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Economics, French Style

by andrethegiant Sun Apr 9th, 2006 at 10:27:36 AM EST

This is my first diary entry here, so I hope I'm not stepping on anybody's toes...

I came across "Economics, French Style" when I awoke this morning, and I thought it would make for some conversation.  In typical NYT/IHT style, it glosses over reality and paints France in a backward light.

PARIS Danielle Scache tries to avoid using the term "capitalism" in her economics class because it has negative connotations in France.

Instead, she teaches her high school students about the market economy, a slightly less controversial term she started using last year after a two-month internship at the dairy giant Danone. That was an experience that did away with more than one of her own prejudices, she said.

"I was surprised to see that people actually enjoyed working in a company," said Scache, who is 59. "Some of them were more enthusiastic than many teachers I know."

"You know," she confided with a laugh, "in France we often think of companies, especially multinationals, as a place of constant conflict between employees and management."

This view of bosses and workers as engaged in an endless, antagonistic tug-of-war goes some way toward explaining the two-month rebellion against a new labor law.

In this world, beyond the political fault lines of left and right, companies and the market cannot be trusted. Any measure that benefits them necessarily hurts employees. The invisible hand in this world is the state, or the "public powers" to use the French term, whose role is to tame companies, protect workers and hold sway over economic growth with public spending.

It is a world that many people here still prefer to live in. In a 22-country survey published in January, France was the only nation disagreeing with the premise that the best system is "the free-market economy." In the poll, conducted by the University of Maryland, only 36 percent of French respondents agreed, compared with 65 percent in Germany, 66 percent in Britain, 71 percent in the United States and 74 percent in China.

The findings suggest that French reluctance to introduce flexibility into the labor market - the embattled new law makes it easier to fire young workers - goes beyond the reform fatigue and nostalgia for the post-World War II welfare state evident in some other European countries. As Finance Minister Thierry Breton put it last week: "There is a significant lack of economic culture in our country."


Hmmm, is it possible that people in France disagree with "capitalism" and "free" markets, not because they are less educated, but because they are more so, because the upsides and downsides of political and economic systems are discussed more openly?

Not surprisingly, all of this gets blamed on education:

"The question of how economics is taught in France, both at the bottom and at the top of the educational pyramid, is at the heart of the current crisis," said Jean-Pierre Boisivon, director of the Enterprise Institute, a company-financed institute that sponsors the internship program for economics teachers that Scache took part in.

"In France we are still stuck in 1970s Keynesian-style economics - we live in the world of 30 years ago," he said. "In our schools we fabricate a vision of society that is very different from the one that exists in other countries."

True enough.  As so many of Jérôme's diary have shown, quality of life and economic growth do not differ significantly in France, and though unemployment is an issue, even the numbers there do not suggest France is a radical outlier.  Economy, as taught in France, in its elite schools, does not seem to differ from the pro-globalization econ taught in so many other places like London and Chicago:


French and international economists agree that the material taught at France's top universities and elite business schools, like HEC, or Hautes Études Commerciales, and Essec, or École Superieure des Sciences Économiques et Commerciales, does not differ markedly from that taught elsewhere. Indeed, France has a long tradition of excellence in academic economics; Europe's most famous economist is Jean-Claude Trichet, the Frenchman who heads the European Central Bank.

What is interesting is that the author of the story forgot to mention the revolt that took place in France in 2000 and gave birth to "Post Autistic Economics".  This revolt did not come from the lower strata, but from the students at the very top of the grandes écoles.  Students at Harvard followed suit by protesting the intro to economics there, which has been taught in essentially the same way for 30 years.  Clearly, if this article were a true discussion of the economic thought in France it would mention all of this.  It does not, and that is revealing and it suggests that the author of the article is penning yet another "hit job" on France.  She goes on to discuss how economics is taught in high schools: "But in high schools, the "economic and social sciences" branch - one of three options that is chosen by about a third of all students - appears to dwell more on the limitations of the market and the state's task of addressing those limitations than on the market itself."
Then the author really gets to the true danger to economic "education" in France:

And then there are the textbooks. One, published by Nathan and widely used by final-year students, has this to say on p. 137: "One must analyze the salary as purchasing power that you could not cut without sparking a deflationary spiral and thus higher unemployment." Another popular textbook, published by La Découverte, asks on p. 164: "Are there still enough jobs for everyone?" It then suggests that the state subsidize jobs in the public sector: "We can seriously envisage this because our economy allows us already to support a large number of unemployed people."

These arguments were frequently used on the streets in recent weeks, where many protesters said raising salaries and subsidizing work was a better way to cut joblessness than flexibility.
Et voilà, now we understand the real culprit behind the civil disobediance--high school teachers and text books.  That's right, it's all those unreformed Soixante-huitards inculcating Maoist propaganda into French youth!

I'm not saying that the textbooks aren't simplistic or even wrong, but I would suggest a more thorough analysis of them before jumping to any conclusions.  Textbooks have been a political issue for decades now in the U.S., and the effect has been to stifle discussion of economics, slaver, class, sexuality and any number of "controversial" subjects.  If the French students are brainwashed, then the American ones are
simply robots, if textbooks are to be believed.

Anyway, that's my take on an article I found rather offensive this morning (or afternoon, depending on your location...).

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Hey, no toes stepped on at all...thanks for the post, and welcome to ET!

"Once in awhile we get shown the light, in the strangest of places, if we look at it right" - Hunter/Garcia
by whataboutbob on Sun Apr 9th, 2006 at 11:01:20 AM EST
Thank you, Andre, excellent diary - recommended!  Thanks especially for the link to Post Autistic Economics... very interesting.
by canberra boy (canberraboy1 at gmail dot com) on Sun Apr 9th, 2006 at 11:02:47 AM EST
Where did she find that "Europe's most famous economist is Jean-Claude Trichet"??


"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet
by Melanchthon on Sun Apr 9th, 2006 at 11:28:08 AM EST
Maybe she means Jean-Claude Trichait.  
by andrethegiant on Sun Apr 9th, 2006 at 12:43:16 PM EST
[ Parent ]
Thanks for the welcome!
by andrethegiant on Sun Apr 9th, 2006 at 12:44:07 PM EST
Good catch Andre.

To fully debunk the article would require several diaries so I'm just going to observe:

One must analyze the salary as purchasing power that you could not cut without sparking a deflationary spiral and thus higher unemployment.

is absolutely correct.  

Enough workers 'flexibiled' into poverty is a major cause of deflationary cycles.  See Great Depression, History of.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Sun Apr 9th, 2006 at 12:44:57 PM EST
Let's add the number two quote from the textbooks:

It then suggests that the state subsidize jobs in the public sector: "We can seriously envisage this because our economy allows us already to support a large number of unemployed people."

New Labour's public-sector jobs programme (861,000 jobs created) really tightened up the UK labour market (at least in S-E England).

But what's sauce for the goose is apparently not sauce for the (propa)ganda...

by afew (afew(a in a circle)eurotrib_dot_com) on Sun Apr 9th, 2006 at 01:11:31 PM EST
[ Parent ]
And visa-versa.

The privatization of British Rail in S.E. England has led to lower prices, an increase in services, and greater customer satisfaction!

Not.


She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Sun Apr 9th, 2006 at 03:41:13 PM EST
[ Parent ]
That's actually a good pun, in my opinion.
by andrethegiant on Sun Apr 9th, 2006 at 07:14:41 PM EST
[ Parent ]
Good one, andré, well spotted and well debunked.

It really is a hit piece. One thing that struck me was how she uses the concept of "world": It is a world..., in this world, etc, like when the media is taking us for a trip to some really weird place which totally differs from anything normal and comfortably well-known. Of course it's a distorting device here, to accentuate a supposed huge difference between France and the rest of the Western world that doesn't in fact exist.

Oh, of course, France is stranded in some time warp from way back in an epoch when, would you believe it, people practised Keynesian economics, oh the humanity! The fact that both the UK and the US (you know, the tomorrow's world countries) have recently gone in for a considerable amount of Keynesianism (861,000 public-sector jobs created in the UK under New Labour, continual increase in public spending under Bush) just flies under the radar.

The killer factoid to prove the difference is, as usual, the poll in which the French only scored 36% when they should have scored at least 60% to be members of today's human race. That poll has been constantly quoted since The Economist put it into their leader the other week (see brunoken's diary here.) Three things I think about the poll (by GlobeScan and the Program on International Policy Attitudes of the University of Maryland, Jan 2006. Link here) :

  • However smart the polling, I don't know seriously such sweeping, trans-world polls should be taken;
  • the question was not (as misquoted by The Economist and every journalist I've read since who has taken their cue from that magazine of reference), "that the free market was the best system available", but "the free enterprise system and free market economy is the best system on which to base the future of the world". There's a fair amount of difference between those two statements, and maybe that darned French education system made the French respondents capable of taking in the whole of a long question (?)
  • a second set of data was not cited by The Economist, nor by anyone else :

The director of political analysis for the study said this:

Steven Kull, director of PIPA, comments: "In one sense we are indeed facing what has been called `the end of history,' in that there is now an extraordinary level of consensus about the best economic system. But this is not the victory of one side of the dialectic. While there is overwhelming support for free markets, there is also near-unanimous rejection of unbridled capitalism, with people around the world overwhelmingly favoring greater government regulation of large companies and more protection of workers and consumers."

Now, I don't see how this can be, if people are getting their economic education right and proper as they should -- not like those pesky French... ;)

by afew (afew(a in a circle)eurotrib_dot_com) on Sun Apr 9th, 2006 at 01:06:53 PM EST
You're right.  Keynsian economics look like the halcyon days...

I had some questions about the polling too, but now I'm invited out to brunch and have to leave.  In any event, this article makes so many dubious assumptions that it's hard to know where to start.

Off to brunch...

by andrethegiant on Sun Apr 9th, 2006 at 01:19:35 PM EST
[ Parent ]
Good topic.

I think it's foolish for a newspaper like the IHT to try to make a case about economic thought in France by using high-school and introductory textbooks, just as it would be foolish to do so in America, or in Britain, or in Germany, or in Japan, or in any other country.  There's a reason those books are used in high school and college-freshman classes: They're simple.  Introductory courses are there to give students basic ideas about economics -- not to tell them, "This is exactly how the world works."  They learn Classicalist, Keynesian and (sometimes) Monetarist views in introuctory macro.  They learn, in a Classicalist framework, the definitions and graphs of basic cost and revenue curves in micro.

Economics has a great deal to say about racism, sexism, slavery, and these sorts of problems, and that is that they're stupid and (warning: buzzword) inefficient.  If, for example, a small-business owner in America doesn't want to hire blacks, and if this is the norm among all other businesses, then they're going to end up artificially boosting wages for whites (and artificially lowering them for blacks), because everyone is going to be competing for white workers -- thus making racism inefficient (and, therefore, stupid).  If a new small-business owner says, "Hey, I don't care about the color of your skin," and hires blacks who are unemployed, his costs are going to be artificially low, thanks to the racists, because an enormous pool of black workers has been created by the ignorant business owners.

Does it still happen?  I'm sure it does.  But it's a mistake to assume that the field has nothing to say about this and other issues.  It doesn't deny the existence of racism, or deny that racism affects people.  It just says that racism is irrational, economically, as is sexism.

I have to disagree with you on the first quote.  Disagreeing with capitalism and market economics shouldn't imply students turning off at the mention of the word "capitalism".  That, to me, -- and I should preface this by saying that I have no idea if this is a norm or if the teacher (or reporter) is telling the truth -- is a sign of shallow students who are too wrapped up in their own ideologies to think about different perspectives.  (I dealt with classmates like this all the time in sociology.)  It's one thing to disagree.  That's perfectly respectable, and it should be encouraged from students whenever possible, because it makes them think.  But for a teacher to actually avoid using a word, simply because the students don't like it, is ridiculous.

The quotes from Nobel Laureates on the Post-Autistic Economics site tell us a lot about the problem economics is facing: Too much mathematics, and not enough serious discussion and (non-mathematical) theory dealing with real-world problems.  None of the famous books from the big names dealt heavily with mathematics beyond basic concepts that could relatively easily be put into mathematical form.  But if the model is not a mathematical one, these days, it doesn't seem likely to be published in the big journals.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Sun Apr 9th, 2006 at 02:03:41 PM EST
I have to disagree with you on the first quote.  Disagreeing with capitalism and market economics shouldn't imply students turning off at the mention of the word "capitalism".  That, to me, -- and I should preface this by saying that I have no idea if this is a norm or if the teacher (or reporter) is telling the truth -- is a sign of shallow students who are too wrapped up in their own ideologies to think about different perspectives.  (I dealt with classmates like this all the time in sociology.)  It's one thing to disagree.  That's perfectly respectable, and it should be encouraged from students whenever possible, because it makes them think.  But for a teacher to actually avoid using a word, simply because the students don't like it, is ridiculous

You're right about this.  I was being a bit snarky in response to a simplistic, silly hit piece.  I think that the market has its place, and questions about capitalism are usually questions about "free" market finance capital that takes a top-down approach to economics.  I don't see any more (or less) sillines to being for capitalism than to being against it.  It is one of several economic tools that most economies throw into the mix.  The problem I see now is pure privitization of everything.

by andrethegiant on Sun Apr 9th, 2006 at 07:21:26 PM EST
[ Parent ]
I agree, as I think all but the most militant Randians and Rothbardians would.  It was a stupid hit piece by a journalist with an unusually small amount of knowledge about economics -- quite an accomplishment, given the generally low level of knowledge journalists tend to have.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Sun Apr 9th, 2006 at 09:25:14 PM EST
[ Parent ]
A belated but warm welcome.

When through hell, just keep going. W. Churchill
by Agnes a Paris on Mon Apr 10th, 2006 at 04:09:53 AM EST

The invisible hand in this world is the state, or the "public powers" to use the French term, whose role is to tame companies, protect workers and hold sway over economic growth with public spending.

Because all the State does is spend (implicitly, waste) money. No mention of its role as a regulator, as a planner, and as an investor in the future.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Mon Apr 10th, 2006 at 04:30:11 AM EST
regulator, planner, investor, huh?

That would be : "hold sway over economic growth with public spending".

It was all in there, you just needed to look...

by afew (afew(a in a circle)eurotrib_dot_com) on Mon Apr 10th, 2006 at 08:40:20 AM EST
[ Parent ]


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