Economists From France

"I had become interested in economics, an interest that was transformed into a lifetime dedication when I met with the mathematical theory of general economic equilibrium."

"L. Walras first formulated the state of the economic system at any point of time as the solution of a system of simultaneous equations representing the demand for goods by consumers, the supply of goods by producers and the equilibrium condition that supply equal demand on every market."

"I say that things are useful whenever they can be put to any use at all; whenever they are seen to be capable of satisfying a want. In this connection, there is no need to consider the subtle shades of meaning classified in ordinary language under terms ranging from the necessary to the useful, from the useful to the agreeable, from the agreeable to the superfluous. For present purposes, necessary, useful, agreeable and superfluous simply mean more or less useful. Furthermore, we need not concern ourselves with the morality or immorality of any desire which a useful thing answers or serves to satisfy. From other points of view the question of whether a drug is wanted by a doctor to cure a patient, or by a murderer to kill his family is a very serious matter, but from our point of view, it is totally irrelevant. So far as we are concerned, the drug is useful in both cases, and may even be more so in the latter case than in the former."

"It took from a hundred to a hundred and fifty or two hundred years for the astronomy of Kepler to become the astronomy of Newton and Laplace, and for the mechanics of Galileo to become the mechanics of d'Alembert and Lagrange. On the other hand, less than a century has elapsed between the publication of Adam Smith’s work and the contributions of Cournot, Gossen, Jevons, and myself."

"L. Walras first formulated the state of the economic system at any point of time as the solution of a system of simultaneous equations representing the demand for goods by consumers, the supply of goods by producers and the equilibrium condition that supply equal demand on every market."

"In many ways, the US led the world toward the development of progressive taxation and the reduction of inequality at the global level during the first half of the 20th century... Unfortunately, one century later, in 2019, the rise of inequality creates new threats to liberal democracies. It is time to take a new step and to develop new policy instruments, in line with the challenges raised by global wealth trends."

"How do wealth- and capital-output ratios evolve in the long run, and why? Until recently it was difficult to properly address this question, for one simple reason: national accounts were mostly about flows, not stocks. Economists had at their disposal a large body of historical series on flows of output, income and consumption – but limited data on stocks of assets and liabilities. When needed, for example for growth accounting exercises, estimates of capital stocks were typically obtained by cumulating past flows of saving and investment. This is fine for some purposes, but severely limits the set of questions one can ask."

"The right seems unable to mount any kind of substantive counterattack to Mr. Piketty’s thesis. Instead, the response has been all about name-calling."

"Recently, prominent historians and economists, among them Walter Scheidel and Thomas Piketty, have argued persuasively that major wars can also act to narrow the gap between the rich and the poor and that the experience of the nations involved in the First and Second World Wars bears this out. Major wars stimulate employment; labour becomes more valuable so wages and benefits go up; and the rich pay higher taxes voluntarily, or find it harder to avoid doing so. At the end of destructive wars it is also easier to contemplate major programmes of reconstruction and social benefits and gain support for them. As William Beveridge, whose report laid the foundations for the British welfare state, wrote, ‘Now, when the war is abolishing landmarks of every kind, is the opportunity for using experience in a clear field. A revolutionary moment in the world’s history is a time for revolution, not for patching.’"

"It is time to change the political discourse on globalization: trade is a good thing, but fair and sustainable development also demands public services, infrastructure, health and education systems. In turn, these themselves demand fair taxation systems. If we fail to deliver these, Trumpism will prevail."

"There should be no more signing of international agreements that reduce customs duties and other commercial barriers without including quantified and binding measures to combat fiscal and climate dumping in those same treaties."

"Ceta, the EU-Canada free trade deal, should be rejected. It is a treaty which belongs to another age. This strictly commercial treaty contains absolutely no restrictive measures concerning fiscal or climate issues. It does, however, contain a considerable reference to the “protection of investors”. This enables multinationals to sue states under private arbitration courts, bypassing the public tribunals available to one and all. The legal supervision proposed is clearly inadequate, in particular concerning the key question of the remuneration of the arbitrators-cum-referees and will lead to all sorts of abuses. At the very time when American legal imperialism is gaining in strength and imposing its rules and its dues on our companies, this decline in public justice is an aberration. The priority, on the contrary, should be the construction of strong public authorities, with the creation of a prosecutor, including a European state prosecutor, capable of enforcing their decisions."

"The main lesson for Europe and the world is clear: as a matter of urgency, globalization must be fundamentally re-oriented. The main challenges of our times are the rise in inequality and global warming. We must therefore implement international treaties enabling us to respond to these challenges and to promote a model for fair and sustainable development. Agreements of a new type can, if necessary, include measures aimed at facilitating these exchanges. But the question of liberalizing trade should no longer be the main focus. Trade must once again become a means in the service of higher ends. It never should have become anything other than that."

"Let it be said at once: Trump’s victory is primarily due to the explosion in economic and geographic inequality in the United States over several decades and the inability of successive governments to deal with this."

"Both the Clinton and the Obama administrations frequently went along with the market liberalization launched under Reagan and both Bush presidencies. At times they even outdid them."

"The tragedy is that Trump’s program will only strengthen the trend towards inequality."

"A balanced treaty between Canada and Europe, aimed at promoting a partnership for fair and sustainable development, should begin by specifying the emission targets of each signatory and the practical commitments to achieve these."

"I can now present the first fundamental law of capitalism, which links the capital stock to the flow of income from capital. The capital/income ratio β is related in a simple way to the share of income from capital in national income, denoted α. The formula is"

"Broadly speaking, the rise of the supermanager is largely an Anglo-Saxon phenomenon."

"Capital is defined as the sum total of nonhuman assets that can be owned and exchanged on some market."

"Economists are all too often preoccupied with petty mathematical problems of interest only to themselves. This obsession with mathematics is an easy way of acquiring the appearance of scientificity without having to answer the far more complex questions posed by the world we live in."

"Democracy will never be supplanted by a republic of experts – and that is a very good thing."

"To put it bluntly, the discipline of economics has yet to get over its childish passion for mathematics."

"The distribution of wealth is one of today’s most widely discussed and controversial issues. But what do we really know about its evolution over the long term? Do the dynamics of private capital accumulation inevitably lead to the concentration of wealth in ever fewer hands, as Karl Marx believed in the nineteenth century? Or do the balancing forces of growth, competition, and technological progress lead in later stages of development to reduced inequality and greater harmony among the classes, as Simon Kuznets thought in the twentieth century? What do we really know about how wealth and income have evolved since the eighteenth century, and what lessons can we derive from that knowledge for the century now under way?"

"Modern economic growth and the diffusion of knowledge have made it possible to avoid the Marxist apocalypse but have not modified the deep structures of capital and inequality—or in any case not as much as one might have imagined in the optimistic decades following World War II."

"I am trying to put the distributional question and the study of long-run trends back at the heart of economic analysis. In that sense, I am pursuing a tradition which was pioneered by the economists of the 19th century, including David Ricardo and Karl Marx. One key difference is that I have a lot more historical data. With the help of , , Facundo Alvaredo, Gilles Postel-Vinay, Jean-Laurent Rosenthal, Gabriel Zucman and many other scholars, we have been able to collect a unique set of data covering three centuries and over 20 countries. This is by far the most extensive database available in regard to the historical evolution of income and wealth. This book proposes an interpretative synthesis based upon this collective data collection project."

"National income is defined as the sum of all income available to the residents of a given country in a given year, regardless of the legal classification of that income."

"Whenever the rate of return on capital is significantly and durably higher than the growth rate of the economy, it is all but inevitable that inheritance (of fortunes accumulated in the past) predominates over saving (wealth accumulated in the present). ... The inequality r > g in one sense implies that the past tends to devour the future: wealth originating in the past automatically grows more rapidly, even without labor, than wealth stemming from work, which can be saved. Almost inevitably, this tends to give lasting disproportionate importance to inequalities created in the past, and therefore to inheritance."

"We know something about billionaire consumption, but it is hard to measure some of it. Some billionaires are consuming politicians, others consume reporters, and some consume academics."

"When the rate of return on capital exceeds the rate of growth of output and income, as it did in the nineteenth century and seems quite likely to do again in the twenty-first, capitalism automatically generates arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based."

"The overall importance of capital today, as noted, is not very different from what it was in the eighteenth century. Only its form has changed: capital was once mainly land but is now industrial, financial, and real estate. We also know that the concentration of wealth remains high, although it is noticeably less extreme than it was a century ago. The poorest half of the population still owns nothing, but there is now a patrimonial middle class that owns between a middle and a third of total wealth, and the wealthiest ten percent now own only-two thirds of what there is to own rather than nine-tenths."

"We shall not … begin this logic by definitions, axioms, or principles; we shall begin by observing the lessons which nature gives us."

"The tone in which an Englishman expresses anger would, in Italy, be only a mark of surprise."

"To the eye of God there are no numbers: seeing all things at one time, he counts nothing."

"It is not true that on an exchange of commodities we give value for value. On the contrary, each of the two contracting parties in every case, gives a less for a greater value. … If we really exchanged equal values, neither party could make a profit. And yet, they both gain, or ought to gain. Why? The value of a thing consists solely in its relation to our wants. What is more to the one is less to the other, and vice versa. … It is not to be assumed that we offer for sale articles required for our own consumption. … We wish to part with a useless thing, in order to get one that we need; we want to give less for more. … It was natural to think that, in an exchange, value was given for value, whenever each of the articles exchanged was of equal value with the same quantity of gold. … But there is another point to be considered in our calculation. The question is, whether we both exchange something superfluous for something necessary."

"The art of reasoning is nothing more than a language well arranged."

"Our ideas are transformed sensations."

"Thirty years of lax budget policy (the Trente Dispendieuses) marked by soaring public spending in the 1980’s, the happy-go-lucky attitude of the 1990’s and finally, a policy of procrastination in the 2000’s characterised by the development of creative budgetary marketing strategies exclusively destined to delay the (always) socially and politically painful moment of addressing the accounts."

"At the end of the current five-year presidential term and the “Trente-Six Dispendieuses” (36 years of uninterrupted deficits from 1981 to 2017) far-reaching public expenditure reforms will be required. These will be all the more painful as they are far too late."

"The government is making another mistake, although purely ideological this time, by thinking about the responsibility pact in terms of contracts that would give rise to reciprocal concessions from companies. Indeed, the government cannot negotiate with companies because the decisions of business leaders are always individual. They are not civil servants working to orders, but free and lucid agents who make their decisions, particularly on investment and job creation, by individually assessing their risks based on the stability of the environment and the favourable outlook for returns on investment. By contrast, an effective government can, and must, create the right circumstances for investment decisions to generate the conditions for growth."

"Despite a relative control over expenditure in 2013, the persistence of a very high public deficit (4.3%) was mainly due to an unprecedented and unexpected drop in tax revenue which confirms the existence of a tax tolerance threshold, specific to each country, and which may have been reached in France. Above this threshold, any tax increase has a counterproductive effect as compulsory taxes stifle activity by further weakening the economy’s growth potential."

"In the developed world taxation is always a political construct, a living organism that is always changing due to endless modifications imposed by lawmakers who are themselves sensitive to the public mood and to changes in social ideology. This is a haphazard scaffolding without an architect that lacks rationality and coherency, with tax and social expenditures- referred to here as social and tax expenditures - constituting a superstructure that is all the more complex given its roots in a tax system whose benchmark standards are subject to innumerable exceptions."

"Nicole Oresme introduced the important concept of graphical representations, or geometrical "configurations", of intensities of qualities. ...He proposes to measure the intensity of the quality at each point of the reference interval by a perpendicular line segment at that point, thereby constructing a graph with the reference interval as its base. ...He refers to the reference interval as its longitude, and its intensity at a point as its latitude or altitude there (perhaps adapting these terms from their geographical use). ...Oresme... provided the Merton Rule with a geometrical verification."

"It appears that here and there some of our modern ideas were anticipated by writers of the Middle Ages. Thus, Nicole Oresme... first conceived the notion of fractional powers, afterwards, rediscovered by Stevin, and suggested a notation [other than our modern notation]. Since 4^3 = 64 and 64^\frac{1}{2} = 8, Oresme concluded that 4^\frac{3}{2} = 8. Some of the mathematicians of the Middle Ages possessed some idea of a function. Oresme even attempted a graphic representation. But of a numeric dependence of one quantity upon another, as found in Descartes, there is no trace among them."

"Coordinates had been used in astronomy and geography since ... Oresme called his coordinates "longitude" and "latitude," but he seems to have been the first to use them to represent functions such as velocity as a function of time. Setting up the coordinates before determining the curve was Oresme's step beyond the Greeks, but he too lacked the algebra to go further."

"God in His infinite grandeur without any quantity and absolutely indivisible, which we call immensity, is necessarily all in every extension or space or place which exists or can be imagined."

"The heavenly bodies move with such regularity, orderliness, and symmetry that it is truly a marvel; and they continue always to act in this manner ceaselessly, following the established system, without increasing or reducing speed and continuing without respite, as the Scripture says: Summer and winter, night and day they never rest."

"Perhaps the first to approach the fourth dimension from the side of physics, was the Frenchman, Nicole Oresme, of the fourteenth century. In a manuscript treatise, he sought a graphic representation of the Aristotelian forms, such as heat, velocity, sweetness, by laying down a line as a basis designated longitudo, and taking one of the forms to be represented by lines (straight or circular) perpendicular to this either as a latitudo or an altitudo. The form was thus represented graphically by a surface. Oresme extended this process by taking a surface as the basis which, together with the latitudo, formed a solid. Proceeding still further, he took a solid as a basis and upon each point of this solid he entered the increment. He saw that this process demanded a fourth dimension which he rejected; he overcame the difficulty by dividing the solid into numberless planes and treating each plane in the same manner as the plane above, thereby obtaining an infinite number of solids which reached over each other. He uses the phrase "fourth dimension" (4am dimensionem)."

"Since money belongs to the community … it would seem that the community may control it as it wills, and therefore may make as much profit from alteration as it likes, and treat money as its own property."

"Every measurable thing except numbers is imagined in the manner of a continuous quantity. Therefore, for the mensuration of such a thing, it is necessary that points, lines, and surfaces, or their properties, be imagined. For in them... measure or ratio is initially found... Therefore, every intensity which can be acquired successively ought to be imagined by a straight line perpendicularly erected on some point of the space or subject of the intensible thing, e.g., a quality... And since the quantity or ratio of lines is better known and is more readily conceived by us—nay the line is in the first species of continua, therefore such intensity ought to be imagined by lines... Therefore, equal intensities are designated by equal lines, a double intensity by a double line, and always in the same way if one proceeds proportionally."