Thursday, 5 April 2012

Macro vs. Micro

Anybody that has ever studied economics will be familiar with the idea of distinguishing events between those that are Macroeconomics (large, widespread issues) and Microeconomics (smaller, specifically magnified issues).

The same can be said for our individual lives. There are values, issues and concepts that form a part of our fundamental existence and then there are day to day issues that have a quick sand like effect on our physical and mental wellness. 

..Why is this?

Economists will argue that the macro/micro relationship is interdependent and the effect of one is directly correlated to the other. Fundamentally,  the relationship is both interdependent and complimentary where microeconomist's analyse the economy from the bottom up, macroeconomists analyse from the top down. 

So how can this parallel be drawn to the institution of Me plc? Well, let us assume that within Me Plc, my heart is the "microeconomy" and our mind the "macroeconomy". On any given day, Me Plc is faced with a relative scale of heart-break, ranging from deep sorrow to destructive euphoria...I unconsciously live every waking business day in the Microeconomy:

- Happy/Sad conversations
- Good/Bad day in the office
- Pointless debate
- Financial stress/Financial comfort


Without giving economics too much credit, the relationship between the micro and the macro is supposed to be positively correlated - but based on the above, doesn't it seem as though we only analyse our own economy using a bottom-up approach?

What can "living in the Macro" change for your daily life? Surely your sense of perspective will greatly alter? Maybe you will think again about what upsets you? 

What we have gauged is without realising, we are letting our reactions to a lot of meaningless experiences channel to our nerve center (bottom up) rather than letting our nerve center authorise or reject, based on importance (top down). 


In keeping with the economic parallel, when analysing the valuation of a company, the greatest importance is based on its Balance sheet (statement of assets & liabilities - the fundamental nerve center). The other available financial statement is the Profit & Loss account (statement of the day to day trading for the year - the heart, blood supply).
The balance sheet is where investors see the true value of a business, as the P&L is merely regarded as a channel by which to fuel the former. 


As the creators of all of these economic principles, why are we the only one's not living by them? 

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