus they also had problems with the
33:29clothing the clothing the clothing so in
33:33the United States working in McDonald's
33:36is considered a bad job you want to have
33:39fun Google MC
33:42job you Google MC job they'll say it's a
33:44bad job that's what that's the standard
33:46of what a bad job is maybe it's not so
33:48bad it but that's that's what it's not
33:51known for being good in
33:54Russia it was a prestigious job Pres
33:58just work at McDonald
34:00prestigious first off they paid better
34:02than anybody
34:03else second off when you join them it
34:06looks great on your resume looks good on
34:08your resume to have McDonald yeah
34:09because you can say hey I helped the
34:11first Western business come and be
34:13successful in Moscow I can help your
34:15company too yeah so in the United States
34:19I worked at McDonald I admitted okay one
34:21out of eight Americans have worked at
34:25McDonald's and here's what you do when
34:27you work at
34:29McDonald's you take you go into
34:31McDonald's you put on your uniform you
34:34work you take your uniform off and then
34:37you leave do you ever see somebody
34:41walking around the mall with their
34:42McDonald's uniform
34:45on no do you ever go to the
34:48nightclub and see somebody rocking out
34:51with their McDonald's uniform they did
34:54in
34:55Russia because they this this is a
34:58prestigious job look at me I work at
35:00McDonald's you stand in line for 4 hours
35:03just to get burger and fries for me wow
35:06wow so they were the clothing was
35:09starting to wear out so they had to
35:11cycle through clothing they said only
35:13wear you uniform at work okay but I got
35:17a date tonight I want her to know that I
35:19work at McDonald's so they would wear so
35:21they had to basically they finally said
35:24okay you need to leave your uniform here
35:26and we'll wash it for you because they
35:28were wearing out they just were using
35:30their their their stuff wow pretty crazy
35:34they also had some other troubles with
35:36the
35:37employees one was skills you say skills
35:41at McDonald
35:44skills skill what skills can't they
35:47pretty much get anybody yep they had
35:50skills see in McDonald's at this time
35:53McDonald's used to have a motto or a
35:56jingle and it was McDonald is a happy
35:58place ha ha ha happy place a clean and
36:02snappy place that I've heard that so
36:05many times growing up and would always
36:07think McDonald's is a happy place in
36:08fact a lot of places still do this if
36:11you look on the menu you will not so
36:14much in the United States I haven't seen
36:15it for a long time in the United States
36:16but in other countries you will see
36:18Smiles on the menu and it says Smiles
36:21are free so they go we want our
36:24employees to smile McDonald's is a happy
36:26place right
36:28there's a problem in Russia people don't
36:32smile they just
36:34don't it's not a smiley place right if
36:38you see somebody just walking around
36:39smiling there's only two
36:41possibilities number one they're crazy
36:44number two they're drunk that's it
36:46they're just not Smiley people they're
36:48friendly but they don't smile how many
36:50times have you seen a picture of
36:52Vladimir Putin
36:54smile you can Google it and you can find
36:57it
36:58but he doesn't smile very much they
36:59think that you look silly like a horse
37:01if you smile or laugh so they'll be very
37:04friendly but they're just not Smiley
37:07people so um if you could the what's
37:11interesting is the country that smiles
37:13the most not us right there's one
37:17country that smiles way more than
37:19anybody else and that's
37:21Thailand Thailand is called the land of
37:23smiles for reason they smile all the
37:25time they smile if they love you they
37:27they smile if they want to kill you they
37:28smile all the time they just that's what
37:30they do they they smile right so I was
37:33in Thailand and I saw a busload of
37:36Russians come to this
37:38Resort the taii people are going hi
37:41welcome here and the Russians are
37:44going and you could just feel the
37:47culture class the stress between the
37:49Russians and the Tai because it's
37:51freaking the Russians out it's freaking
37:53the ties out and it was just a culture
37:55they just don't smile it's it's kind of
37:58weird so I had a former former student
38:00and she um was from Russia and she went
38:03back home and her mom says why are you
38:04smiling all the time she says because
38:06I'm happy she says well don't you look
38:08weird right and so they just they're
38:10just not Smiley people but McDonald's is
38:13supposed to smile so they told their
38:16employees you need to smile so they said
38:19let's practice say welcome McDonald's
38:21how may I help you and I want you to
38:22smile to it they go welcome McDonald's
38:25how may I help you I said no you need to
38:27smile
38:29no you need to really
38:32smoke and they actually had a high
38:35employee turnover on just getting people
38:38to
38:40smile wow who would think that that
38:42would be a skill that's hard to get it
38:45was they also had a problem with the
38:47currency the currency so at this time it
38:50was a Russian Ruble but it was a Soviet
38:52Union Ruble right and the ruble was
38:55nontransferable currency
38:58which means the ruble had no value
39:01outside the country so if you take a $20
39:04us $20 bill us go anywhere in the world
39:10everybody knows or has a close idea what
39:14the value is right and so you can ex go
39:17to a local bank you can exchange it and
39:19you'll know that you're getting pretty
39:21close what you should get Rubble is not
39:23not exchangeable there's no you can't
39:25export it there's nothing it only has
39:27value inside the Soviet Union so now
39:31you're make you're McDonald's you're
39:32making all this
39:33money but you can't do anything with it
39:36you only spend it in Russia okay so you
39:38spend it in Russia do you want to live
39:40in Russia I don't want to live in Russia
39:41I mean I'd love to go visit but I like
39:44Seattle I like this area so what how do
39:47you get your money out when it has no
39:50value so McDonald's they're smart they
39:53said aha let's buy a local product that
39:57the Russians are very good at world
40:00famous
40:01for that happens to be made out of
40:05potatoes
40:07vka yeah so McDonald's was for a long
40:11time was one of the largest exporters of
40:13vodka in the world from Russia so they
40:16buy the vodka you ever heard of of a
40:18brand called stoy
40:20vodka that was MC
40:23vodka yeah I mean craziness craziness
40:26craziness
40:28so uh they did pretty well but they had
40:30some interesting experience so I've been
40:32to McDonald's in Thailand and you go to
40:35McDonald's and Thailand and let's see
40:37what happens here so you'll
40:41see Ronald there with his hands up doing
40:45the Namaste or way I I don't know I
40:48can't remember they call it Namaste I
40:50think they call this wayy in um in the
40:53Thailand right and you'll see that yeah
40:56they they they've got and everybody
40:58stands next to it and yes I took a
40:59picture doing this right next to Ronald
41:02McDonald's uh but it's kind of
41:03interesting they see they have a local
41:06menu they have some Local
41:08Foods right right but they also have a
41:12Big
41:14Mac and it's McDonald's in Thailand
41:16versus Canada they're both to Olive beef
41:20patty Special Sauce lettuce cheese
41:22pickles onions on susce
41:24bun and they look pretty much the same
41:28to me you know what happens is here in
41:30the United States you get one and it's a
41:32mallad almost know you open it up and
41:34it's all we they just throw it on there
41:36in other countries they stack them and
41:38make it look a little prettier but it's
41:40always to beef P anyway so they've got
41:44some local foods that um that they
41:47wouldn't necessarily have in some other
41:49countries but they have they still have
41:51the big
41:55Ma so I went to a McDonald's in London
41:59whenever I go to another country I
42:00almost always eat a McDonald's for two
42:03reasons number one it's pretty safe
42:07right until your guts get used to the
42:10local
42:11food you it can start to make you you
42:14you you're eating all this wonderful
42:15food in this new country and then you
42:17start to get the tummy problems and the
42:20last thing you want to do is have tummy
42:22problems when you're on a bus in the
42:23middle of nowhere or on the side of a
42:26mountain or or things like that that's
42:28just not good so I normally eat at
42:31McDonald's to try to get used as I'm
42:34getting used to it so I eat two or three
42:36times there at the very beginning and
42:38then I stop eating at the McDonald's or
42:40I've go from one country to the next I
42:41start over also I want to try Big Mac
42:44because I just told you a Big Mac is
42:46always the same and I want to be able to
42:48tell you the truth that a Big Mac is
42:50always the same and I've been to over
42:52almost 60 countries to eat a Big
42:55Mac they always same I went to one in
42:58London London was a McDonald's on the
43:02first floor and it was three stories
43:04three stories tall the top floor was a
43:06MC
43:08disco MC disco can you imagine going to
43:12McDonald's and go dancing with your
43:14fries and your
43:16shake they did weird weird weird so
43:20McDonald's was has been pretty
43:22successful there's another company we
43:23need to talk about called
43:26Subway Subway Subway subs you know Jared
43:30you the creepy
43:33weirdo child molester that was their
43:36spokesperson he's in jail right now
43:38because he did later on you're gonna
43:40find it wasn't by accident that somebody
43:42like Jared worked at Subway because
43:44Subway does a lot of really creepy stuff
43:46let me show you some ads later on that
43:48you're gonna like
43:50on okay anyway Subway decides to go to
43:55Russia turns out the Russ Russians love
43:57Subs they thought Subway was pretty good
44:01so the local so the when Subway went to
44:03Russia they got a local Russian
44:07partner and because it makes a lot of
44:09sense they speak the language they know
44:11the culture they got connections there's
44:12a bunch of reasons why you want a local
44:14to help you get your business up and
44:15running so they're up and running they
44:17start to make a lot of money and then
44:20the Russian partner says some words to
44:22the American partner that you don't want
44:24to hear he said thank you for your
44:28business what do you mean I'm taking
44:31over now you've made enough money
44:34go you can't take the away I did get out
44:38of here if you come
44:41back you won't be able to leave in other
44:44words I will kill you if you come
44:47back the Russian Subway
44:51Mafia say well he won't kill me listen
44:55if you're in another country and
44:57somebody threatens you with a
44:59gun walk away you will never win so
45:04let's say for instance you're standing
45:06out in the middle of a crowd with TV
45:08cameras everywhere and somebody comes up
45:11to you with a gun and points a gun at
45:12you and you Bruce Lee Kung Fu them
45:15Jackie Chan them and you take the gun
45:17out of their hand and shoot them
45:20everybody sees this happening you are
45:21going to jail for the rest of your life
45:24that's just the the rules the laws in in
45:27other countries are designed to protect
45:29the locals not the foreigners you need
45:32to walk
45:33away now there never was a McDonald's
45:36Mafia a MC Mafia well there was one
45:39attempt against McDonald's so McDonald's
45:42they start up their business they're
45:44making lots of money now the mafia
45:46normally leaves you alone at the first
45:48because they want you to be successful
45:50then they start to ask you to give them
45:52money so McDonald's making money hand
45:54over fist everybody's happy and then a
45:57mafia Thug comes into McDonald's and
45:59knocks on the door he says I've got some
46:02information I'd like to share with you
46:05and he says may I speak to the manager
46:06the M manager comes up hi welcome
46:08McDonald's how me I help you and the
46:10Russian says I have some information for
46:12you that'll be very helpful I found out
46:15that your store is probably gonna burn
46:17down
46:18tonight and uh I can I have some people
46:21and we can protect your store now the
46:24manager at McDonald's acted stupid he
46:26knew what what was going on but he act
46:27stupid goes oh thanks well we got real
46:29good people here we we're real good at
46:31not letting fires catch and the the
46:34mafia gangster says no you don't
46:36understand my people are the only ones
46:39with the skills that can protect your
46:42place the manager acted stupid once
46:45again oh no thanks all so much you know
46:47what well we'll take care of it the
46:49manager the the mafia Thug said once
46:52again you don't understand you either
46:55pay me money
46:58or my people will burn down your store
47:00and kill your
47:02employees now the manager McDonald stop
47:05smiling and he says oh oh uh well I
47:09don't have any Authority I'm just a a
47:10manager here can I have a couple days to
47:12talk to corporate you know and find out
47:14what to do and the the thug says I give
47:17you two days and I will be
47:19back so now the manager McDonald's goes
47:22wo this is
47:24scary um
47:27I'm gonna go talk to the police he tells
47:29the police this sad story and the police
47:30say yeah these things happen probably
47:34best just go ahead and pay them off the
47:36manager McDonald says no you didn't you
47:38didn't hear me we don't pay off
47:40organized crime you need to come and
47:42protect us from these
47:44gangsters and the police says well it's
47:48difficult and we'll see what we can do
47:51but we can't guarantee your
47:54safety manager McDonald says no no you
47:57didn't understand me they said that
47:59they're going to kill my people if we
48:01get approached or threatened by anybody
48:04we're just going to close and leave
48:06we'll just close up and leave that's all
48:08we're gonna do policeman says well if
48:11that's what you want to do that you can
48:12do that the McDonald's Mar says no you
48:15did not understand me we will close our
48:19stores and we will tell the entire world
48:23that McDonald's the most successful
48:25franchise in the history history of the
48:27planet can't do business in Russia
48:30because of the mafia organized crime and
48:32corrupt police
48:34officers now think about this right
48:38you're looking at a place to invest your
48:40money and you find out that McDonald's
48:43that's
48:44everywhere cannot do business in Russia
48:47because of the mafia would you ever do
48:50business in
48:51Russia I wouldn't right if they can't do
48:54it then there's something wrong right so
48:57the policeman think what this would do
48:59to the Russian economy oh my gosh so
49:02then the policeman comes back says oh we
49:04didn't understand that oh we guarantee
49:08your safety you are never going to be
49:10approached we're going to put police
49:11cars all over the place you will never
49:14be messed with we will guarantee it
49:16right they had to didn't they right then
49:19the police put word on the street they
49:21said look you guys sell drugs we look
49:24the other way you do prostitution we
49:26look the other way you sell television
49:28sets out of the back of trucks that are
49:30illegal from Japan we look the other way
49:32do not touch
49:34McDonald's if you touch McDonald's we
49:37will be all over you we will put you in
49:39a jail cell in Siberia and you will
49:41never see your
49:44family it gets
49:47better the mafia no matter what you see
49:50on television there isn't a mafia
49:52they're little clubs little clubs all
49:55over the air and sometimes they fighting
49:56other but there's not one there's little
49:58families little
50:00groups so what would happen is if one
50:03Mafia group attacked McDonald's the
50:06police would come down on
50:08everybody and they didn't want that to
50:10happen so the mafias put were down on
50:13the street they said
50:14look if the police ever catch you doing
50:19something to McDonald's They said that
50:20they going to go to jail for the rest of
50:22your life and you won't see your family
50:24and that's partially true because we
50:27will kill the rest of your family
50:28members we will kill your parents your
50:30children your aunts your uncles nobody
50:33touches
50:35McDonald's you just see what just
50:37happened so in so now instead of
50:40attacking McDonald's the mafia protects
50:43McDonald's and they don't pay anything
50:45for this
50:46protection now Subway manager found that
50:49found that happen and went to the police
50:51and says we'll tell them that about
50:54Subway and the police said you're Subway
50:58you're not McDonald's you don't even
51:01pretend like you're McDonald's and so
51:05they walked out
51:07wow but there are more Subways than
51:09there are
51:12McDonald's statistic wait till we talk
51:15about McDonald's then I'll get you I'll
51:16get you some good
51:19statistics
51:20okay now some of you have older
51:24textbooks if you have an older textbook
51:27it gives you the definition of dumping
51:29and it says dumping is selling something
51:31at below
51:33cost that's
51:35changed the new definition is selling
51:38abroad at a lower cost than it's
51:40available
51:42domestically so shouldn't something be
51:45more expensive the farther away it is
51:47than it's made the answer is
51:50yes right
51:52so if you have a if you have a bottle of
51:55French wine where should the French wine
51:58be the
51:59cheapest FR yes France FR but that's the
52:04cheapest because that's what should be
52:05the cheapest because you have to ship it
52:06and that should cause the price to go up
52:08and it is right so the new definition
52:12dumping is selling abroad at at lower
52:15cost than it's available
52:18domestically now they changed this
52:20because primarily
52:21Microsoft Microsoft sells the
52:24Xbox how much does does Microsoft make
52:27on every Xbox they
52:30sell
52:32nothing Microsoft loses money on every
52:37Xbox they sell and they would like to
52:40sell as many as they can and lose all
52:43that money well that's dumb it's not
52:47dumb because they make the money on
52:51the
52:53games they make a lot of money on the
52:55games they're software company not a
52:57hardware company right so they can they
52:59can make the Xbox but they make the
53:01money on the games right so they've had
53:05to change the definition of dumping so
53:08now if you want to buy an Xbox where
53:09should it be cheaper should be cheaper
53:11in the United States because Microsoft's
53:12from in the United States and had a
53:14student in one of my classes he says I'm
53:15from
53:16Japan and Xbox is cheaper in Japan than
53:19it is in the United States and my answer
53:22is yes it is I'm aware of that because
53:24it's a different Xbox
53:27no it's the same
53:28Xbox it's different and here's how it's
53:32different CH Japanese people tend to
53:35have a little smaller hands than
53:38Americans they do right so when they
53:41took the Xbox to sell in Japan they took
53:44the controller and shrank it just a
53:46little bit now it's a different product
53:49you can't buy that shrunken Japanese
53:51version of the the thing here in the
53:53United
53:55States so if you've ever gone to other
53:58countries you'll notice that you'll see
54:00one product but it's a little different
54:01in other might be like so one place it
54:04might be white the next PL another
54:05country that product might be gray
54:07they're doing that to get around
54:09anti-dumping laws so there was this guy
54:11I was doing some Consulting for and he
54:13had a um CD player you guys know CD
54:17players right who round things put music
54:21in yeah okay you know what that is right
54:25so he was selling CD players and making
54:27a lot of money some with these things
54:28they're portable CD players for about
54:30200 bucks which is a lot of money right
54:34even back then but his CD players were
54:37different his CD players had little
54:40cartridges that would come with them and
54:42you could plug them into the CD player
54:44and it would make the CD would smell
54:46nice just a nice little smell right and
54:49so you buy the CDs and then you could go
54:51to the local uh 7-Eleven and places and
54:54buy little cartridges to put in your CD
54:56and you're walking around smelling your
54:58nice CD player right he was making he
55:00was actually doing pretty well in Japan
55:02so he says I want to come to the United
55:04States and I
55:06said dude nobody is gonna pay
55:10$200 for a CD player that smells nice
55:14when you can get one that doesn't smell
55:16nice for less than
55:17$50 there's no way he says we'll just
55:20lower my prices I said oh so you're
55:22going to lower your prices in Japan he
55:23says no I'm making too much money in
55:26Japan I'll just sell them cheaper in the
55:27United States can't do that it's against
55:30the anti-dumping laws can't do that but
55:32he could come to the United States how
55:34could he do it make it a different color
55:37so instead of purple make it
55:39Plum or red make it Pink I don't
55:43know but so your textbook has the wrong
55:46definition it's not selling below cost
55:49it's selling it below what what it's
55:51available
55:53domestically okay
55:57yep and the next thing we're going to
55:59talk about is the legal forms of
56:01business this isn't legal versus illegal
56:04it's just that all businesses in the
56:06United States are one of these three
56:08forms of business and we'll talk more
56:11about that later

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