economicmultipliers_50

Economic Multipliers (50)  
 
Do you know what these are?
They help CREATE wealth in systems.
Discount shopping and discount selling may or may not create economic multipliers for you or the businesses in your community.

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I discount shop.  I don’t get $500 worth of groceries for $12.50 and I don’t have a basement or closets filled with items I got for ‘free’ but none-the-less, I discount shop.

I watch ads, try to clip coupons for the products I normally buy and have occasionally purchased products I didn’t really need because they were almost free (truly).  I’ve also bought products that were less than what I wanted (resulting in a second purchase) because I didn’t wait (and then pay ‘more’) and get exactly what I wanted or needed.

I stop in at thrift stores or go to rummage sales to browse even when I’m not specifically looking for something.  And sometimes I ‘waste time’ looking for the least expensive way to buy a product or service when I know the few dollars I might save could never justify the time spent in ‘the search.’  But the worst is:  Sometimes the people in my life somehow convince me that I should look for the best deals for them (for products I don’t normally buy) and most often, they do not pay me for this service.

Because I study economics, I can fortunately roll most of these activities into my ‘economic research.’  When you track prices for products and services over many years and pay attention to who is producing what, how quality and reliability are changing and what types of discounts people are offering on products and services, it’s much easier to understand what is going on in the economy.  Evaluating my own and others behaviors also provides food for thought when I think about how people (including myself) interact with ‘the economy:'
  • Do they ‘window shop’ for fun or to get ideas about products and services?
  • Are they compulsive shoppers who have houses full of things they couldn’t possibly ever use?
  • Would they buy a low quality item that needs to be replaced frequently or a high quality item that might last a lifetime if it’s well taken care of?
  • Do they only online shop because:  (a) they like to avoid stores, (b) they like to avoid people, (c) they like to bypass state and local taxes (in the United States, you’re supposed to file sales and use tax forms if your state requires it), (d) they don’t like dealing with salespeople, (e) … they (purposely left blank), and/or (f) they’ve become master online buyers and always know where to find the best deals.
  • Do they only buy items when they are on sale? … If so, is that decision based on an economic need or based on hating to think that someone else purchased something at a lower price than they did?
  • Do they buy things they do not need because they don’t want anyone else to have the opportunity to purchase the item at such a low price (I’ve actually observed this behavior in the secondhand market where items are many times one-of-a-kind because only one comes in)?
  • Do they buy things from charitable organizations to give to other charitable organizations to sell?  (People do this … sometimes because they know the second organization has a better market or the item could be auctioned off for a higher price … but many times they fail to think about the fact that it is easier for organizations to process money than goods and if they want to make a donation (and have cash), they should let the organization decide what it needs the most.)
  • Would they run to 18 different stores looking for the best price and spend more on transportation than any price differential they would gain monetarily?
  • Is their time worth far more than any ‘savings’ they would gain by discount shopping?
  • Do they waste too much time researching the multitude of options available when a product of a suitable quality and a reasonable price is available?
I could tell you hundreds … perhaps even thousands … of things I’ve learned about the economy by discount shopping (the greater percentage of it … window shopping).

I can even say that when I discount shop, I normally do not consider myself to be good for businesses.  I know that if I go into a store to buy only the advertised product that is on sale to lure people in to shop for other things, the store might be losing money doing business with me.  I worry about that.

I grew up around a business that fell on ‘hard times’ when:
  • interest rates soared (businesses many times finance a portion of their inventory … particularly during certain seasons … with loans),
  • energy prices rose (one component was on-the-road sales and deliveries),
  • 'corporate’ stores started getting larger and expanding into business areas traditionally served by local businesses,
  • environmental and occupational regulations started working their way into every aspect of business and in the beginning, had a fairly steep learning curve and a lot of upfront costs … particularly for small businesses which needed to know just as much as larger businesses but didn’t have ‘larger bases’ to ‘average out’ all the extra time and costs.  (At one time, the main concerns were ‘simply’ making sure all the scales were accurate, the products produced and sold were of high quality, the buildings, property and equipment were properly maintained, the workers received their paychecks on time, and all the product training and recordkeeping (including payroll, sales, property and income taxes) were properly taken care of.),
  • cities were encouraging industrial companies to move to the outskirts to make room for urban redevelopment (companies that also had walk-in/retail arms could never be sure of continuing business in that sector if they moved), and
  • workers in every sector were seeking higher wages and benefits (because they were getting ‘hit’ too).
Now, many people like jobs that pay ‘punch the clock’ wages and benefits.  Many people are willing to invest in and even help run pre-established companies.  But very few people have the knowledge AND the energy AND the desire to take on the risk that goes along with establishing and building companies.

That is why I worry about businesses and their ability to make money.

People retain jobs when businesses make money.  Taxes get paid when people make money.  Public infrastructure gets built when people make money.  Public services (like public education) get funded when people make money.

Businesses make money when people want to pay for the things that they sell … at prices that allow them to make money.

Even though I worry about businesses, I haven’t ‘shaken’ the discount shopping bug because I know that ‘buy one, get one free’ gets me two of something instead of one.  IF I planned to purchase that item anyway, I need to buy it less often and have more ‘discretionary money’ to spend on other things.  I also WANT the person who is making close to minimum wage to be able to take advantage of every sale and coupon that is available because I know they have a lot more opportunities for a better life if they do (if they don’t waste more money and time on gas and bus fares and ‘the search’ than they could retain in their pocket and their life if they just shopped normally for only the things that created value).

But I also want the individual who has the income to recognize that their time probably has a lot more value if they spend it doing other things that are value creating versus discount shopping (unless that is their business).

I want the individual who only shops online to avoid sales taxes to know that the quality of their life and others is in some way connected to the sales tax revenues that states receive.

I want the individual that always wants things for ‘FREE’ to know that the economic future of their community is at stake if they don’t value goods and services … with their money.

I want the individual who buys anything to buy quality with the expectation that quality, when taken care of, usually can be donated when it is no longer needed or wanted by the original purchaser … and the simple donation of well-taken-care-of items increases the base of wealth in communities.

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I wish there were easy answers regarding the economic storm that is travelling around the globe.

Discount shopping might create economic multipliers for one individual or family (if they have the money to take advantage of the discounts) and discount selling might be the answer to retaining customers and sales for a business in a community (if their customers buy a combination of products that are at discounted and regular prices) but long-term, I don’t think either can create strong economic multipliers for states or nations … and the economic multipliers that we create determine our future ‘bases’ of wealth.

The world my grandfather lived in no longer exists:  The question is?  What do we need to MAKE SURE we replace it with?