Emil Dinga

Economist, Ph.D., the Romanian Academy, President of the Romanian Society for Economics Philosophy, with expertise in the epistemology, philosophy and logic of economics

The Professionalization of the Public/Political Decision-Making

Emil Dinga

The professionalization of the public decision-making involves, of course, two distinct semantic aspects: a) turning the politician - the public decision-maker into a professional; b) ensuring the professional character of the public decision-making process.The first requires that the person making public decisions (in general, the politician) become an expert in public decision-making. This is possible and even desirable, but here the term expert must be given a particular meaning. Typically, we call the expert a person who can formulate explanations (based, of course, on theories), that is, they can establish effective causality. In this sense, the politician cannot become an expert, because there would be a contradiction in terms. Therefore, according to the first significance of the professionalization of the public decision, the politician must become a professional not in the theoretical foundation of the public decision, but in the ethical foundation of it. The professional’s expertise in public decision-making will therefore consist in his ability to capture the common (or majority) interest of the community, to translate this interest into a political target and to co-ordinate social action towards achieving this goal (the content of the leadership concept). The “profession" of a politician therefore presupposes a specific competence, namely to build visions, to formulate (in interpersonal language) the objectives associated with those visions, to implement social mechanisms and procedures to achieve the objectives and to ensure the ethics of the distribution of public goods generated by achieving the objectives (i.e. the social justice). As we can see, the professionalism of the politician is not about designing means but designing goals. As goals do not imply an effective causality, but, as has been shown above, a teleological one, it results that the politician, the political decision-maker or the public decider, cannot be both an expert in the instrumental sense of the term. More

Automatic Stabilizers as Publicly-Oriented Predictors

Emil Dinga

In the economic process, the volatility of macroeconomic variables is not the true problem, but its unpredictability. In fact, this conclusion is equally valid for microeconomics. For example, under the EMH – Efficient Market Hypothesis – a predictability, as low as it may be, provides to the (qualified) observer some opportunities to be exploited above the market average returns, without extra risks to assume or extra costs to pay. The volatility has the two “classical” causes: the invisible hand, that is, the aggregate behaviour of the economic actors in the market, and the visible hand, that is, the state (usually normative) intervention in that market (when the state behaves as economic actor, it is also part of the invisible hand). Consequently, as can easily be noticed, the majority of economic (quantitative) models of decisions are aimed at predicting the future market, usually in terms of price. The real and therefore useful predictions must be related to predictors, which are, conceptually, economic or institutional variables with a much lower volatility or, at the very limit, with no volatility, at least in short and medium term. For example, the risk of bonds is null or, at least, constant even if it is different from zero. Our topic in this article is the well-known predictors in the economy, namely the automatic stabilizers. More

On the Nature of the Concept of Tolerance

Emil Dinga

I would like to discuss the following issues related to the concept of tolerance (the concept of intolerance can be derived, relatively un-problematically, from that of tolerance): the nature (source) of the concept of tolerance. More

Some Thoughts on COVID-19 Pandemic Shock

Emil Dinga

On the nature of COVID-19 pandemic shockWe think the COVID-19 pandemic shock “verifies” the following features:the shock is atypical: it has the particularity that it bypasses the standard “path” – that is, it does not affect the nominal flows of the economy (especially the financing or re-financing mechanisms) – but directly affects the real economy:
the reduction/limitation of economic activities involving human agglomerations (in order to avoid the spread of the SARS-CoV-2 virus) has led to a decrease in the labour factor in the production function, thus to a decrease in domestic supply; More

About the “Fair” Sharing of Economic Value Added

Emil Dinga

Periodically, economists put on the table a remarkably interesting (and disputable, as well) topic, that of model for sharing the value added between labour and capital. The subject is present both on the work table of theoretical scientists and on that of researchers interested in the social justice echo of the income/wealth distribution inside the society (like Piketty, for example). In this intervention, I am interested not in the social justice considerations on the evoked topic, but in a very “ideologically free” approach. More exactly, I shall discuss the possible fair sharing of the value added between labour and capital (as main production factors) from the perspective of economic sustainability. This is distinct from economic optimality or economic fairness, although, as it is well-known, there is a so-called trade-off between equity and efficacy as impact of economic distribution. Without any doubt, the social justice angle of the topic is of multiple interests (including the scientific one) but, as said, this perspective will be postponed for the moment. More

The Economists Need Skin in The Game

Emil Dinga

The concept of economic crisis encompasses quite different situations (from either a causal perspective or a consequentialist one), from a conjunctural transient state all the way to a real blockage of the economic system. For this article, we shall presume that the phrase ‘economic crisis’ is used correctly, by indicating a dysfunctionality, either of structural or functional nature, in the economic process or system concerned (for example, the national economy of Romania). Economists throw the phrase left and right with a grave face, which does not bode well for ignorant people. More

Rebuilding Economics

Emil Dinga

In the last decades, the economic discipline in its hypostasis of Economics (i.e. positive economic theory) was, and also currently is, subject to radical and massive criticism not only from the non-economists (including physicists!), but also from notorious economists, including Nobel Prize winners.The perspectives of such criticisms are very different, starting from the conceptual bases, focusing on the methodological framework, and ending with the predictive potential. Of course, although the initial criticisms were focused on the mechanical ways of economic thinking (by taking over the Newtonian paradigm in physics), other points came to the forefront in recent years: the required interdisciplinary character of Economics, the issue of truth in the economic field (in a wider sense: in the social field), the required evolutionary nature of Economics, because of the evolutionary nature of the society, and even the requirement of a new formalism in Economics based on something other than differential equations (which do not indicate the dynamics – i.e., the causality – in the economic process) and so on. More

The Case for a Homeopathic Fiscal Policy

Emil Dinga

Very recently, a certain initiative of the Minister of Public Finance – namely regarding the possibility that tax evasion be punished by prison time – has generated much rumour and pros vs. cons debates (especially among the TV talking heads). Since the political (or even electoral) reasons of such a proposal are alien to my mind, I will focus this intervention on the general character the fiscal policy should exhibit, according to its nature as well as its purposes and, consequently, on the legitimacy of introducing such sanctions. Another issue of interest will be that regarding the efficacy of the proposed measure. More

A Single European Tax?

Emil Dinga

The European budget is the main financial tool by which the process of economic integration and convergence is driven within the European Union. In the European construction, we can identify four tools aimed at initiating, conducting, and finalizing such a construction:An axiological tool: the set of European values on which and for which the European construction is initiated and made. Although a properly European set of values is still undergoing crystallization, many of them are in force and guide the formation of purpose and establishment of actions. This tool represents the final cause of the European construction;
A political tool: is the most important and productive tool. In fact, the European Union is a deliberative social construction, underwritten by an intellectual project[1]. Moreover, the European construction is based on fundamental political documents – the treaties – as primary macro-norms, which generate all the secondary and tertiary norms (communitarian legislation) to design the path of European construction. This tool represents the formal cause of the European construction; More

The Concept of Economic Capillarity

Emil Dinga

The term capillarity belongs, from a historical point of view, to physics, but it has been taken over, in terms of its general, philosophical significance, both by psychology and sociology, as well as by historical science. From a semantic point of view, capillarity indicates a property of a phenomenon or of some entity to evolve (from a spatial point of view or structural-functional properties) in a manner contrary to all laws and mechanisms known and accepted as governing the phenomenon or the respective entity. The classic example of capillary is that of a liquid that, in a tube narrow enough that its surface tension exceeds the value of the gravitational force, instead of moving down (more precisely, in the direction of the source of the gravitational force), moves in the opposite direction. More

A Short Behavioural Analysis of the Changes to the Social Security Tax in Romania

Emil Dinga

Starting with January 1st 2018, the payment obligation which is automatically withheld regarding the social security contributions (for state pensions, health, and unemployment insurance) will be moved from the employer to the employee. In order to preserve the nominal net wage, the nominal gross wage was increased by an adequate rate. In fact, a combination of nominal gross wage increases and contribution rate decreases was used to this end. I would like to broach some predictable effects of the mentioned normative measure: a) the monetary illusion effect; b) the nominal income effect; c) the consumption and savings effects; d) the effect of social solidarity erosion; e) the efficient wage effect. More

From the Intelligent State to the Responsible One

Emil Dinga

The state is not a manager only with regard to the society as a whole. If it was to be like that, a performant computer could have better accomplished whatsoever administrative tasks. The social contract on the basis of which the state is supposed to be generated implies both much more and much less than that. Let me provide some analytical explanations: More