Local Needs Global: Monetary Policy and Main Street

(continued from last post)
Granted, the local to global relationship has always run deep with currents and countercurrents. Positive feelings as to globalization in the U.S. probably reached a height in the nineties, Thomas Friedman notwithstanding. However, it really depends on who one asks, and where one lives. In the major cities, globalization mostly continues to be perceived as a plus - a sentiment reflected in the still positive stock market of Wall Street. But Main Street U.S.A. doesn't really look, or feel, like it did twenty years ago. By the last decade, the easy mobility and dynamism of previous decades was fading a bit. One had the feeling upon entering any number of towns and small cities, that there wasn't always room for someone new unless they had a clear reason for their arrival. Perhaps few would say it out loud, but there seemed to be a "keep moving along" undercurrent for potential residents who arrived "a bit too late to the party". That is, unless one's credentials proved sufficient to assist a town's tax coffers, which were themselves growing increasingly "needy".

When, exactly, did the "party" stop? Much of small town America reflected the changing economic times earlier than the cities. In small towns, when someone cannot pay a bill, the ripple effect shows up quite a bit sooner in other local economic relations. Not only did quality retail seek out more exclusive settings decades ago; but much more recently, towns also could not capture enough weekend traffic for shops set up by Baby Boomers, who wished to recall mom and pop stores of the past. Some of the apparent gains in GDP from the early 2000s also reflected many such efforts at small business establishment. Some of these interesting retail locations were fortunate enough to become a pleasant weekend jaunt from a major city. However, many other towns simply closed even more doors, and resigned themselves to a limited retail existence.

In part because of what happened to so many shopkeepers in recent decades, mixed feelings also continued over the big box stores which largely took the place of so many downtowns, in spite of affordable merchandise from other countries. Until the last recession, consumer abundance still spilled out into the countryside, so it is only in the last few years that ramifications from that recent setback are starting to become more noticeable. Five years ago, even small town dollar stores had not only many necessities of life, but much more to offer as well. In recent years, there have been more calls to make our goods in the U.S., and companies are rising to meet that challenge according to the evening news. But the last time I went into a dollar store, I searched in vain for a box of straws and a piece of fabric to clean a pair of sunglasses.

For anyone who lives in a city, these changes are more subtle. In still prosperous cities, the fruits of globalization and product abundance - while scaled back somewhat - still have plenty of shelf space anywhere traffic remains heavy through the course of a day (This is the continuing abundance many city professionals still experience). Just the same, it is hard to imagine a return to the former relationship with consumer abundance we once all shared, in places not so well "positioned". That loss hurts all the more, now that fewer of us drive to the cities to shop. What, exactly, might that former prosperous relationship be replaced with?

Globalization, I certainly took you for granted, and had no idea you would be "leaving" so soon. Main Street does not especially want you, at least in this present limited guise. What's more, Main Street is not happy with present day quantitative easing by the Fed, and wants it to slow down or even "stop" it altogether (relative to normal printing). To which I have to ask, Main Street, what is it that you really want? Have you given up altogether on the idea of a prosperous society? If my questions feel like an obnoxious "intervention" of sorts...well yes perhaps it is. But by no means is mine the only voiced raised. So too are the voices of your youth and even some of your Baby Boomers with too little to do. Both groups need new definitions of economic activity, so that they may continue to look forward to the future. They are not so quick to designate as "losers" the peers among them, who have yet to find economic access. They are slower to "take sides" because from what they've seen, taking sides means not taking productive action.

We understand: Main Street, you have been let down many times. I too have known the pain of having to close business doors. But why would you insist on long term defeat as the only option? I fear that you have retreated behind your closed doors and given up on hopes of a better future. Consequently, when you hear the voices raised for printing money to bring down unemployment, you pass the word on to Washington that you're just not interested. If there is little valid employment for your own, most folks you know are darn sure not interested in employment for anyone else. Sure, it's easy to point to the great employment made possible by renewed oil production, but how many in your extended family are capable of picking up and leaving town to take part in the renewal? Monetary policy wants to make it possible for all to have a better life, wherever we actually live. Please give it a chance.

In a way, some of your city brethren have felt like you in this regard. They have asked "What has globalization done for me lately?" And their response has sometimes been to print a private source of money not to serve the bigger interests but to "take care of their own" - their small businesses and the skills of at least some of the locals who were already providing services for their wealthier citizens, prior to the recession. Like you, these cities questioned the interests of Wall Street which seemed to have so little to do, with them. The local printed money basically says, take your global economy and shove it.

But think about the places where money on Wall street goes, and why it goes there. Especially, look at where it really messed up, big. Why do you think that happened? No, really think about it, i.e. that part where Wall Street was profiting by providing something many actually wanted: always bigger and better housing. Nothing wrong with nice houses, mind you. People just forgot to use manufacture and economies of scale for true innovation in housing. No one ever provided more efficient, less heavy, less expensive options for those without professional salaries. So governments and Wall Street got caught up trying to back what everyone on Main Street had said they wanted: exclusive forms of housing (with few technological gains in centuries), even for those with limited budgets. Main Street forgot to let technology and globalization work for the citizens who really wanted and needed it. So Wall Street and the government was just following those "bigger and better" wishes when money printing grew so much in the first place. Main Street inadvertently expected life and work to become an all or nothing proposition, and forgot how incremental its own rise to success actually was. Everyone deserves incremental ways to live, work and survive, throughout the course of their lifetimes, so that demographics don't need to play havoc with any sets of generations.

Governments, give Main Street ways to reinvent itself. Main Street, give yourself ways to work with governments to do so. Everyone, give the Fed's current efforts to stimulate the economy a chance. Give globalization a chance to continue with the real innovations and technological improvements we all gained from so many places around the globe, when our parents were young. But most of all, Main Street, give yourself a chance for renewal. Consider the possibility that globalization did not so much move away from you, as you did, from it. Internalize the gains of globalization and make them your own, so that we can all be strong again. Have faith that technology can not only work for us, but allow us all to utilize our own skills more fully, especially in the places where they are needed most.

It's not always easy to figure out how to start over with one's own zoning, regulation and rules that continue to restrict economic activity to a bare minimum. But as the old saying goes, Rome wasn't built in a day. The main task, of the moment, is to find inclusive and flexible ways to make Main Street youth a real part of economic life. Even if that means rethinking some important aspects of wealth creation, to do so.