Microeconomic and Macroeconomic Trends and Financial Regulation
Ask any economics student about the disciplines of economics, and they will tell you that these two are microeconomics and macroeconomics. And sadly, these two disciplines are against each other. In the present, there will be many changes that will affect the financial services industry. What the country is going through in terms of financial regulation is unlike what is has been through in the past. In the present-day financial services industry, there are two major forces that are coming face to face. Microeconomics is the area of business that students often lean towards. In this set-up, profit maximization is the overall goal. For businesses to grow and make more money, fixed costs and marginal costs must be optimized. Simply put, microeconomics views the world using the eyes of the CEO. It is the job of the CEO to do what they can for the benefit of the company for it to deliver value and make more money.
On the other hand, macroeconomics is very much attractive to policy geeks. The goal of this economic discipline is to attain equilibrium of the market. This means that goods and services with the greatest number can be exchanged by sellers and buyers using prices they have mutually agreed upon. There is good competition between businesses in this set-up. What is bad for businesses will be oligarchies and monopolies. Macroeconomics essentially looks at the world using the eyes of the government. In essence, this economy strives to make everyone involved happy, which often opposites making everyone equally unhappy too.
By looking at the differences of these two perspectives, you know very much that they will be going against each other. Even if most individuals agree that everyone can benefit from efficient markets, it is not all the time that the government must side with microeconomic business interest when they take the essential steps to benefit everyone. Sometimes, competition can only be fostered when the financial industry finds a way to block the merger. For sellers and buyers to make informed decisions, too, legislation of disclosures may be necessary. At the same time, certain activities must be stopped or regulated so that some will not be harmed by others financially.
The extent of market regulations is always a never-ending fight between the government and business sector, which is very much something you can expect. However, you should know that if the economy is on the rise and everyone is quite happy, the power struggle between microeconomics and macroeconomics stops. When businesses make money, they become happy. Consumers are equally happy too because they have money. The government is quite happy because the system is working just fine for everyone.
However, with recent financial crises, the financial services industry may get lost and damaged. Any market bubbles are the responsibility of government regulators. It is also their job to recommend the necessary financial and securities regulations and measures to prevent whatever is going on from harming the economy.