Thursday, May 28, 2015

Needed: A More Practical Side of Macroeconomics

A tremendous amount of effort goes into macroeconomic thought and activity on an ongoing basis. But how practical are the results, in terms of applicability for populations as a whole? What's more, how important is this consideration, in the minds of those who debate and research these issues?

To date, the most important applications of macroeconomics are of a monetary nature, because monetary policy has the (most obvious) ability to be proactive in a broad sense. Even so, governments and markets do not always coordinate their activities so as to allow monetary representation to remain proactive. Plus, the fact that monetary policy should represent entire populations and aggregate time potential, has been blunted by the centrality of governmental economic activity, which came to dominate in the twentieth century.

While government activity has been able to provide marketplace substitutes in some instances, its ability to do so exists only up to a point. This is particularly true in regions where marketplace scarcity - in terms of important services formation - is threatening more regions with the passing of time.

Thus far however, dialogue concerns mostly what occurs in primary equilibrium. In other words, few actually discuss how to include those with insufficient economic access, or what is increasingly a missing marketplace for time, services, knowledge use and interdisciplinary coordination. What continues to fall away from primary equilibrium, is by far the most pressing concern - not just because of obvious social and cultural implications, but also because of general equilibrium distortions which have only grown since the Great Recession.

The fact that this is not being discussed at national levels, has considerable bearing why the average citizen has few means to proactively engage in the discussion. Granted, much of the ongoing macroeconomic conversation is supposedly on the public's "behalf".  But citizens are not particularly impressed with the results. How could they be, given the fact some of the most pressing problems are concealed by political disagreements? When economic issues are politicized, they are framed in ways which make them all but impossible to productively address.

As a result, citizens exercise the main option they actually have, which is to refuse more of the same. But refusing more of the same without a change in overall focus, does not mean being able to preserve the previous status quo. Just the same, policy makers have also been inclined to apply the brakes in multiple capacities without fully understanding what is at stake.

How do think about this? For one thing, it is not possible for macroeconomics to be "all about" government activity, because governments rely on a thriving marketplace for what they wish to accomplish. Importantly, fiscal activity has little choice but to slow, any time that monetary activity is cut back in some capacity. But just as supply side gridlock continues to affect monetary policy, governments are reluctant to acknowledge the extent to which they also rely on marketplace vitality.

Political parties are not able to address these problems, because they represent different special interests which in turn are holding fast to their own staked out positions. Even so, reacting to the fact this is happening, will not move anyone forward in terms of production reform. The help of all factions is needed now, to overcome the present marketplace stalemate.

For all that monetary policy can do, it cannot provide the supply side impetus and motivation which would spur long term growth to more sustainable levels. Just the same, the capacity of supply side reform belongs to entire populations - a fact which has been missed. It is time for policy makers and economists to approach economic problems by more practical means. Macroeconomics needs to be proactive not just monetarily, but also in respect to structural coordination and organization. Otherwise, citizens will still find it difficult to gain perspective, regarding what is at stake. Ultimately, the marketplace needs to be approached through more inclusive and personal means.

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