The Dollar in Olympia’s Circulation*

*Or how the personification of Demand shapes our Community

I’ve written about our local economy previously. The recent theme here has been our subconscious behavior’s responsibility for the shape and feel of our city. In pursuing this argument, we briefly need to examine the circulation of money in our economy, as a piece of the larger global economy and as an entity within it.

Money in our hands has a fascinating life of its own. This chart describes a typical family’s spending habits.

Where_money_goes_02

Instead of the people with money in hand, imagine the converse: money, with people in tow. In any economy, people are swapping dollars in exchange for goods and services. Imagine a single dollar circulating through that economy, the paths it treads, where it goes, who carries it, spends it, saves it and otherwise removes it from or adds it to circulation. Imagine a dollar bill dropped as a tip at the Eastside Tavern, later used to by coffee at Olympia Coffee Roasting, Co., which in turn is given as change to someone who later donates it to the baby shower gift pool, which for that purpose is spent at one of the cutsey baby clothes stores around here, returning to the till until in a similar circuit over and over again until it is given out as change for someone in town for a gift and a quick beer at the Eastside. In the argument for a local economy, the general concept is the more of those dollars stay swirling around town, the better for the townspeople.

Does it really work that way? While this dollar is stilling in wallets and tills, a vast range of goods changes its relationship status—beer, clothing, coffee were all traveled from producer to consumer in exchange for that dollar. Until we start attaching iPhones to dollar bills, as well as the fictional credit that goes along with it, it’s tough to say where the money goes, but we can safely say that hard cash bills and coins circulate in the broader economy.

Recall a particularly poignant example slightly out of context:

We obtain our spending money from our salaries and in Olympia, it’s safe to say that a lot of that money comes into the community in the form of taxes from all over the state. Whether it stays in our local economy is up to us. As I’ve said a few times recently, keeping that circuit local depends on our conscious desire to keep it here. However, our consumer purchases tend to recede to the back burner of our conscious thought. Even when they come to the forefront of our conscious decision making, the data points of consideration turn more on economics than anything else. We have to consciously spend money differently if we want to shape the overall local consumer demand, which examples like these make me think is pretty similar to most other cities in the country.

Over the last five years, our community has seen an influx of non-local stores, and relatively constant turnover of the businesses owned by locals. Remember Rainer Organics? Trader Joes? Panera Bread? When we speak of demand, we’re talking about that collective behavior of our community driving these trends. Our actions are individual, but collectively, they shape the community. What does the circulation of our local dollars say about the present and future of city’s look and feel?  What is the likely result? Are we satisfied with these results?

Now for a more realistic appraisal. Sorry, for the shaky footage, but I’ve always loved this clip.

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