What are the different limitations of macroeconomics and microeconomics?

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My answer to What are the different limitations of macroeconomics and microeconomics?

Answer by Desmond Last:

In our developed economies the distinction between macro and micro has been erased by Government Policies and Global Economic ownership . This has resulted in our economic systems, such as they are, becoming macro-dominated.

Over-bearing regulation,over -bureaucratic Government and Large Flows of Capital with their barriers to new business, are the now almost insurmountable hurdles to and hence limitations of microeconomics.

How can businesses and markets within microeconomic systems work efficiently, when the very systems they are intended to interact with are so determined to use their monopolistic control of government and regulation to control the size, location and even the ‘life’ of those markets and businesses?

A microeconomic system should be able to grow both capital and labour. It should be an important provider of labour and commerce for its connecting markets in macroeconomic systems but that is not happening.

In the U.K the opportunity for capital growth by the individual working within the microeconomic system has been stifled. EU Regulation, overbearing Health and Safety Regulations, the influx of large foreign multinationals and the demise of the High Street have all placed limitations on the microeconomic system.

The macroeconomic system dominated as it by the concentration of capital is now profit squeezed so it does everything it can to remove competition. EU regulation is a manna from heaven to the big car-makers, agricultural groups, food makers and retail chains. They can squeeze the life-blood out of the small retailer or producer by expensive regulation and large retail outlets.The once proud shop-owner now a shelf filler, like his Steel-Maker counterpart, in an Aldi supermarket.

I know from experience the smooth road to Government the big boys have. I represented Renault Vehicles industries on the Truck and Bus Committee which worked with Government – I know first-hand that the small man is no man when it comes to Government access.

But what of the macrosystem does that have limitations?

Yes with dire consequences.

Big Global business has forgotten the most important lesson in commerce – Look after your customer.

Well it is a bit difficult to look after him when he is floating down a raging river on what is left of his house. Or he is one of the 80,000 in Alberta that cannot use the local Wal-Mart because it has been burned to the ground – if it wasn't then it could have been.

Similarly the maximization of profit that has lead to big car-makers to use China’s cheap labour is not much use when the production line is underwater.

Macroeconomics should act as the watering can to the seedlings of small business. Instead it has choked them by controlling the supply chain and by not questioning Government Policy. Instead it has become a bystander to the world. Now it must suffer the consequence of shareholder greed and executive bonuses and uneased large sales.

That is the limitation of the macroeconomic system unless it supports the microeconomic system it takes value away from those it needs as customers and allows concentration of capital and hence monopolisation.

Have you ever seen a market grower at a G7, G10 or GA20 meeting? Or a country who is not part of a trading cartel such as the EU?

We are a crossroads. Unless macroeconomic systems begin to accept the reality of a world dominated by bad Governments and Economic Policy Groups who are corrupt, and do not seek solutions but control of capital ,then we are heading for the largest Global recession in the history of the World.

It was after all the IMF who last year produced a Global Economic Report that never mentioned Climate Change.

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What are the different limitations of macroeconomics and microeconomics?

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