In economics, there's the policy "trickle down effects" that were largely discounted by economists (and in some instances ridiculed), versus the real economy trickle down effect. It's the latter, which some of us of a certain age particularly miss: those days of plentiful second hand markets that contributed to decades of weekend entertainment, and more. Supply side trickle down meant increased access to products which still had plenty of value, once the original buyers decided to part with them.
Often, resold goods had scarcely even been used. In the eighties, many second hand stores further specialized in new areas such as music and sporting goods. Quality product such as high end clothing could found with be price reductions which meant inexpensive signaling, for that matter. From the seventies (at least here in the South) to the early part of the new century: Mass production made it possible for most anyone with limited incomes - wherever they happened to live - to enjoy many benefits of a modern economy.
What happened to second hand market abundance? While resale stores can still be found in some areas, their prominence reached a turning point about a decade ago. This unexpected death knell became obvious with the onset of the Great Recession, when second hand stores of all varieties began to close their doors. While some would fortunately remain in business in larger cities and towns, it ultimately became difficult for small towns to maintain even a single store. Yet only a decade earlier, in small towns, it was common to find at least three operating in close proximity to one another, putting those old downtown buildings to good use.
Retail in general has also faced its own setbacks, since the Great Recession. While some discretionary income loss is inevitable in times of recession, Liberty Street Economics recently highlighted the fact that this time, it took a full decade for discretionary income to return to trend. And by the time it finally returned to its earlier level, much in the marketplace was irrevocably changed.
Today, discretionary spending follows new patterns, much of which bypass many local communities. Two sets of circumstance about discretionary income losses, particularly stand out: First, the fact that Fed policy makers did not maintain aggregate spending capacity at the onset of the Great Recession, also accounts for Main Street losses too numerous to fathom. Second, non tradable sector demands continue to crowd out tradable sector activity, even now. Much of this crowding out has diminished the marketplaces which were fun, only to replace them with economic activity which is necessary, but not necessarily fun.
If we could somehow wave a wand to bring back economic dynamism, what would we want? Some would doubtless argue that in earlier decades, Baby Boomers such as myself had a lot more stuff than we "needed", so who misses the loss? Nevertheless: Given the crowding out that has occurred, no one knows the real extent, of what has been lost that people might still enjoy if they had the chance to do so.
Tradable sector activity was dynamic, in part because so much of it took place in ways that made resource coordination and reciprocation, far more obvious than what occurs in the present. And when too much economy activity becomes generated through debt, it becomes increasingly difficult for lower income levels to know the extent, to which discretionary spending is even a rational choice.
When resources are coordinated and matched without debt at the outset, societies have more room for flexibility and further options. Perhaps one of the best things about real economy trickle down, was the fact it encouraged societies to share the fruits of knowledge, as well. Alas, in times of economic stagnation, knowledge seems to be held more closely, as if the product of knowledge were the only remaining way to generate wealth. There are far better ways of building wealth, than hoarding the use of knowledge. Fortunately, we can do better.
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