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Microeconomics versus macroeconomics
costargh:
But don't we need the government to stop large cyclical booms and recessions?
Collin Li:
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
Fyrefly:
Four Words: Tragedy of the Commons.
Governments come in handy there.
Oh, big picture: governments exist 4 reasons beyond the realm of economics, though their very existence causes inherent economic problems.
I got shit micro tute test result 2day, so I'd rather not think bout anything economics beyond that this evening.
Thankfully only the best 3 count, so I can count this as my stuff-up.
*wanders off*
Collin Li:
--- Quote from: Fyrefly on September 17, 2008, 07:21:52 pm ---Four Words: Tragedy of the Commons.
Governments come in handy there.
Oh, big picture: governments exist 4 reasons beyond the realm of economics, though their very existence causes inherent economic problems.
--- End quote ---
What you say is valid, but nothing you said supports the need for macroeconomic toying around that currently happens.
Tragedy of the commons is because there is a lack of property rights. It's a problem of communist societies, more than capitalist societies, because proper capitalist societies have well-defined property rights. You don't have commons when you privatise. Once again, it's a microeconomic solution to a microeconomic problem.
The question here still persists: what's so important about toying with the macroeconomy?
ReVeL:
--- Quote from: coblin on September 16, 2008, 07:42:18 pm ---Why would the poor be worse off, and the rich be better off? The relative wealth gap may increase (not clear, can you show this?), but the poor certainly would not be worse off under a system of voluntary transactions (a free market). They simply wouldn't accept the transactions that would lower their well-being.
You have pointed out some microeconomic policy concerns, and I have replied to show how microeconomics is employed to attempt to fix these problems. But more importantly, none of the arguments you brought up actually justify the macroeconomic policies that aren't designed to target any of these problems, such as the manipulation of credit (monetary policy), and the aimless fiscal policy used to control the "macroeconomy."
--- End quote ---
Well, you clearly know much more about economics than I do, and it seems logical that in a free market when two people meet it is only likely to increase "well-being", otherwise why would they interact..?
But wouldn't market failure still occur?
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