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Microeconomics versus macroeconomics
brendan:
--- Quote from: costargh on September 17, 2008, 08:45:51 pm ---Competition for what? What are charities competing for?
--- End quote ---
To serve their clients, and hence survive. Even a NPO has to be financially sustainable. Every organisation needs cashflow to operate.
Collin Li:
--- Quote from: Brendan on September 17, 2008, 08:47:06 pm ---
--- Quote from: costargh on September 17, 2008, 08:45:51 pm ---Competition for what? What are charities competing for?
--- End quote ---
To serve their clients.
--- End quote ---
That's how they get their profit :)
brendan:
Greg Mankiw, Harvard Econ Prof, on Micro vs Macro: http://gregmankiw.blogspot.com/2006/04/micro-versus-macro.html
Collin Li:
I should add, however, that NPOs can be as competitive as private charity, as long as the competition is open. NPOs can be competitive as long as intrinsic benefits exist (non-monetary rewards - which contribute to utility). However, without competition and choice, there will be complacency, which is what the biggest-monopoly-of-all, government, is the best at.
Collin Li:
--- Quote from: coblin on September 17, 2008, 04:54:41 pm ---It's almost an assumption the business cycle just occurs. Here's one theory that believes central banks are actually the problem:
http://en.wikipedia.org/wiki/Austrian_Business_Cycle_Theory
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I withdraw my support for the Austrian Business Cycle Theory. Here is why it goes wrong for me:
"The objection is simple: Given that interest rates are artificially and unsustainably low, why would any businessman make his profitability calculations based on the assumption that the low interest rates will prevail indefinitely? No, what would happen is that entrepreneurs would realize that interest rates are only temporarily low, and take this into account."
Source: http://www.gmu.edu/departments/economics/bcaplan/whyaust.htm
The essence of the ABC is that the short-term interest rate will affect investment decisions in a way to promote malinvestment (to promote investments that would not have been profitable had there been no intervention). That passage above drives a nail through the theory.
However, the need for a constantly expanding monetary base (what Milton Friedman argues for) still baffles me. I am also unsure whether the Chicago school is in favour of the current style of central banks that we have.
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