High-end hand-me-downs (the smart set calls them "vintage") are more ecologically sound than new clothes.
Buying a shirt the second time around means you avoid consuming all the energy used in producing and shipping a new one and, therefore, the carbon emissions associated with it.
Every item of clothing you own has an impact on the environment. Some synthetic textiles are made with petroleum products. Cotton accounts for less than 3% of farmed land globally but consumes about a quarter of the pesticides - eww yuck!
One quick way to change your outfits: invite friends over for a clothes-swap. Everyone brings a few items they want to trade. It's easy on the environment and your pocketbook, and there's nothing quite like souvenirs from your friends.
Swapping is the new Shopping!
For more info check out
http://www.clothingswap.org/
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Economics of recycling
Modern supply chain practices are actually surprisingly energy efficient. Transporting a kilogram of cargo in a 40 tonne truck requires 1ml of diesel per 100km, floating across the ocean in a container ship takes much less. In most cases the largest emissions of CO2 from transport are caused by the consumer driving to the shop and back. So making a special trip to a second hand clothing store would offset all the gains made by recycling the shirt.
The costs of fossil-fuel derived fabrics and energy usage are already built into the purchase price of the shirt. Sweatshops can undercut their worker's wages, but the oil companies don't offer discounts to anyone.