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.)