In a Financial Crisis What Happens to the Dog Bakeries?


What will happen to the dog bakeries? I ask this question, because this line of business (and perhaps many others) escaped my attention for so long. I saw my first one years ago in suburban St. Louis. As one interested in economics, poverty and history, it struck me that dog bakeries represented a perfect symbol for the many “discretionary” business lines that have been established in recent decades in what has been called the consumer economy.

This discretionary economy consists of businesses for which do not exist in societies with little discretionary income. It includes in its ranks a host of businesses that did not even exist before the last couple of decades, from dog bakeries, to Starbucks, tony cafes, specialized clothing stores and personal fitness centers. While these businesses might have been attractive to the households of the 1940s, 1950s, 1960s, or 1970s, people just didn’t have enough discretionary income to support them.

Stores specializing in accessories for the bathroom simply did not exist in the immediate post World War II years. There was little, if anything, akin to a Gap store, a Banana Republic or an Abercrombie and Fitch. Few people had either access to or membership in gyms or personal fitness centers. Gyms in those days were often barebones affairs for roughnecks as opposed to the fashionista hangouts of today.

Even in the 1960s and 1970s, many of the businesses we take for granted today simply did not exist. There were no Starbucks coffee shops. If you wanted espresso, you looked near a college campus or found an Italian neighborhood. Big box stores specializing in pets had not proliferated. Instead there were small stores crowded with everything from hamsters and turtles to birds and bulldogs. I suspect there were no dog bakeries.

It would be most difficult to reliably estimate the size of the discretionary economy. Much of the discretionary economy lies embedded in the larger service sector. By 2007, the share of private employment in the nation in services had reached 2.5 times the rate of 1947. Within that vast sector are companies which provide goods and services our forebears lived without like gyms, boutique coffee and dog bakeries.

The years since World War II have seen an unprecedented democratization of prosperity in the United States. Poverty rates have fallen and people live a far better life style than before. This has led critics to complain about the consumer society. For some, this “consumerism” was declared a false god and some even looked forward to a day of reckoning when the nation’s sins of over-consumption would earn it a deserved eternal damnation.

Generally, these critics lacked a decent understanding of economics. For one thing even the most frivolous types of consumption employ people. When households cancel the gym memberships or have no need of the dog bakery, people lose their jobs. Supporting a nation of 300 million people requires all of the consumption it can afford to provide employment, a decent standard of living, and yes, to reduce poverty.

So what happens now? If the ‘bubble’ expanded the discretionary economy, what will a prolonged recession do? It could be a mistake to presume that the economic downturn will soon be reversed and that previous consumption rates will be restored. One of the factors different about this downturn is the extent to which it has reduced the wealth of households. The IRAs and investment portfolios that many had relied upon to provide a comfortable retirement have declined steeply in value. This is a particular problem for the millions of baby boomers, who have spearheaded the development of the discretionary economy.

Now they seem less likely to consume with the abandon they showed before the prospect of running out of money became a realistic one. The coffee at home will be more attractive than the $5.00 latte at Starbucks. Rather than stopping at the canine bakery, people may now choose to buy more prosaic dog biscuits from a supercenter aisle. The recent decision by Starbucks to close 600 stores recently may be a harbinger of things to come.

But there is more. Boomers and others who have seen their savings devastated could reduce their spending on other items not directly part of the discretionary economy. The wardrobe – you need clothes, but not necessarily new suits every season – may not be renewed quite as frequently. The car may be kept a couple of extra years. This could place the entire auto bailout in jeopardy.

It would be a mistake to assume that there will be a quick and easy exit from the current economic difficulties. An affluent economy is necessarily a consuming society. Such an economy requires both necessities as well as the frills. It needs gyms, Starbucks, dog bakeries and the rest of the discretionary economy, just as it needs automobile manufacturing, information services and grocery stores. The destruction of the discretionary economy may not be as serious as the loss of homes in Detroit or jobs on Wall Street, but it can not take place without destroying the jobs and lives of people.

Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris. He was born in Los Angeles and was appointed to three terms on the Los Angeles County Transportation Commission by Mayor Tom Bradley. He is the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.

Well i know the chicago real

Well i know the chicago real estate market is doing better this year than last but that's probably because of all the bail outs and things are turning around finally.

IBonds don't have anything....

Treasury bonds are issued in $1,000 increments and pay semi-annual coupon payments. Due to the riskless nature of these securities, investors turn to treasury securities when there is instability in the credit and equity markets. IBonds don't have anything to do with a baseball player disgraced by steroid allegations. IBonds are a new series of Treasury bonds that are backed by Treasury guarantee to never lose money. However, you won't be able to withdraw if you're staring down the barrel of needing no fax payday loans. You can't withdraw the interest for the first year at all, and then the first five years carry penalties for withdrawal. They stop accruing interest after thirty. They are geared towards being a solid long term investment. You also cannot buy it for anyone other than yourself, so you can't have your children's debt relief in mind for buying IBonds.

Trust in the Creativity Stream

People clever enough to peel money off the affluent in return for dog treats will find something new to do. However, just like biological evolution, current economics will teach people to adapt or die.

Richard Reep
Poolside Studios
Winter Park, FL

I thought that China and Vietnam

had plenty of dog bakeries.
When I want to eat baked dog, they are the go-to countries on my list.
How can the USA possibly compete in the international arena?

Dave Barnes

We’ve all heard about the

We’ve all heard about the recession and the toll that is having on Americans everywhere
va loan

increasing consumption

Thank you Wendell Cox for discussing consumption.

If consumption increases, many more people may have jobs. If consumption increases, many stocks may regain some of the value they have lost. If consumption increases, more jobs may be created and there may be less need for food stamps and Medicaid.

The federal government might not want to have individuals and businesses pay the social security tax for the next 2 years on wages below $30,000 a year. This may give many people more money to spend and help them reduce their debts. This may help many businesses have more money to spend, reduce their debts, and increase the probability that they will stay in business. Many businesses might fire fewer workers. Many small businesses might hire more workers. If unemployment significantly increases, many more people will not be paying into Social Security and Medicare. If unemployment significantly increases, the need for food stamps and Medicaid may increase.

If the federal government decides that businesses do not have to pay social security taxes any more, many businesses might fire fewer workers, hire more workers, increase pay of many workers, and increase dividends.

I discuss many different ways of funding Social Security and Medicare on different parts of my website I mention a national sales tax, selling federal government owned land, a higher gasoline tax, and other things.

Many more state governments may want to allow smoking in restaurants. Consumption in many restaurants may increase which may help many state governments obtain more revenues from taxes on restaurants. If consumption increases in restaurants and they employ more people, the need for food stamps and Medicaid may decrease.

Many more state governments may want to allow gambling in casinos. If casinos employ a lot more people, the need for food stamps and Medicaid may decrease.

I graduated from the University of New Hampshire in 1992 with a BA Degree in Political Science and a minor in Economics.

I ran for United States Senate in 2002.


Ken Stremsky

The term financial crisis is

The term financial crisis is applied broadly to a variety of situations in which some financial institutions or assets suddenly lose a large part of their value. In the 19th and early 20th centuries, many financial crises were associated with banking panics, and many recessions coincided with these panics. Other situations that are often called financial crises include stock market crashes and the bursting of other financial bubbles, currency crises, and sovereign defaults.

business directory