People often talk about the economy like it is one large basket where we all dip into and take out off. If it’s empty we all suffer and if it is full we all benefit.
Well, I’d argue this is a rather narrow conception of the economy.
I want you to think of an economy like a house. A house with many rooms. A house with many rooms that keeps adding on more rooms and converting old ones to new uses. People spend time in each of the rooms but might spend more time in one then the other. This is the basic of a segmented economy. All economies are segmented but together make up the greater economy.
Now imagine a group of people come to the house for a party. Chances are many would be cordoned on to spending time in one particular part of the house. Some may venture to the kitchen, the toilet or upstairs – be it briefly.
We consider the room where most people spent time to be the main driver of the economy because that is the room hosting everyone. But what if people who came to the party also ended up moving to different rooms to sit and chat or carry on with other business for extended periods of time until slowly the main room became empty. It wouldn’t be empty for long of course because at some point the host would call everyone back to that room for some reason.
But less and less people may come back to that main room over time. Why is this? Perhaps different groups have formed quite naturally, finding likeminded people who congregate in different rooms in the house for the rest of the party, so the party host calls for more friends to come from outside.
Each room with different groups will grow and function like a micro-party, or micro-economy, segment, of the overall economy. As long as the main party is going, everyone is still there.
But what happens when the main party dies or shuts up. Well two things can happen. One, maybe the people in the micro-party’s carry on quietly or join up with other groups and have a hush hush party, generating their own fun. The other thing that could happen is that the host decides starts to clean up the main party room, calling in friends to reminisce about the great night and lament that it is over. But what isn’t being talked about is that now, the room is being converted into a large sleeping area to host another use for the room, so while the party is over, the room is being utilised for another purpose that everyone appreciates, generating it’s own energy.
That is, a new industry has formed in the shadow of the former with new micro-economies forming around it. Some boom because the main party has died down. The main economic party driver does not realise too that now a new funnel of energy is being driven.
Why do I think this supposition is accurate? Well think of towns that have have survived the industries that gave birth to them. Some countries call these towns, Heritage Towns, towns that were pivotal in the founding of a particular industry, that might be gone or, in the same vein, towns that hold a particular economic legacy. By virtue of their existence, we can derive a narrative that the party never stopped, it just went into smaller rooms where different economic ventures spurred forth in the other rooms of the house.
This is how I imagine an economy to look like.
– Hans Lee