Errr...that interview says it's worth five pounds:

 

Sigh tiredness can do that to you.

From hp-lexicon

It gives me a headache trying to find a reasonable conclusion to this to be honest because we're given so little information.

In most fics hit wizards and aurors are the occupations where you earn a lot of gold some fics put healers in that bracket as well. This does sound logical because these are two professions where your knowledge means your/other's survival and there's a lot to learn in comparison to say being a clerk. 700 galleons a month is in that regard the upper percentile when it comes to income. Excluding of course private entrepreneurs, for example whoever makes Firebolts. Now that's paying more than premium for buying an enchanted twig. Sure this is fanon but we don't exactly have much else to go after other than what seems reasonable. If this had been real they'd most likely have divorced already.

Considering an assistant manager of the biggest/only bookshop only makes 42 galleons a month then whoever's doing the gruntwork on the floor earns even less.
Take Arthur Weasley, a department head of a minor office, by non-magical standards his salery would be at the assistant manager's level or lower. Now with a single book costing around 8 galleons there's little wonder why they're having difficulties managing what with costs of clothes, wands, Hogwarts fees and food. (Conjuring is confirmed not to last)

So suddenly one can realize something. The Weasley's being poor is their own goddamn fault. Despite Arthur having a low paying job with no chance of promotion he's gone and popped out seven children. Even though they have to use hand-me-downs Molly has shown no indication of trying to help the economy by working herself instead being a house wife. Now normally you'd think she'd be forced to work and have one of the older siblings act as a pseudo parent until they'd be able to make do but oh no.
How much money is Bill and Charlie sending to their parents each month to feed the children? I mean really?
Disgusting irresponsibility. There's one thing to want lots of children, there's another thing entirely to spawn lots of children if you can't provide a decent upbringing because I can hardly imagine anyone would want to be poor. I fail to see how this family would realistically be the model warmhearted family they're portrayed as. Severe economical difficulties due to idiocy's hardly a good foundation to build upon.

Imagine freshly graduated students who're taking their first piss poor job that pays even worse than what Arthur gets. There's no way in hell any remotely intelligent person would consider starting up the children factory at that point considering the state of their economy.

 

Reading the list of comparative prices really shows how little work JKR invested into really thinking her world through.
As a comparison David Eddings once said he has about 30 Notebooks filled with prelimiary notes on the "universe" of the Belgariad before he started writing the first book. Though he has his faults as a writer (omnipotent protagonists e.g.) his world itself is a very well done and "realisitic" setup (well as long as magic can be realistic).

If you say a hitwizard is in the upper bracket of ministry paid jobs (below the minister, head auror, chief of DMLE etc.) his salary should be about 3 times the salary of a store manager of a major bookstore.

The price of a new wand (with a rare core inside) is completly ridiculous when you compare it to the potion ingredients, never mind that wandcraftig implies a level of crafting which would cost money as well.

Summa Summarum JKR wrote 4 charming books which captivated you with details and well done characters, but if you start to look too closely things come apart horribly.

 

Dragon Feeder at Gringotts (DP)
.....7 Galleons per week

Taking into account that 1 Galleons = 5 British pounds, that would mean that the above dragon feeder's weekly income is 35 pounds.

Wow talk about poverty line

Not currently living or having ever lived in England I cannot tell if there is such a great disparity between the cost of living, but having heard from friends that have been to England that the cost when compare to conversion price was unattractive, i can only say that the poor Dragon Feeder is better off being a muggle manual laborer...

From where I live, the poor sod is earning $80.55 AU per week (before tax? after tax?) which is less than the goverment handout for the unemployed.... (and by a large margin to boot!)

 

I think that, a lot of these plot holes, could have been easily solved in JKR had devoted a couple scenes in each book to Harry sleeping through Magical History.

Where are the spells? Uhh, the Vatican burned a whole library during witch trials, Alexandria's library was lost, etc. magical knowledge is just resurfacing through the last two centuries.

Economy? After WW2, certain things became easier and harder to procure. The prices are assbackwards.

System of Conjuration? Just devote a scene to McGonagall explaining it or something...

Why doesn't somebody rob a muggle bank? Uhh... the ministry has a special agency that goes around warding vaults for free (it is to keep the economy in-check).

Honestly, it wouldn't have been hard to avoid all these errors if someone hadn't clearly been writing off the top of their head. People only make huge incosistencies like JKR when they write without a plan (not that there's anything wrong with writing without a plan, but, you have to be willing to revise, revise, and revise).

 

The reason I believe a dragon feeder is paid so little is that he has a place to sleep, is most likely given free food, and is easily hurt so the people handing out the pay check probably have to pay workers' compensation all the time for hospital bills.

What I can't understand is the great disparity between these two. Everyone and their grandmother goes to buy books at Flourish & Blotts, yet they are only payed ... around 1/17 of what a Hit-Wizard is payed. Well, I somehow doubt the Ministry really needs Hit-Wizards all that often and I'd hope that it was meant that they were payed 700 for the months that they worked on an assignment -which has a high chance of death or capture- while not paying them anything for the other months. This would seem much more logical and the difference in income would seem much less pronounced.

 

ok even taking that into account lets go to the below:

Assistant Manager at Flourish & Blotts Wizarding Bookstore (DP)
.....42 Galleons per month

This seems a fairly common Job, no hazard pay and not so lowly that its a job that you can get off the bat.

Thats still a measly 210 pounds per week which translating into my currency is $483.25 AU, that is still a pathetic sum to earn as a monthly wage, it is STILL less that unemployment benefit in my country and its still what most people with a bit of education can earn in a week.

I am not sure how much Hermione's parent would earn as a dentist but if its anything like in my country (and I'm incline to think it is) than its a heck of a lot more than $483.25 AU per month. By wizarding standard then, they would belong to upper income percentile.

The entire scenario feels like wizarding England's currency value harkens to 300 years back in muggle england, were the gap between the rich and the poor is like a chasm...

The cost of commodity reflect on the purchase power of the rich, while the poor would be lucky to earn that cost of the same with years worth of income and are given cheaper alternatives in a less attractive and more common market were only they congregate... bah.

Edit: Ok did some research, an average wage of a dentist is around 60,000 pounds.

We'll slash that by 35% for tax purposes (very simplified) and bring it down to 39,000 pounds annual income. That gives a monthly earning of 3250 pounds or 650 galleon, wow suddenly our lil Hermione is coming off as a particularly well off witch, taking into consideration that both her parents are dentist and they own their own practice... but even if Mr Granger was the sole bread winner of the family, he could still theoretically earn his wage in the muggle world and live in style in the wizarding world.

Imagine muggle born wizard / witch who comes from a top wage earning family or worse yet, someone with REAL wealth like the Duke of Westminster who has a net worth of $5 Billion US according to Forbes... the whole scenario just goes to tell you that wizarding commerce cannot stand by itself, there has to be a prop somewhere to help it be sustainable, otherwise all it would take is one rich heir to be selected as a muggle witch / wizard and for the said witch to realise the disparity between his and their wealth before the entire economy collapse.

 

Nah, they'd skin him alive for that, heh.

***​

A thought just struck me, that it is possible to explain such cost deviations under the pretext that Britain is really a third-world country in the magical world.

Say, turn to the real world for example: your average American makes $ 40 000 a year and lives comfortably with that. Your average Russian makes $ 5 000 a year, and lives comfortably, too; we have all the food we need, our outfit comes from the local stores, we can live with our parents in their own apartments, or we can rent our own place, and still have some spare money left. That covers the basic needs. Local services are quite cheap, too. On the other hand, when it comes to buying advanced technological stuff, or some high-quality products, they end up being really pricey. American coming to work or to live in Russia ends up being rather well off without even trying. American coming to say, Nepal, one of the poorest countries in the world with average income of $ 250 a year, ends up living like a sultan.

So, taking that into account, you can assume that the prices for a handful of beet-eyes, or for the piss-poor local-crafted magical wands are being reasonable when compared with the prices for high-quality advanced magical theory books, or quality instruments coming from abroad.

Hm, though, come to think of it, maybe I'm contradicting myself, as the book prices are inconsistent with this theory: I've heard that from somewhere (and can confirm myself, living through economic default and a number long-term economic crises): when your economy crushes, the prices for books are the first to fall spectacularly, and then they would rise slowly up when the situation stabilizes.

So I don't know. Maybe it's still a good idea to work with, beh.

Edit: Kardikek, what does (DP) stands for in your list?

 

In your scenario, it's possible that people would have to aquire more knowledge in magic to compensate for the economic crisis, so since that knowledge would be aquired through books, it'd explain the increased demand.

 

Guessing but I think DP's might be one of those official information guides she's published. Like the one about magical creatures. Easy to check up I guess.

The pricing of the items are all explainable quite easily. Monopolies, rarity and customer demand for the high priced goods, government subsidies, mass produced items and things you could just pick up in the forest for the low-end.
It's just when you compare the pricing of the items to the wages they recieve along with what we receive that things start to crash. The easy solution is that Rowling just didn't think things through enough and who can blame her? We're the fanatical ones trying to make her world alive.

The dragon feeding wage could easily be excused as something that wouldn't require all that much time. I mean how much time does it take to feed a few creatures? I can't imagine it'd be anywhere near the effort to feed an entire zoo in our world. A few dozen at most. Throw some meat into wherever they live. So effort = zilch. Easily something just about any fool could do in about half an hour a day, less if they use magic.

Considering the few bits of facts we're privy to, I see the assistant manager of a bookstore as something you could use as an average for the population. You're not down there scrubbing floors and frankly it's not necessary but you're not the president of a conglomerate either. So we're talking about an adult average middle class wizard working for 30-50 galleons per month. 150-250£/month.
That's what I get for free every month from the swedish government for studying. Not loans, free.

1000 galleon transfer fee for a star chaser. That's what a top end administrative job would pay you per month for normals. Nothing near the tens of millions of euro of our world.

She just took simple round numbers. 1000 galleons sounds like alot. Check.

 

It would be so much easier if the two world simply didn't mix in terms of economic, a totally insulated community with its own currency would be much more believable.

But the interaction with muggles... and the fact that muggles can actually changed their currency into galleons mess the entire thing up.

Just make it so that the goblin simply do not accept any form of muggle money.

I'd think their devious mind would already conjure up a loan system for any muggle born witch / wizard that has to be repaid when the graduate from school, this will explain how muggleborn can go through the magical educational system and as a bonus, seems like something the purebloods would do to 'keep the mudbloods down where they belong.'

 

I think you all are forgetting the fact that this is magic we are talking about. Their is -most likely, though I don't know for sure- no heating bill, no water bill, no car insurance, and no energy bill. As such, the cost of living is way down and so wages would never have to increase. I'd say the reason some people make so much is either because they're politicians or they are putting their lives on the line all the time for their country.

 

Kolskit: They may not need hit-wizards often but when they do one would assume that they REALLY need the guy dead. You want to keep you assassins happy.

That being said, a hit wizard could start their own quidditch team in a year easily.

700 galleons a month = 3500 pounds * 12 months = 42 000 pounds a year.

That's about 85 000 USD a year which is above average but still middle class.

So we have to assume that money doesn't have the same value in the HP world that it does in the muggle world. And that perhaps it doesn't have the same prestige as things like blood are much more important once it's all said and done.

 

What I never understood is the phoenix feather wands...

The dragon heart strings are relatively easy to come by. Dragons are closely monitored and kept in some sort of national park-like setting. When a dragon dies, one can assume that said dragon is harvested for its organs, and a single dragon heart must contain hundreds (at least) heart strings. So while dragons aren't common themselves, the relatively low number of wizards out there (and the corresponding number of wands, give or take an auror having a spare), means that a dragon core wand should not be particularly expensive.

The same with unicorns, maybe even more so. We do not know how rare unicorns are compared with other magical species, but here we do not need to kill the unicorn, only take a hair. So wizards find a herd, maybe even keep it monitered, and every now and then go and take a few tail hairs from every member of the herd. Relatively easy, limitless supply if properly harvested. Again, makes for a cheaper core.

Phoenix feathers...now we run into a massive problem. We have to assume that as Ollivander uses these as one of his three, we're talking about a decent number of wands. It's ridiculous to assume that Ollivander has only 2-3% phoenix wands. At the very least, the fact that he advertises them as one of his staples means we've got to be looking at 10-15% minimimum, if not the expected 33%.

But where do they come from? Phoenix's are very rare, and a tame one even more so - Fawkes 'bonding' or whatever you want to call it to Dumbledore is a big deal - I can't recall another phoenix ever being mentioned, even in passing. Unlike dragons, a wild phoenix will not truly die, and cannot ever be caught and plucked by force. So for Fawkes to have given in his lifetime 2 feathers - well excuse me for thinking the wizarding world doesn't exactly have phoenix feathers for sale at your local apothecary.


Somehow, despite this...the total price of a feather is under seven galleons...man, that doll of Krum must really be special.

 

To put a specific value on the Galleon

J. K. Rowling sets the approximate value of a galleon at five pounds (i.e. approximately US$ 10 or € 7.5), although "the exchange rate varies".


In the book Fantastic Beasts and Where to Find Them,it is said that

£174,000,000.00 raised for charity is equal to 34,000,872 Galleons, 14 Sickles, and 7 Knuts

It is also stated that the book costs £2.50 ($3.99 US), or 14 Sickles and 3 Knuts.

The first piece of information suggests that 1 galleon = £5.12

And the second figure states that 1 galleon = £3.01 approximately.

So, that said, I figure there's a service charge that the goblins put on all exchanges that's likely on a sliding scale.

For example, when I went to the Netherlands you could go to a currency exchange and trade pounds or dollars for whatever you needed, but there was a flat fee for the exchange that came out of the total. I expect that when you hand over muggle money for a cheap book, that there's still that same flat fee that comes out of your exchange.

Banks don't work for free my friends. They'll charge a fee to convert the money because they have to pay the person doing the exchanges.

So, I'd say that 5 pounds 12 would be the right figure.

Also remember in Goblet of fire, they presented someone with a big check for their work. I seem to remember that they did a conversion there as well.

CNN money however put out a calculator for it
http://cgi.money.cnn.com/apps/hpcurrconv

They peg it at $4.82 to the galleon, which I think is just plain wrong.

 

Banks don't charge any fee to exchange money. They simply set their rate higher than the market value. Thus when you exchange money they are making money off that transfer. If you ever know someone who works inside a bank get them to bring the daily currency conversion sheet. There can be a spread as big as .01 The customer can then either bargain the manager down or will simply get a better rate by exchanging larger amounts of money.

Part of the big problem with Rowling's economic system is that Gringotts will have large holdings of muggle money but there will be little demand for it. 5-7 muggleborns all converting pounds to galleons for their Hogwarts tuition is hardly going to be demanded for consumer purchases from the muggle world. That would either suggest that Gringotts acts as a buffer between the magical and non-magical worlds (real estate, building materials, etc) or that the exchange rate is going to continue to rise making muggle entry into the magical world harder.

In any case, a lot has been left undescribed and JKR is no economist. Creating a fantasy world that lies within our own is great but it forces you to accept these type of challenges.