THE BLOG
of John Gelles
April 9, 2006At a rally for the President in fall of 2003, Karen Loberg (of the Ventura Star) took this picture. It made the front page. I was famous for a day. Topic:
Economics, French-style
In my view we need a mixed economy with some of the competitive features of a market economy and many of the strategic policies of an economy based in law and an on-going democratic consensus over results:Ombudsmen to take the side of the individual; adhocracy to avoid dogmatism; money reform to allow non-zero sum outcomes for management and labor; limits to protect earth for future generations; freedom and human rights as guiding ideals; etc., etc.
In other words, the best of all possible worlds.
Katrin Bennhold may feel the same---but in this report she emphasizes neoliberalism and its anti-Keynesian approach to encourage competition and performance. Still, she presents a picture of a real country and its attempt to move ahead ---in spite of local and global ignorance surrounding these matters which France has not escaped.
What I admire about France is not what China is famous for. Unless we reconcile technology transfers to China and India with a future for their workers that mimics French concern for rational rights and Keynesian understanding of property, price, money, debt, employment, interest and taxes --- unless we do that--- we shall all be losers again --- as we were in the 20th Century. In that century we may have avoided the ultimate loss of engaging in one more world war--- but the two we fought with a depression in between taught lessons neoliberalism has forgot.
John G.
Copyrighted work reprinted here is for educational non profit purposes --- and at the teachable moment. It was offered free to me on the internet (as a member of a wide audience) and is copied here free to others adding to its value) --- it is fair use of the work.
Copyrighted or other imported essay --- or if none then main body of blog: International Herald Tribune
Economics, French-style
By Katrin Bennhold
SATURDAY, APRIL 8, 2006
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."
A survey commissioned by Breton's ministry last month showed that a large majority of respondents failed to identify key economic concepts, from gross domestic product to public debt.
Breton plans to set up a 15-member Council for the Teaching of Economics, with the mission of improving people's understanding of the economy.
"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."
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.
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.
Scache, who has been teaching economics for 37 years, said her stint at Danone made her realize how little the official syllabus focuses on the market.
"We briefly look at the market mechanism in perfect competition as a fictional case, and then immediately move on to what the state or European authorities can do to alleviate its shortcomings," she said.
The syllabus for the final year, for example, has seven units: growth, capital and technological progress; work and employment; social stratification and inequality; conflicts and social mobilization; integration and solidarity; globalization; and European integration and economic and social policy.
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.
Boisivon decided to set up the Enterprise Institute internship program to give economics teachers an opportunity to experience businesses from the inside. Almost 200 economics teachers, out of some 4,000 nationally, have taken part in the program since 2002. Their internship, which is fully funded by the Enterprise Institute, rotates them through several departments in one company, arranges visits to several others, and holds workshops and debates.
But re-educating economics teachers is not enough to solve the problem, officials said. "It's not so much that the French have outdated economic ideas - it's much worse," said a senior adviser to Breton. "The very concept of economic policy does not exist in our country. We have a social and political vision of history in which the state is the protagonist."
Like teachers, politicians here have perpetuated economic concepts no longer viewed as valid in most Western countries. From President François Mitterrand, who lowered the retirement age in 1982, to Prime Minister Lionel Jospin, who introduced the 35-hour week, Socialist leaders have done much to ingrain the idea that the pool of labor is fixed and needs to be shared out.
But French leaders on the right --- the very politicians now seeking to introduce flexibility --- also have shied away from accepting what other nations view as economic reality. President Jacques Chirac and Prime Minister Dominique de Villepin, both Gaullists, are among those who have demonized the deregulation efforts of the EU.
On left and right, many leaders have something in common: 27 months at the École Nationale d'Administration, or ENA, the breeding ground for the political elite. Antoine Durrleman, director of ENA, acknowledges that, for decades, the school contributed to shaping a vision of the economy in which the state was central. "ENA went along with an economic context that was largely planned," Durrleman said. "We were really a mixed economy after the war. Until 1986 the government still fixed the price of a baguette. This is recent history."
Durrleman, a former adviser to Chirac, said he aims to make future leaders studying at ENA more aware of how companies work. He has overhauled both the entry exam and the program to include topics related to applied economics and business administration. Since 2003, all students at ENA must go on a one-month internship in a company; 20 percent of the 100 students do a six-month corporate internship. From next year, everyone will have to spend at least three months in the private sector.
"I believe we need more cross-fertilization in France," Durrleman said. "Companies create wealth, they finance the state. The state must understand companies." In addition, he said, "There is a pool of knowledge in the private sector in terms of project management, cost control, and performance monitoring that civil servants can benefit from."
Breton did not go to ENA, and he is one of only two French ministers with both a degree in economics and senior experience in the business world, most recently as CEO of France Télécom. His ministry's future Council for the Teaching of Economics will include economists, financial journalists and economics teachers, officials said.
One possible action would be one- minute television spots that explain an economic concept such as gross domestic product or inflation before the prime time news. Other ideas are workshops for journalists at the ministry, longer television programs about economic processes, and the development of teaching materials on the economy.
A poll that the ministry conducted last month and plans to publish in coming weeks showed that many concepts remain hazy in France. Only 23 percent of respondents for example said they "knew exactly" what GDP was.
But 90 percent of respondents said it was important to understand economics, and 82 percent want mandatory economics classes for their children.Copyright © 2006 The International Herald Tribune
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