 |
| Hamburgers by uberculture/Flickr |
In the same week that I heard about some really
unappetizing food at McDonalds, The Economist came out with its latest analysis
of foreign-exchange rates according to its popular Big Mac index. This is how
The Economist explains its index:
"Its secret sauce is the theory of
purchasing-power parity (PPP), according to which prices and exchange rates
should adjust over the long run, so that identical baskets of tradable goods
cost the same across countries. Our basket contains only a Big Mac, and relies
on the efforts of McDonald’s to produce identical products from the same
ingredients everywhere - underlining
added - (or almost everywhere: for India we use the Maharaja Mac, which
contains chicken rather than beef) "
So by and large, the Big Mac Index is based on
comparing the price of an identical product (i.e. the Big Mac) around the
world, the Index can determine whether a local currency is over - or
undervalued against the dollar. The Economist continues:
"... At market exchange rates, the Canadian
version of the burger costs $5.39, compared with an average price of $4.37 in
America. By our reckoning, then, the Canadian dollar is roughly 24% overvalued
relative to its American counterpart...."
Generally, average prices of hamburgers are lower
in poor countries due to their lower labor costs, and this would invalidate
some of the Index' conclusions, claim critics of the Big Mac Index. But I pose
there is another criticism based on the "identical product"
assumption.
A few days ago, I read the following alarming
article McDonald's McRib Sandwich a Franken Creation of GMOs, ToxicIngredients, Banned Ingredients on the Natural Society website. This doesn't
offer pleasant reading, let alone eating:
" (the
McRib) sandwich is not only full of genetically modified ingredients, a medley
of toxic fillers and preservatives, but also some ingredients that are actually
banned in other nations around the world........But what’s really inside the
McRib specifically that makes it such a food abomination? Containing over 70
ingredients, the McRib is full of surprises — including ‘restructured meat’
technology that includes traditionally-discarded animal parts brought together
to create a rib-like substance. Here’s some of the disturbing substances found
within the McDonald’s McRib sandwich...
....Out of the 70 ingredients that make up the
‘pork’ sandwich, a little-known flour-bleaching agent known as azodicarbonamide
lies among them. At first glance, this strange ingredient sounds concerning
enough to look into. After a little research, you will find that
azodicarbonamide is actually used in the production of foamed plastics. Foamed
plastics like yoga mats and more.
What’s more? In Australia and Europe, the use of
azodicarbonamide as a food additive is banned. In Singapore specifically, use
of this substance in food can result in a $450,000 fine and 15 years in
jail."
The article continues: "... it’s not actually
a rib. Instead, it’s a combination of unwanted animal scraps processed down in
major facilities and ‘restructured’ into the form of a rib. Then, 70 additives,
chemicals, fillers, and GMO ingredients later, you have a ‘meat’ product that
tastes like ribs."
Although above quotes are about the McRib, there
are similar critical views about the Big Mac, as analyzed in Anatomy of a BigMac which shows that one of the
following is the case: either Big Macs around the world contain the same
ingredients as in the US and then this appears to be in breach of certain laws
- Europe, for example, does not allow hormone treated (U.S.) beef; or Big Macs do not contain the same
ingredients in different countries and then the Big Mac index offers a
distorted view of the relative values of the currencies (for example, beef is
generally cheaper in the U.S. than in Europe, and who knows what kind of
ingredients they use in other parts of the world. Case in point is the Maharaja
Mac which uses chicken rather than beef (!). It's then not surprising that
according to the Big Mac index, the Indian Rupee is undervalued by 61% (an
Indian Maharaja Mac costs $1.67 vs. $4.37 in the U.S.)
 |
| Source The Economist |
I'd say it's time for The Economist to develop
a more accurate and in any case healthier index than the Big Mac index.
No comments:
Post a Comment