Is Your Standard of Living Sustainable?
By: Tom Chatham
More and more we are hearing the word sustainable being thrown around. The economy, the job market, the environment, agriculture, water, energy and a host of other necessities are coming under pressure from some unseen force.
It is easy to be successful in times of plenty but what happens when the plenty starts to run out? Why is there plenty one day and shortages the next?
When something is used it must be replaced before someone else can use it or benefit from it. That is something most people don’t think about and don’t care about. They expect it to be here as long as they need it and don’t want any excuses why it is all gone. This is the mentality many people have been brought up to believe in.
When you use something faster than you can replace it you end up with shortages. If you are lucky, the market forces will adjust and increase the output to provide everyone with what they want. This is the system we have grown up with, and it is beginning to fail.
Resources that are increasingly hard to find or extract are running head on into an increasing population that wants more of everything. There are limits to everything and we are just beginning to realize it in a very painful way. And don’t worry. If you have not felt the pain yet, you will because things are going to get tighter until people adjust the way they live.
For most people, their standard of living depends on services and products produced by others. When resources are misallocated in the economy, it can cause shortages in many connected areas. If money is directed into the financial sector instead of the manufacturing sector, eventually you will have lots of excess financial products but a shortage of real goods. The financial sector may make some people rich but that is done at the expense of everyone else. You end up with a few people with piles of money but less and less to spend it on. As this continues, access to real goods becomes harder as resources dry up and people are displaced in the sector that produces real goods. More people with less money to spend results in fewer jobs and less access to products while others have excess to spend and cause excessive waste of available resources.
The whole economic scheme we are using will ultimately cause resource depletion and scarcity. More people chasing fewer goods usually ends in war. The element that has caused a lot of the problems is the use of fiat money. It can be increased faster than resources can be produced and bears no relation to actual availability of resources.
Those that rely on unproductive jobs that produce no useful products ultimately consume more than they should. Until the actual production of individuals begins to achieve a balance with the available resources, there will continue to be a decrease in the standard of living. It will decline until people become more productive while consuming less.
There is too much excess currency in society which causes too much excess waste. If you do not understand, just go to craigslist or ebay and look at all of the things for sale. This is excess stuff that these people really did not need to begin with. You can even find people giving away stuff just to get rid of it. A person with free time and transportation could furnish a house in a few weeks time with just the free stuff available. This is the massive misallocation of wealth we suffer from. We have used our future resources today and the time is approaching when we must balance that out.
When you look at what you have, can you say you have actually been that productive in life or have you just been fortunate to have a high paying job? When all of the excess currency in society implodes and people can no longer buy to excess, they will be forced to live within their means once again and the amount of actual production they are capable of will determine what their standard of living will be. This is one of the ways that dwindling resources will be rebalanced with needs.
For a person that lives a self sufficient life, it just seems natural that what they have is in direct proportion to what they can produce. They must labor for any excess and that in itself prevents resource depletion in many ways. When you have to raise your own food you are more cautious with what you have and strive to reduce waste to a minimum. When you have to labor to produce excess to trade for other items, you are limited by how productive you really are. Your productive capability defines your standard of living as it should be and it is something you cannot escape from.
Those who’s labor is defined by sitting behind a desk and shuffling paperwork every day live by a distorted standard where their annual pay is in many cases several times that of those that actually produce goods. This distorted standard allows for excessive use of resources that must be produced by others. In the end someone will have to do without the resources they have actually worked for. This is the situation we are now headed for as a culture.
The current allocation of resources is not sustainable due to gross malfeasance and misallocation in the financial sector and the culture that has evolved around it. When this paradigm ends it will shock many and cause chaos as people try to rebalance society and reallocate resources. For those that have prospered in the world of paper assets, it would be wise to reallocate some of those assets into real assets that provide real production to insure you can maintain a reasonable standard of living in the future. Nothing in life is free. Everything has a price and at some point you will have to pay the bill for all you have used in life. For many, that bill will be much more than they are capable of ever paying.