Romanian governments have misunderstood or neglected two important things about their policies: the first is that public policies that produce results that matter to the individual, regardless of whether the individual belongs to a group or not, are guided by principles, writes Lucian Croitoru in my personal blog

The main ideas of the article:

• Public policies that produce results that are important to the individual, regardless of whether he belongs to a group or not, are guided by principles

• In many areas, but especially in taxation, health care, and education, public policy has been, if we leave aside a few exceptions, rather “a euphemism for an incoherent sequence of divergent paths.”

• The problem with unprincipled policies, apart from the fact that the government has become a “follower” in the very areas where it should be a leader, is that the policy is vulnerable to shocks

• Undoubtedly, salaries in education need to be increased. But at the same time, an analysis is needed to show whether the state finances too many places in the budget for various specialties in higher education, compared to the real demand in the economy for these specialties.

• We cannot know which political party or coalition will make a fundamental adjustment, or again resort to “incoherent sequences of disparate methods.” We simply know that the necessary adjustments cannot be avoided for long

• The solution is to return, painfully defined, to the right principles. This return is needed both in the relations between the state and the economy, and in the budgetary sphere

To be clear, when I make the above statement “regardless of whether the individual belongs to a group or not,” I mean to center the normal person, that is, the person who does not belong to any of the countless “special groups.” ” whose policy of power established that society should guarantee them through laws “concrete results”.

Our society is divided like a pie, where different individual groups get certain results (privileges)

I mean not only the famous “special pensions”, but all the “special benefits” that different groups have. If we think about it, our society is divided like a pie, in which different segments have been given laws with a certain purpose, that is, laws according to which different individual groups of society get certain results (privileges). Perhaps, this is how our democracy is eroded the most.

The second thing that governments have failed to understand or neglected is that in the public sector, the activities with the largest number of employees are the provision of health services and the provision of education services.

When they choose not to follow the principles, governments are behaving like “weak economists” who will “pursue a small current gain followed by a large future disadvantage.”

In these two sectors in particular, we will see the unintended negative consequences of unprincipled policies. When they choose not to adhere to the principles, governments are behaving like a “bad economist” who, as Bastiat defines it, will “pursue a small current benefit followed by a large future disadvantage,” rather than a “true economist.” “, who “will strive for a great benefit in the future, at the risk of immediate disadvantage.” A good economist takes into account “what is seen” as well as “what is not seen” (Bastia, What is seen and what is not seen).

The principles that should guide public policy have been discarded in favor of “pragmatism.” Again, to be clear, the word pragmatism is misleading. It is often used with the intention of expressing efficiency. But, unlike the idea of ​​using principles, the word “pragmatism” has a different meaning. “Pragmatism” means unprincipled actions.

For Karl Menger, this kind of pragmatism is “superficial pragmatism, a pragmatism which, contrary to the intentions of its representatives, inexorably leads to socialism.” In other words, the word “pragmatism” began to reflect the opposite of spontaneous order, but also the opposite of the idea of ​​effective implementation of activities, guided by rules specific to activities and principles related to general values.

In order to understand as clearly as possible what is meant by public policy guided by pragmatism, I will use quotations which I have used on other occasions, but which are worth repeating, because they accurately and plastically express the essence of this type of policy.

Thus, in many areas, but especially in fiscal, health care, and education, government policy was, with a few exceptions, rather “a euphemism for an incoherent sequence of disparate ways,” as Lachmann (a German economist, Austrian school economy). theory), ways that, according to another follower of Austrian economic theory, Roger Harrison, made “further different ways necessary.”

In other words, as Hayek envisioned, governments never followed a path of their own choosing, but followed a path that opened up to them as a set of “inevitable needs” to remedy the consequences of previously unprincipled measures.

Read and comment on Lucian Croitoru’s blog

N.Ed: Lucian Croitoru is the chief adviser on monetary policy to the head of the National Bank of Romania