Why the costs get higher and higher each time?

To all of us if someone charges us higher we dislike it. If you are a businessman and one of your employee demands for salary increment, you dislike it. But when you sell something and you get higher price or when you are an employee and if your salary is increased, you will be most happy person. We feel that it is most right thing happened to us. At that time we start praising our ability, intelligence and efforts, also luck and god’s grace.  We all want to be rich, but all of us are against the rising prices. My grandfather used to buy some food stuff about 500gms for Rs.1 and now we have to pay minimum of Rs. 50 for that same 500gms food stuff. So it shows that prices are 50 times higher today. Somebody told me that age and prices always rise. And I felt that he was right.

Why do these prices keep rising each time? 

Our human society is dependent on each other. Each person or few people from a family have to do commercial activity. Each one want more and each one want to be get rich. Let’s take an imaginary example on this. 100 people live on one island. Their transaction is limited to the people on this island only means they have transactions within this group of 100 people only. Each of these all 100 people sells something as a commercial activity. It means each one sells something to other 99 people and each one buys stuff from other 99 people as per need. Each of these 100 people wanted to be rich but most of them don’t know how. From these 100 people 10 people increased the prices of their products.  As the needs of each one on this island hasn’t changed, other 90 people kept buying the stuff as usual. So with these higher prices the income or prosperity of these 10 people started increasing. But on whom account? This prosperity is because of taking higher from others means taking more money from others.

These 10 people has to pay higher only when they buy from other 9 people but buying from those other 90 people they have to pay as old regular price. So on average they got benefit and they started getting rich. Those 90 people whenever bought stuff from those 10 people had to pay higher but they had no other means to compensate this. So on long run they started getting financially weaker. So their normal life also started suffering. So to save themselves they all one by one increased prices of the stuff they sell. In response to maintain their prosperity those 10 people again increased the prices of their stuff. And in response, these 90 people also. So, it became a poisonous cycle and so unlimited process of price rising kept going.

Yo may say that in present world the population is kept increasing so rather to increase the price we can sell the stuff to many more people and get prosperity. But the reality is with the rise in population each one has to do some commercial activity, and to do so each time, each new person cannot have new product to sell so they will choose something from the available same stuff to sell and so for same stuff you will find more merchants selling it and so competition. And so many times it will not be possible to sell the stuff to many people.   

Present economics is so complicated that common people like you and me are unable to understand it. Yet, perhaps from 100 reasons I think this is 1 major reason for which one has to raise the prices and only then one can be rich. The fact which applies to 100 people’s group which same applies to the population of present world. Consider that prices of 10 products which you use in your house get higher; as a result your house economy is going to be disturbed. If your commercial activity is a job then you have to demand for higher salary for sure and if it is business, you have to increase the price of your stuff or service and this poisonous cycle will continue further. Whenever we search for a job, we consider who pays more to us. And also we are concern in advance for future possible salary rise we get in particular job or company. In any job if we don’t get salary increment in 2 years, it is sure that we will search for new job. It is sure that if each one want more, costs of each thing is going to rise. And it will continue further.

It is common thing I have understood that with the rise of petroleum prices, price of each stuff rises. Same is with agriculture products, rise in their rates forces rise of the costs of other products.

You must have heard someone saying like this, “Sir, How can we afford this low salary when the prices of each stuff have increased so high? How can we sustain our life?  Or “We had to raise the costs of papad as cost of black gram had increased.” Or “We had to raise the auto rickshaw fair as petrol prices got high.”