The Paris School of Economics: Will it be Say or Walras?

The world doesn’t know it yet, but a new place where economics is taught has just opened in Paris (see here). It is aiming at competing against the “hegemony” of the English-speaking world in economics; both at the academic level and at the policy level. The reasoning is simple: the best places to study economics are in the UK (e.g. LSE, Ox-Bridge) and in the US (e.g. Harvard, Chicago, GMU). With a few exceptions (e.g. the Max Plank Institute), Europe doesn’t have much to offer in this field; the best research is often done outside of Europe.

In reaction to this state of affairs, the French government decided to open the Paris School of Economics (PSE). Should we have reasons to rejoice about this new school? Well, while it is hard to foretell the future (and a happy surprise is always possible), there are good reasons to believe that PSE is going to be another big French failure in education.

• The main reason why graduate education in economics is a disaster in France is because of the state control of universities (see here an article on the subject in The Economist). Exceptions to this rule include the University of Dauphine with Pascal Salin and a few other pockets with good people (e.g., the Universities of Toulouse and Aix-en-Provence, Science Po Paris) but by and large the teaching of economics is terrible, which explains why France is the only place where economists are more to the left than the general population.
• In order to avoid the problem of state control, PSE was established as a private foundation with a public-private arrangement where funds are drawn from various sources. Initially at least, the government will be providing most of the funding. This set-up might make it difficult for anyone to be ultimately responsible for the way things are being done. Interestingly, the Paris local government is listed as a private partner (see here).
• PSE is partnering with a bunch of “grandes écoles” many of which (e.g. l’Ecole Polytechnique) are engineering schools. They are places where economics is often done in the worst possible way. An instance of this is Nobel laureate Maurice Allais who taught at l’Ecole des Mines in Paris. He was such an engineer that even after 60 years of work in economics, he still couldn’t understand that trade creates value for all the parties involved. Let’s not forget that Léon Walras was a student at l’Ecole des Mines in Paris. (For an interesting discussion of the influence of engineering in the field of social science in France, see Friedrich Hayek’s The Counter-Revolution of Science.)
• The director of the school is Thomas Piketty who studied at l’Ecole Normale Supérieure and at LSE. He is now famous for his work on income distribution and taxation (along with Emmanuel Saez who now teaches at Berkeley). While a genius of sort (he started teaching at MIT at the age of 23), his work on the effect of marginal income taxation on the supply of labor is strange to say the least, and it has led to very bad policy propositions that basically amount to stifling entrepreneurial incentives. No wonder why he is a darling of the French Socialist Party.
• Last but not least, among PSE’s fairy godmothers are Joseph Stiglitz, Olivier Blanchard, François Bourguignon, and Jim Mirrlees. I believe Gary Becker, James Buchanan, Vernon Smith, and William Easterly have not been contacted.

So it is hard to see how this new school could be turning out anything interesting. It is unlikely that good economics will come out of PSE, let alone good policy proposals. In all likelihood PSE will fuel the statist mentality common among engineers that have attended top engineering schools in France. Those who long for the revival of the French classical school of economics and the new Jean-Baptiste Say will have to wait. For now, it is more likely that the ghost of Léon Walras will be parading in the streets of Paris, an honor that he couldn’t even receive when he was alive. (Although to be fair to Walras, his economics was worse than his policy views.)

Comments

[Sleeper]

Plus que ca change, plus que ca reste la meme chose!

[AJE]

.. but won't have to wait too long

http://anthonyjevans.googlepages.com/say.pdf

[Student]

Just come out and say it. "I don't like the place because they will be my political opponents and using lots of math".

That's all your post really gets at anyways.

[David]

A bunch of low level economists with a very strong philsophical bent trying to bash much better economists - how funny...

This site brings nothing to the table - time to move on...

[Sécessionniste]

Just come out and say it. "I don't like the place because they will be my political opponents and using lots of math".

Pretty stupid comment. Piketty's book on "économie des inégalites" is horrible. Irrelevant statistic observations, absurd deductions (we have to raise minimum wage in order to increase the level of employment, because more people will be attracted by a higher salary; if capital and labor are in a constant relationship (ex. 1 Unit of K and n units of L) within the frame of the production process, no price system is necessary for the allocation; etc.)

His political views are stupid as well. If you've ever read some comments in "Libération", you won't believe that something that stupid can be written. Friedman was a fascist, Sarkozy is a gaullo-bushist who is a totalitarian and authoritarian (guess he wanted to find a nicer description for an unreflected fascist reproach), Ireland are robbers because their tax level is not as high as that of the rest of Europe, etc.

The mathematics used in his papers are not that sophisticated, those who had a decent economic education should be able to read them. But his point of views are still very questionable and often misled.

[Student]

Secessionniste,

Nothing you said really changes Frederic's argument. All you basically said was that you agree with him about Piketty. That's very nice.

Maybe you can even elaborate on his arguments even more, but it wont change the simple fact that his initial post boils down to politics and math. Mostly politics.

[Matt C.]

Well, I would have to say that the second was even worse that first.

Student-just for a moment consider what Frederic said. He never came out and said that those economist who use math are bad economist. There is a difference between bad economics and using math to prove good economic points. Austrians can certainly disagree with a positivist approach or even a statistical modelling, but they won't disagree with good economics.

Remember, demand curves slope downward, whether or not you use math. Piketty forgets that simple basic idea in Economics, is that really the type of "Economist" you want running a School of Economics??

[austrian]

>A bunch of low level economists with a very strong philsophical bent trying to bash much better economists - how funny...

A bit rich from a non-entity who teaches at Longwood College right?

[Philippe Lacoude]

"Remember, demand curves slope downward, whether or not you use math. Piketty forgets that simple basic idea."

Oh, no! He does not. For example, he thinks the labor supply curve slopes upward for low incomes and downward for high incomes. This thereby justifies lower taxes on low incomes and higher taxes on high incomes, all in the name of "efficiency."

These people use economics as a tool to justify political power games. They invent new rules as they go as ex post facto justifications for their disastrous policies.

They also keep a strong grip on data sets to make sure they will not be challenged.

France is the only country on the planet where the minimum wage is supposed to be harmless to the employment of young people, where the money supply is supposed to be disconnected from inflation, and where working less brings prosperity.

It is pretty pathetic but it offers a real experiment into the nefarious effects of the welfare state. In this respect, it is always interesting to watch them dance on the edge of the cliff...

[John Pertz]

Phillip

Your post is a perfect summation of my view of left leaning economists. Its as if they didnt like the logical end game of classical economics so they went around inventing a bunch of half baked, untrue ideas about the market. That way they could find some kind of role for the government to play in our lives.

[Steven]

Austrian, you are right about David Lehr. But let's try not to make this too bitchy.

[austrian]

I guess Lehr is upset that Prof. Sautet forgot to add Longwood College (that very famous research university & producer of numerous Nobel winners) to the list of best places for studying economics.

[hunden]

"I don't like the place because they will be my political opponents and using lots of math".

Sure; also,

"they will be stealing my money to implement methods I deem to be pure quackery to promote ideas I hate, and have devoted my life to fighting".

Didn't Thomas Jefferson have something to say about that?

"To compel a man to subsidize with his taxes the propagation of ideas which he disbelieves and abhors is sinful and tyrannical"

"A bunch of low level economists with a very strong philsophical [sic] bent ":

a philosophical obscurantist claiming knowledge of what belongs, and does not belong to philosophy, an issue everyone acknowledges is itself philosophical.
But in order to see the contradiction, you would have to learn logic, a philosophical discipline.

Statistics is but one tool of economic history; it is of no use in economic theory — a deduction from epistemology, a philosophical discipline: human action is driven by human thinking and the idea of a "mechanical" or "statistical" description of thought processes is a contradiction in terms.

For the same reason, mathematics belongs only in the fields where economic calculation is actually used by human actors : i. e. finance and other organized markets.
Otherwise, it is at best a useless contraption which distorts logic and gives a false impression of rigor; and more often than not it is a smokescreen to hide unstated, and often inconsistent statements, which the philosophical illiterates who use it have denied themselves the intellectual means to examine, among which absurd political prejudices rank prominently.

An example of that is the aboved-mentioned Piketty: a political philosopher would identify him as a social Nazi, in the sense that he denies the human rights of certain social minorities. His policy prescriptions are tantamount to "hate speech": "hate speech", to promote "hate taxes", according to a standard of slavery to the state.
To be sure, if you give more importance to the "state slavery" aspect than to the "hate" element, you could also call him a "Communist".
But once again, in order to understand that, you would have to learn philosophy.

And he is not even a competent mechanistic "economist". If he were, he would understand the unavoidable consequence of political rivalry for the alleged "benefits" of redistribution:
at the "equilibrium" of mathematical "economists", in order to receive one dollar from the political process you must spend a dollar in lobbying and agitating — otherwise there would still be a profit opportunity in politics and therefore no "equilibrium".
The consequence is that the equivalent of everything that governments redistribute must be lost in the process for the satisfaction of human wants —politics as an end in itself being an element of pure consumption, which may be discounted.
And since they reason in mechanistic terms, would-be mathematical "economists" are the last who could refute that.

Their spontaneous recourse, their usual alibi would naturally be the alleged "empirical testing" of that "hypothesis". And luckily, statistics are expressedly designed to hide and deny the extent of such a destruction: Piketty would probably waste no time before using them to refute what I have just proved.

But that would only be another example of a mathematician mistaking himself for an economist who "proved statistically" that two plus two makes five.
Isn't a whole wing in the Great Library of Statist Sophistry already full of such "proofs"?

[Max]

Well, I am a student of engineering and I still can gasp the idea of trade surplus for all parties. However, I can see why you might feel that way towards engineers.

The problem is that we prefer problems which can be estimated via mathematical methods. However, most human action problems are not that easily understood. Therefore, I am always sceptical about economic equations, because I think of economics of a social science and not a natural science.

[libert-à-rien]

Bonjour ,

Le mieux est de liquider la pseudo-science économique , sciences des ânes [Bourdieu], qui ne sert qu'à engraisser des professeurs d' économie fonctionnaires.
Les plus rigolos sont les fonctionnaires-économistes-autrichiens ou plus rigolos encore les fonctionnaires-économistes
libertariens.
libert ... libert à rien
Des matheux.
Des physiciens.
Des chimistes.
Des biologistes.
Mais plus d'imposteurs !

[libert-à-rien]

Bonjour ,

Il faut pas mal de culot pour nier les origines fascistes du libéralisme moderne, comme le fait "sécessioniste " , vu que le premier champ d' application de ces idées a été le Chili fasciste de Pinochet.
Actually , Friedman WAS a fascist.
Jamais mon cher la France n'acceptera de se soumettre au fascisme yank.
Plutôt que de discuter de l' EEP vous feriez mieux de disserter sur la souffrance du contribuable yank qui voit 350 tonnes de billets de 100 $ partir par avion cargo dans la colonie irakienne des USA.

[Sécessionniste]

Don't feed ...

[Philippe Lacoude]

Fred,

Libert-à-rien a raison. Il faudrait parler un peu de la « souffrance du contribuable yank ». Parce qu’après tout en tant qu’exilés, et tant qu’à faire, on voudrait bien que les impôts baissent encore un peu plus aux Etats-Unis ! Deux effets : 1. Nous n’en serons que plus riches. 2. Ca donnera encore plus de raisons aux êtres productifs qui vivent encore en France de venir nous rejoindre laissant derrière eux Libert-à-rien, Piketty et ce système prétendument social que le « monde entier leur envie ».

Best Regards,

Phil

[Neel]

Libert-à-rien, how can you write such nonsense? Friedman was a fascist? Where do you get that from? You could at least show a modicum of respect for other scholars. What the hell does Irak have to do with the issue discussed by Frederic?

[Neel]

Each time I read a piece on French universities, I realize how discerning Adam Smith was when he wrote: "If the authority to which he [the professor] is subject resides, not so much in the body corporate of which he is a member, as in some other extraneous persons, in the bishop of the diocese, for example; in the governor of the province; or, perhaps, in some minister of state it is not indeed in this case very likely that he will be suffered to neglect his duty altogether. All that such superiors, however, can force him to do, is to attend upon his pupils a certain number of hours, that is, to give a certain number of lectures in the week or in the year. What those lectures shall be must still depend upon the diligence of the teacher; and that diligence is likely to be proportioned to the motives which he has for exerting it. An extraneous jurisdiction of this kind, besides, is liable to be exercised both ignorantly and capriciously. In its nature it is arbitrary and discretionary, and the persons who exercise it, neither attending upon the lectures of the teacher themselves, nor perhaps understanding the sciences which it is his business to teach, are seldom capable of exercising it with judgment. From the insolence of office, too, they are frequently indifferent how they exercise it, and are very apt to censure or deprive him of his office wantonly, and without any just cause. The person subject to such jurisdiction is necessarily degraded by it, and, instead of being one of the most respectable, is rendered one of the meanest and most contemptible persons in the society. It is by powerful protection only that he can effectually guard himself against the bad usage to which he is at all times exposed; and this protection he is most likely to gain, not by ability or diligence in his profession, but by obsequiousness to the will of his superiors, and by being ready, at all times, to sacrifice to that will the rights, the interest, and the honour of the body corporate of which he is a member. Whoever has attended for any considerable time to the administration of a French university must have had occasion to remark the effects which naturally result from an arbitrary and extraneous jurisdiction of this kind."

Things have not changed a lot during the past 230 years...

[libert-à-rien]

Bonjour ,

Monsieur Lacoude , vous êtes l'exacte illustration de ce que je dis.
Faire de la propagande antifrançaise à la "Heritage" , sous couvert de la pseudo- """"science """" économique est certainement beaucoup ,beaucoup moins stressant que de faire fructifier les études de Maths que la République vous a offert pour une somme modique.
Plus payant sans doute aussi.On a l'honneur qu'on peut.

[libert-à-rien]

Bonjour ,

Monsieur Neel , allez-vous m'expliquer que Pinochet était un parfait démocrate ?
Dans ce cas je crois que les inquiétudes du Monde entier face à la prétention de Bush d'installer des "démocraties" partout soient relativement fondées.
Je le redis parce que vous n'avez pas bien compris , il me semble:
Actually , Friedman WAS a fascist .

[austrian]

I'd never have guessed that libert-aryan was french were it not for the beret, the stripey sweater, and the bicycle with a string of onions hanging from it (that & the fact that his girlfriend has hairy armpits gave the game away!)

[Sécessionniste]

Just remember, don't feed ...

[Philippe Lacoude]

Pour les lecteurs honnêtes du blog de Fred et pour mémoire:

1. La « France » (l’Etat) m’a « offert » des études avec de l’argent pris à quelqu’un. L’Etat n’offre rien. L'État, c'est la grande fiction à travers laquelle tout le monde s'efforce de vivre aux dépens de tout le monde. Et comme mes parents sont productifs, plus d’argent leur a été pris qu’il ne m’en a été « offert ». Donc le financement de mes études est essentiellement une affaire familiale...

2. Je travaille aujourd’hui pour ma propre entreprise comme consultant dans les domaines de l’informatique et de la finance. Je fais donc « fructifier » mon capital humain. Il faudrait donner la chance aux jeunes français de rester en France plutôt que de les pousser vers l’exil à grands coups d’impôts et autres barrières.

3. Je ne fais pas de propagande anti-française. Je critique l’intervention étatique et promeus la liberté partout dans le monde. En France, aux Etats-Unis, en Russie, en Chine ou à Hong-Kong. Chaque être humain a le droit de bénéficier pleinement du fruit de son travail. Ceci inclut les Français que j’aimerais voir employés, riches et prospères plutôt qu’en proie au chômage, à la misère et à l’humeur des fricofages de Bercy et du Palais Bourbon… Je n’ai aucun sentiment xénophobe. Je souhaite la Liberté aux 6 milliards d’êtres humains. Le libéralisme est universel et ne distingue pas en fonction des frontières. Ceci dit, il y a beaucoup à dire sur les réformes à faire en France : même s’il n’existe aucun endroit dans le monde où les hommes sont complètement libres, il existe des différences profondes dans les degrés de liberté et elles ne sont pas favorables à la France.

http://www.heritage.org/research/features/index/

4. Pour promouvoir la liberté dans le monde, et donc en France, il vaut mieux être à la Heritage Foundation (ou à l’IEA, à l’AEI, ou à GMU) qu’à la Paris School of Economics.

5. La Heritage Foundation écrit souvent en termes peu flatteurs à propos de la France, cela est entendu :

http://www.google.com/search?q=France+site%3Aheritage.org

Mais en huit ans comme visiteur, employé, donneur et consultant de la Heritage, je n’ai pas eu souvent l’occasion de parler de la France. Mon travail à la Heritage étant essentiellement centré sur la Domestic Policy :

http://www.google.com/search?hl=en&q=France+lacoude+site%3Aheritage.org

http://www.google.com/search?hl=en&q=lacoude+site%3Aheritage.org

6. Je souhaite également à la France (et donc plus précisément aux Français qui produisent des richesses) d’avoir un jour l’équivalent de la Heritage Foundation. Je souhaite à la France (plus exactement aux Français qui produisent des richesses) d’avoir un jour à sa (à leur) tête l’équivalent de Lady Thatcher.

Il n’y a aucune raison biologique ou culturelle qui ferait que le libéralisme serait plus adapté à l’Anglo-Saxon qu’au Français. La seule raison est politique et Frédéric a mis le doigt dessus : l’enseignement des sciences sociales est une catastrophe et cela ne va apparemment pas s’arranger avec M. Piketty et sa PSE.

[austrian]

It is just nuts to say Friedman is a fascist.

That label does apply to the state worshippers (Bush & his Empire project) at Heritage though

[Shane]

Whoever says that Friedman was a fascist is an idiot. He stood for individual freedom!

[austrian]

the sophistication of shane's analysis of individual freedom totally underwhelms me.

friedman is no fascist though & only a jackass would think so.

[libert-à-rien]

Bonjour ,

1)Ecoutez , cessez de me servir le baratin de Bastiat.Bastiat est l'antithèse par sa biographie des idées qu'il prétendait défendre.Vous savez aussi bien que moi , que ce type , n'a pas tenu six mois comme salarié du Commerce et s'est empressé de vivre de l' Etat.C'est le cas de tous les libéraux qui dissertent en France de l'Entreprise:ils n'ont jamais rédigé un CV , passé un entretien d'embauche , connu un fin de mois difficile etc ,etc ,.Comme le dit mon cher père , ex-dirigeant d'une très grande entreprise française , "Ils seraient incapables de gérer un bureau de tabac".Cessez de découper l' Homme en, rondelles ; l' Homme n'est pas qu'un consommateur affolé de liberté économique. C'est pour avoir ignoré cette réalité première que vos grands décideurs US sont dans une canule en Irak.

2)Vous êtes drôle: d'un côté vous poussez à la mondialisation et vous vous étonnez que les jeunes veuillent voyager.Vous savez aussi bien que moi que l' hémorragie des cerveaux (!) est la plus grande dans la très libérale Grande-Bretagne.Inversement j'ai rencontré une Normalienne d'origine vietnamienne , venue en France , qui s'enthousiasmait pour la gratuité et cependant la qualité exceptionnelle de nos Khâgnes.

3)Arrêtez , vous allez presque croire à la propagande libérale US contre la France.Une seule question aujourd'hui qui dans l'affaire irakienne disposait d'une Administration plus efficace:Chirac ou Bush ? Allez parler de liberté tout court ,avant de parler de liberté économique ,aux pays victimes de la barbarie yankee.Depuis 50 ans la liste est longue : je me limite donc au Kosovo et à l'Irak.D'autre part Friedman nous a montré que libéralisme et fascisme font bon ménage.De plus qui vous a dit qu'il n' y avait pas de libertés économiques en Chine ?

4)La PSE c'est une pantalonnade.Je suis partisan d'une minoration drastique du poids des Sciences Humaines en France au profit des vraies Sciences.En particulier liquider l' Economie et son enseignement en France.La puissance d'un pays ce sont ses Matheux , ses Physiciens , ses Biologistes , pas ses économistes.L' économie est une pseudo-science , une idéologie qui sous sa forme libérale actuelle est l'exacte décalque du Stalinisme avec son grand frère les USA et sa section française : la secte libérale.

5)C'est curieux ces personnes qui font l'apologie de la Concurrence et qui n'admettent pas de modèle alternatif au leur.Tous anglosaxonisés c'est la voie obligatoire du Salut.C'est méconnaître la Réalité ,la détestation mondiale qu'inspirent chaque jour un peu plus les Etats-Unis dans le Monde.

6)Eh , bien moi je vais vous choquer mais tant pis.Je suis Catholique et vu la terreur que les grands libéraux britanniques ont imposée en Irlande pendant des siècle , je regrette profondément que l' IRA ait loupé la mère Thatcher.Et je pense que ce n'est pas ceux qui ont pendu un Saddam qui ne leur demandait rien qui sont aptes à me le reprocher…

[Chabadi]

Réponses à libert-à-rien :

- Sur Pinochet : http://www.quebecoislibre.org/030927-11.htm
+
http://fare.livejournal.com/98412.html

- Sur les universitaires-fonctionnaires libéraux (ou "libertariens") : http://fr.liberpedia.org/Universitaires_lib%C3%A9raux?PHPSESSID=4692d0d81f81dc4e76ae87d0d38dd802

[nicolas]

Libert a rien tu es ridicul. tu te pretend catholique. Et bien dans ce cas je te conseil vivement de lire JP2 et son encyclique...
Peut etre devrais tu faire un petit tour sur l acton institute. Et oui Jesus etait le premier libertarien.

[libert-à-rien]

Bonjour ,

1)Cher Nicolas vous êtes l'illustration parfaite de mon point 4).Vous reproduisez en tout point le schéma stalinien.
Dans leurs temps, les Staliniens nous expliquaient que Jésus était le "premier Communiste".Maintenant leurs mimes libéraux nous expliquent qu'il était le "premier Libertarien"...

2)Relisez ,vous , l' Epître aux Hébreux de ce merveilleux Saint-Jacques et venir me dire s'il est Libertarien …

3)Vous lisez trop Charles Gave qui est un essayiste grotesque …;

4)"Il est plus difficile à une riche d'entrer dans le Royaume des Cieux qu'à un chameau de passer par le chas d'une aiguille" [Jésus premier libertarien]
Ce qui laisse prévoir de sérieuses difficultés à notre ami Lacoude si avide de s'enrichir …

[libert--rien]

Bonjour ,
Cher Chabadi

1)Il reste que l'origine du libralisme "moderne" est rechercher dans le lit d'une dictature.Dur , dur pour ceux qui nous expliquent que le libralisme c'est la Libert

2)Ce pauvre Guillaumat t lui-mme mendier ses fins de mois l' Etat.Dur , dur de venir nous expliquer que:" si je suis fonctionnaire c'est la faute de l' Etat".Dur , dur pour ceux qui nous prcher la RESPONSABILITE individuelle.

[nicolas]

domagage je ne suis ni croyant ni catho, je n attache donc aucune importance que ce soit a jesus. Ca ne me fait pas plus plaisir que ca qu il dit tu rendras a ceasar ce qui est a ceasar...
relisez votre cathechisme.

Quand a l allusion pinochet friedman peut devirez vous demander pourquoi pinochet a instaurer une taxe tobin?. et qu a la place d un grand scientifique si l on vous demande que dois je faire pour bien faire fonctionner l economie. Alors oui je prefere repondre histoire que cet imbecile ne fasse pas plus de mal.

votre mauvaise foie fait aussi honte a voir que mon orthographe!