Monday, January 7, 2008

Cooking the Books

In two different interviews on Saturday, Finance Minister Christine Lagarde gave two different figures for inflation in 2007, 1.5 and 2 percent; in her budget projections, she used the figure of 1.8 percent. The INSEE put the figure at 2.8 percent in November.

When Mars & Co. evaluates ministerial performances with its statistical indicators, I wonder if there will be a box for "mean number of different inflation estimates per day." Or is the relevant indicator "points shaved off of INSEE estimates when appearing on the JT de 20h?"

New Blog

Sebastien Fath, a French specialist in the study of evangelical Protestantism, has just launched a blog. Professor Fath would seem to be fated to the study of faith. I look forward to reading his posts.

Krugman: Hope for Europe

Paul Krugman suggests that the EU-15--the wealthiest EU countries--have done better at job creation in recent years than the US. He also states that the idea that the European welfare state was "moribund" and could not survive globalization is an artifact of an exceptional decade, the 1990s, and not a consequence of the laws of economics. Since I subscribe to this belief myself, I hope he's right, but it will take more than a single graph to make the point persuasively, particularly since both curves slope upward in recent years and the rate of convergence is not impressive. The important question is whether the European uptick will hold if the US economy turns down sharply, as it may be doing right now. For that we must wait and see. But the comparison of "varieties of capitalism" should take on some interesting new dimensions in the years ahead.

Comp Time in the Hospitals

Work more but earn nothing has of course been the lot of many public employees in France, especially in the hospitals and police. In the world of medicine, 23 million hours of comp time are owed to hospital workers, a delegation of whom met today with Roselyne Bachelot. The minister says she has about 700 million euros to work with in arriving at a rate of compensation for these "RTT" hours. As the late senator Everett Dirksen used to say, "A billion here, a billion there, pretty soon you're talking about real money." Sarkozy's budget problems aren't getting any easier.

University Enrollment Down

While students continue to protest the idea of selective university admissions and the subjection of the university to supposed "market values," they are nevertheless responding individually to market pressures and selecting potentially more lucrative tracks. Le Figaro reports that university enrollment overall was down 2.2 percent last year, as more students chose to enroll in legal or medical programs and fewer (-5.6%) chose literature, languages, and human sciences.

Of course such individual choices are perennially out of phase with the actual state of the job market, and the reorientation of dreams of the future does not imply happiness to come or a pot of gold at the end of the rainbow.

At Harvard there was a sharp rise in the number of students who wanted to become investment bankers or designers of collateralized mortgage obligations in the years just prior to the subprime crisis. I dare say those numbers have plummeted. When those who used to major in sociology in France begin to dream of working 100 hours a week poring over spreadsheets at Goldman Sachs, we will know that either Sarkozy has succeeded in transforming French mores or it's time to dump our hedge fund holdings, perhaps both.

Teaching Economics

The teaching of economics at the lycée level is under fire in France. Michel Rocard is to receive a delegation of teachers of economics upset by his criticism of their instruction, which he holds responsible for France's "economic illiteracy" and for the absence of the social dialog that he believes exists elsewhere.

No doubt there is some truth to the allegation that much lower-level economic teaching remains impregnated with residual (and crude) Marxist doctrine. Still, it's doubtful that one proposed remedy--allowing CEOs to have a hand in writing syllabi in order to give a more positive image of the firm--is really a wise approach. Nor would it be useful to encourage the grab for hegemony in the teaching of social science that some economists might be tempted to make. Richard Descoings, the head of Sciences Po, has opened his blog to a debate about the virtues of mathematical literacy in social analysis (via Étienne Wasmer). I hope Michel Rocard has read it. Rather than cast the issue as "benighted Marxists" versus "enlightened neoclassicals," there should be serious discussion of what counts as evidence in economic arguments; what students need to master in order to evaluate econometric arguments, which involve as much art as science, to be sure, but also a long apprenticeship in dull methodology; and the importance of highlighting controversy among economists rather than accrediting the notion that the discipline offers a magical key to resolving all political controversy by supplying unique correct answers.

ADDENDUM: Henry Farrell, who links to this post, cites a wretched piece by Stefan Theil in Foreign Policy. I had seen Theil's piece before posting this and agree with Henry that it's a gross misrepresentation.