Our monthly soaring bills exceed our monthly income?
Source: dailymail.co.uk
Increase in the prices of various goods due to the decline in energy surplus has made our income less to save. Our income in Indonesia may increase by 8% per year. However, the fact is that some commodity prices may have risen even faster than our income growth.
We take an example in the UK which has more complete and reliable data. Based on the facts that I read from the news page above, it is explained that during 2008 to 2013 the average annual income in the UK has increased by an equivalent of 6.25%, meanwhile the monthly cost of living has increased by an average of 25%.
It means that within 5 years our monthly costs of living has relatively increased 4 times than the increase in our annual income.
Therefore, we might be heading to an economic downturn. We might still be able to afford our basic needs, but our disposable income would be diminished and our ability to save and build assets would be likely to cease, not to mention that inflation is ready to wane the purchasing power of our money.
The End of Prosperity Era?
So far, we have discussed that the EROEI Ratio has decreased gradually from time to time. Real economic growth may have ceased a few years ago. When energy has become increasingly expensive to obtain, then our potential for prosperity has diminished, to the point where our economic growth has ceased.
This is reflected in our soaring cost of living. Of course, all economic sectors have been affected by the decrease in the energy surplus ratio. If this ratio continued to decline, craving for a luxury vacation in Paris, buying a luxury house, driving a luxury car, eating in a luxury restaurants or spending Sunday afternoon at a golf club, if the energy surplus decreases then it will all just be a dream and end.
The Impact of Decreasing Energy Surplus on Community Welfare
I myself who is really concerned about economic inequality and poverty, of course, is really worried about this problem.
When the cost of living is relentlessly increasing, we have less income that can be saved for our future or the accumulation of capital to build assets.
To escape poverty we must have assets. An accumulation of capital for the creation of wealth can come true if we increase our savings and investment for the future.
The decline in the energy surplus is certainly a big challenge for people who have had smaller amount of assets to the creation of wealth. This despair condition would cause them to always depend on monthly salary.
Therefore, their monthly salary is only sufficiently enough to afford their soaring living costs. Ultimately, those who do not have assets or wealth would be more likely to keep working whole life.
Henceforth, I always hopes that every country could someday apply the concept of a welfare state for a more equal distribution of wealth, so that we all can benefit from the economic growth and development and ultimately we also can tackle the negative impact of the decline in energy surplus.
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