My take on the rising cost of living.

Recently the media has been repeatedly harping on the rising cost of living thus with a heavy heart I intend to write about my own views on this issue. I know that I mentioned about a year ago that I will no longer write about economics, politics or personal matters on this blog but I decide to do an exception for once.

My explanation for the rising cost of living is very simple. There are simply just insufficient natural resources to go around. As people around the world becomes more affluent (read China, India and to some extent Brazil), expectations increased and people are willing to pay more for luxuries of life. Allow me to use the example from NatGeo years ago. As China develops, the Chinese people expect to have more meat in their diet (eating meat is a sign of wealth) which lead to greater allocation of resources for pig farming. Crucial farmland, formerly used for growing rice, are then diverted to grow grain which in turn is used to feed the pigs. As expected, price of rice soars. Logically speaking the whole thing makes sense for the farmers as pig farming is indeed more profitable. But now we are suffering from the economic effects of the tragedy of commons, as everyone diverts resources to fulfill their individual needs, they neglected the public good and everyone becomes worse off. This pork incident is just an example, the theory also applies to other materials such as cereals (land in USA is diverted to grow either maize or corn as fuel), granite, copper & other raw materials in various industries.

The problem is everyone knows the problem and no one wants to tackle the root of it. People choose the easier alternative which is to secure the resources at the expenses of others. A simple day to day example is rather than conserving electricity or food, people choose to backstab their way in office to get the pay raise to pay for these rare stuff!

I am not saying that we should not work hard for better sales figures or revenues. What I was trying to say that since we cannot prevent other people from becoming affluent (we shouldn't anyway) we should instead try to ease supply side shortages. This include a greater commitment to recycling, cutting down on un-necessary expenditure (switch off your aircon unless it is unbearably hot!) and consume less (don't order a western set meal if you can't even finish the soup). Such sustainable practices goes a long way in saving your own pocket and the world.

Some may argue that one's individual effort is too small to make a difference. Well that's the ultimate illustration of the tragedy of commons. The thought that "I will not make a difference" cause the inefficiencies of a typical individual to be multiplied by many many times.

From my personal experience, conservation and simple living pays well. The savings from cheaper food contribute a lot to my financial well being as well as the act of not switching on the aircon whenever possible. I also believe that my refusal to succumb to the temptation of the I-phone or I-pad or any other funky gadgets helped a lot.

Now I better practise what I preach and not succumb to the random gian of warhammer miniatures.