By Daniel Becker
We all know the arguments about the loss of good jobs. Automation, competition, outsourcing. We’ve been told that America was striking out to raise it’s status when it came to jobs. Don’t lament the loss of those blue collar manufacturing jobs to cheap labor. They aren’t worth it. Step up. The new jobs will pay more if you get educated. Well, an entire generation got educated, and they are now looking for a job that will just keep them at their status quo.
We seem fixated on just this singular aspect of the decline of the middle class. Well, there is an entire sector of our economy that was and is just as important to growing and keeping a middle class: Retail.
The entire economic focus on finance to the point of believing that all that is important to having a successful economy is to keep improving the efficiency of money has not only generated a formula for making money from money (CDO, CDS, ABS, subprime, leasing, arbitrage, shorting, longing, etc, etc, etc) it has also convinced us and made us act on the idea that consolidation is efficient and that efficiency is growth. The old “economies of scale” thingy.
Well, here from my friend is what he recalls of main street in Central Fall, RI. This is what we lost as a pathway into middle class for the sake of “efficiency”.
“When I was younger, Dexter Street was alive with activity. Anything you needed you could purchase on Dexter Street. There was a shoe store, two hardware stores, a jeweler, two bakeries, three or four restaurants, about 5 bars, a military store, two pharmacies, three barber shops, two liquor stores, about four of five variety stores, two meat markets and a fish store. They are all gone.”
It’s is not just the loss of the mills. Central Falls et al could have survived at a much greater level of prosperity if the people had not lost the only path to actually receiving benefit from outsourcing. But, with outsourcing came consolidation in not just manufacturing, but also in the end point distribution of all that consolidated manufacturing: Retail. The efficiency gained of the dollar producing a product outside the USA was consolidated by the move to consolidate the retail part (and wholesale too). The lack of share of productivity gains to the masses is not just do to the loss of manufacturing. It is also do to the loss of access to retailing.
Sure, we all thought it was grand buying something for much less than what Dexter Street Hardware USA could sell it for. We had more money in our pockets after the purchase. How’s your community doing now?
It’s not just industrial New England that lost retail as represented in the loss of “Main Street USA”, you know we are hearing of the destruction of the “heartland America” main street. I’m not talking about the loss of the cultural experience that “Main Street USA” represented, though there is that. We closed down for the sake of money efficiency, the other primary path to become middle class. In doing so, we also reduced the movement and thus booking of dollars within the local community. One dollar on Dexter Street, Central Falls, RI could potentially be booked in 31 businesses just by the owner of the business. Even if with that one dollar divided among the employees, that dollar still for the most part stayed in the community to be booked potentially 30 times. One dollar in Big Box Mall USA is divided up such that only a few cents per employee gets booked in the local community with the rest going up line to the few.
No, the trades related to construction can not make up for the loss of independent retail. Retail was a major cylinder in the small business engine of our economy. It was also a major path to political reality and activism.
It’s time we start broadening the discussion to beyond just money efficiency. Just as with the concept of the “free lunch” tax cut, that is, that there is no free lunch to growth via tax cuts so is it true with efficiency based on the slogan of “economies of scale” when talking about money’s roll in the entirety of society. That we can buy stuff from overseas cheaper at Big Box Mall USA is not enough of an answer to accepting this paradigm.