lots of little economies, all connected

By alice | June 23, 2008

I started a lengthly rambling post about housewifery, the universe and everything, but unless these things get written in one sitting it’s a matter of several days. Meantime, here’s the economic theory that underlies it (which is also the reason why a lot of people including me, anyone who works for Google and most people who live in Austin probably aren’t experiencing much by way of recession stress):

We’re all used to thinking that there are two economies that affect us: the world economy, and our national economy. The world economy affects our national economy, and when our national economy is in trouble, we’re in trouble too: the amount of spare money in our bank accounts disappears and previously taken for granted luxuries, which may include electricity or food, become unaffordable. Which we do not like.

However, that’s just how we’re used to thinking. The new reality is that there are lots of little economies loosely joined. One reason for this is that we understand how wealth isn’t about just money anymore. (Of course, some people have always known this, and considered themselves wealthy because they loved their own lives, but it’s getting a lot more widespread as an attitude these days.) Some money-rich people are choosing relative material poverty, because they find it more liveable (smaller homes, fewer possessions). Other people are money-poor but enjoy lifestyle traits which have now been valued at tens of thousands, if they were available to buy (which they’re not).

Another explanation is this guy’s maxim that getting rich is not about how much you earn, but how you spend what you have. The same approach to increasing your financial wealth applies to increasing how wealthy you feel, in terms of how you live. For instance, the extent to which money contributes to happiness obviously depends on how much value you get from the money you have. I don’t need studies to prove this: if meth amphetamine is your top expense you’re not going to be feeling great every day. Less depressingly, if you live and work in New York City, it takes a lot more money to upgrade your accommodation than if you live in a small town (which you love as much as the average New Yorker loves New York). Whereas growing a few plants from a packet of seeds can bring hours of pleasure for 50c.

So, you have an economy all of your own, consisting of your own income and how you spend it. If you share your money with others in a family unit, that’s your economy- so, vital to be actively seeking to enrich each other’s lives as they spend, rather than fighting over who gets to splurge on the maximum number of soul-destroying fripperies. Then there is the economy of your home town. Dollars spent on local independent businesses are worth more to local people and therefore your local economy than the same dollars spent at big corporations supporting managers and offices thousands of miles away.

Every dollar you spend can end up being worth much less or much more than a dollar, to you and your chosen community, in a very real way, depending how you spend it. When people realise this, they empower themselves, and make themselves far less vulnerable to big swings in the world and national economies. The more of us do it, the better for our communities, and therefore us. It’s an investment, and it takes a while to grow, because investment is fundamental to living well.

Lots of little economies, loosely joined, I guess. Choose yours wisely! And understand how it all works.

Another ideas that ties into this comes up in my comment on J.P.’s post about paying for cleaning up the damage done by different goods. People want to pay extra for things with real value to them in their real lives, communities lower these costs and businesses can become or lead these communities. In fact if they don’t, many will just die of their own meanness.

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2 Comments »

2 Responses to “lots of little economies, all connected”

Beth Says:
June 23rd, 2008 at 6:41 pm

When my husband came in from work tonight, I said,” Honey, I saved you a couple hundred dollars today.” “Huh?” said he. “The money it would have cost to hire someone to trim all the shrubbery in the yard, which I spent all afternoon doing,” said me.

Our own little economy.

Felt blog Says:
June 27th, 2008 at 8:56 pm

[...] researching the effects of spending locally, I found this insightful blog post by Alice Bachini-Smith on society and the economy. I thought it was very nicely expressed and summed up a lot of what Felt is all about, so I wanted [...]