VCE Stuff > VCE Economics
Microeconomics versus macroeconomics
Collin Li:
Yeah. Market failure still occurs, but try not to think of it as merely an "excuse" for any government intervention. They are microeconomic issues that should be targeted by microeconomic policies. For example, pollution isn't best targeted by a central bank which increase interest rates, because that won't only discourage pollution, that will discourage spending in general!
The fix is to privatise air (sort of silly, idealistic and impractical), or to tax pollutants (more practical). Respectively, those two solutions are from the Austrian school of thought (more pure classical liberalism) versus the Chicago school (utilitarianism plays a greater role in their analysis).
(There are many other schools of economic thought too, if you are interested. I think Wikipedia will give you hours of reading if you want. These are the two schools of thought I align myself most closely to, however. I am leaning to the Austrian side, but I pick parts from whichever school I think is better.)
costargh:
How about the need for a welfare system for the equitable distribution of income or more so, to ensure that the poor have access to basic necessities for life?
dcc:
--- Quote from: costargh on September 17, 2008, 08:17:50 pm ---How about the need for a welfare system for the equitable distribution of income or more so, to ensure that the poor have access to basic necessities for life?
--- End quote ---
Economists of the Austrian persuasion disagree with this so-called 'need' on both an economic and moral basis.
costargh:
But isn't that just one view? What about the generally accepted view...
brendan:
--- Quote from: ReVeL on September 16, 2008, 07:32:22 pm ---I think that government intervention is required when an open market fails to allocate resources to best satisfy societies needs and wants(i.e when market failure occurs).
Government intervention is essential for things like Public Education and Healthcare(an open market would be unlikely to provide these at free or subsidised prices to the public due to lower profits),
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Of course a free market can't provide "subsidised" places because that is by definition is a government intervention so it is meaningless to say so. Also since when does "allocate resources to best satisfy societies needs and wants" mean providing things for free?
--- Quote from: ReVeL on September 16, 2008, 07:32:22 pm ---I'm not sure that "well being is maximised by individuals interacting in the free market" is true.
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Generally it is.
--- Quote from: ReVeL on September 16, 2008, 07:32:22 pm ---The poor would be worse off and the rich better off wouldn't they?
--- End quote ---
compare south korea and north korea.
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