A New, Minimalist Economy

The first time I heard the question, I was sitting in the living room at my mother-in-law’s house. We had tuned into MSNBC for Tammy Strobel’s interview. After their appearance on the TODAY Show and in the New York Times, the Strobel’s were being interviewed on the cable network about their experience with minimalism and tiny house living.

At the end of their conversation, the host asked Tammy a pointed question. Relatively new to the movement, it came across to me, as a “gotcha” question—an odd send-off to an otherwise friendly interview. The interviewer asked:

But Tammy, what if your way of life caught on and everybody chose to live minimalist? What would happen to our economy? Have you given any thought to the ramifications?

Since then, I have come to understand, while terrribly mistimed in this specific interview, questions concerning the impact of minimalism on our economy are important ones—and quite significant to a percentage of the population. On a semi-regular basis, I am asked similar questions and have come to expect them. Recently, after an event here in Phoenix, I was approached by a CFO with the same concern.

Joshua, I understand what you are saying about owning less and I don’t disagree on a personal level. However, our national well-being requires people to buy things they don’t need. If minimalism caught on nationally, our economy would be ruined.

Now, before I move on to address his specific concern, I do think in the short-term and to some extent, he is probably right.

There are numerous factors that contribute to the overconsumption so prevelant in almost every wealthy society in our world today. There are personal, heart issues that give rise to overconsumption: greed, jealousy, lack of empathy, desire to impress, pride, compensating for personal shortcomings, our propensity to look for happiness in the things we possess, and general unawareness of the damaging affects of overconsumption.

But beyond that, there are also societal issues at play. Our economy, to a large degree, is based on overconsumption and the need for people of every social class to spend more than they have. Disappointing retail figures and sluggish consumer confidence are always reported as doomsday scenarios.

“We must get people spending,” is the mantra of the journalist as the only way to revive a slowing economy. In fact, just this past week, a news story lamented the possibility of consumers paying down debts: “If [consumers] trouser the savings to pay down debts instead, expect more gloom ahead.”

My first question after reading the article was, “What kind of society have we built that requires people to go into debt to sustain it?” How long can that last anyway? But, beyond that, I was reminded of the often-asked question I first heard addressed to Tammy on MSNBC.

Can minimalism and a thriving economy co-exist?

I believe they can (and I am not alone). For starters, those who argue they are incompatible fail to miss the bigger picture on two significant fronts: the flexibility of our capitalist system and the misunderstanding that minimalism represents zero spending.

First, concerning the flexibility of our economy, it is widely assumed that markets and business dictate consumer behavior. And again, to a degree, they are correct. Marketers work long hours and make good money devising new ways to shape our consumer behavior and bend it toward their specific product line. However, business, at its very heart, is about catering to the desires of the consumer—not the other way around.

For example, on a consistent basis, there is outrage over fast fashion—these outlets that offer cheap textiles with an ever-revolving supply entering and exiting their store. The reality exists that to create such a large quantity of clothing at such low prices requires somebody, somewhere to be paid very little to produce it. We throw our hands up in disgust… and then we drive to the store to buy our cheap t-shirts. As a result, more inexpensive t-shirts, sweaters, dresses, and sneakers are produced.

However, if the consumer masses finally said, “Enough! I am willing to pay more money for my fashion to ensure proper working conditions around the world,” and truly meant it, these outlets would change their practice and their strategy to meet the new demands of the public they desire to clothe.

Businesses may influence some aspects of consumer spending. But as a long-term rule, they respond to consumer demands far more than they create them.

Which brings me back to the original question. Would our economy decline and our nation falter if minimalism became the norm? In the short-term, yes, there would absolutely be some hiccups along the way. But an economy based on free-market, capitalist principles will always be able to re-invent itself. Entrepreneurial spirits will always find new ways to generate revenue. And they would do so in a new, minimalist economy as well.

This, then, introduces the second misconception mentioned above: the belief that minimalism represents zero spending.

Minimalist lifestyles do not require (or even invite) people to stop spending money altogether. Instead, it merely redirects their money toward non-material pursuits.

As the wave of minimalism expands (which it continues to do), a new economy will begin to emerge. Economists, take heart: money will still be spent. It will just be spent on more rewarding things than material possessions. It will focus on things like:

Experiences. From concerts and eating out to museums and sporting events, minimalists prefer experiences over possessions. Spending will begin to move in that direction.

Travel and Tourism. Many minimalists refer to travel as the “ultimate experience” and some embrace the lifestyle purely for its pursuit. Others recognize it as merely a nice byproduct of owning less. Both approaches impact our economy significantly: as dollars are directed away from fleeting material possessions, travel will become more attainable—and so will the many industries required to support it.

Art. While not every minimalist considers themselves an artist in practice or appreciation, there is little doubt that a new, minimalist economy will place a higher value upon it. Minimalism allows more people to practice it and in turn, provides more opportunity for people to appreciate it.

Higher-Quality Consumer Products. To live is to consume. We all need food and shelter and clothing. We also have passions and purposes that we desire to fulfill with our short lives. These needs and these purposes require material goods. Minimalism does not reject all material purchases, but it does provide the opportunity (and the desire) to own higher-quality items. In a minimalist economy, well-designed, multi-purpose, quality-crafted items will be desired and purchased.

Services. In a minimalist economy, services become more desired than retail products. As a short anecdote, my friend recently hired a personal chef to complement his use of a personal trainer. He would credit minimalism as a means to that end. Because he spends less money on things and less time caring for them, he has found the space in his schedule and budget to hire these services—services that, in the long-run, are an investment into his health, well-being, and productivity.

Research and Problem Solving. As Mr. Money Mustache eloquently argues, the savers and investors represent the true engine of economic growth:

Only by sacrificing current consumption, can people put money into banks or share offerings, which end up in the hands of new and existing businesses who can then use that money to create new technology, factories, or human capital, allowing them to increase their productivity. Capital creates productivity, and productivity is the driver of our standard of living.

Sharing. The movement is already underway—technology has made it possible. Resources and products are being shared today among citizens at a far-greater rate than they have been in generations. From Uber and AirBnb, to Fon and NiceRide, there exist examples all around us of this growing industry providing a snapshot into our future economy. Again, each one represents the ingenuity of individuals and the entrepreneurial spirit.

Public good. This, then, represents the greatest benefit of minimalism on a macro-level. Minimalism provides opportunity for the individual to practice generosity on a larger scale than ever before. Minimalism allows us to redirect our finite resources away from our wants and begin to use them in practical ways to meet other people’s needs. Whether we are feeding the hungry, housing the orphan, saving the environment, protecting animals, or speaking up for the disenfranchised, our resources can make this world a better place for everybody.

Will the economy falter if minimalism grows to a nationwide movement? Certainly, our existing one based almost entirely on individual overconsumption will slow—and it will hiccup in the short-term.

But it will re-invent itself. Indeed, it always has.