What would be the consequences of Downsizing on the economy?
It would decrease consumption, lowering demand on many markets, meaning that prices would go down. If downsizing would rampant enough it's possible that economy would experience deflation, maybe even recession. As the result, maybe central banks would be decreasing key interest rates (i.e. make new debts cheaper), start buying bonds and lowering reserve requirements for banks in order to stimulate economy. While governments could increase government spendings, decrease tax burden and relax business regulations for the same reasons. Accumulation speed of government debts would be increasing (i.e. government would be borrowing more in order to finance their deficits caused by increased government spendings and decreased taxes). It would also make workforce more rigid, unemployed downsized people wouldn't be able to take some jobs. Like you can't take job of a burger-flipper at MacDonalds if you're downsized. Nations with downsized workforce would be able to offer lower prices while exporting their services abroad. Downsizing would be most widespread among countries with big service sector, like many deindustrialized and post-industrial countries. Imports of countries with downsized workforce would decrease, possibly leading to positive trade balance.