Arthur Laffer had his moment of glory years ago, hatching the supply-side doctrine made famous by Ronald Reagan. But to see Laffer wowing a crowd of French economists recently, you would think he was still on the cutting edge of economic thought. The audience, gathered at a Paris seminar in late March, even guffawed at Laffer's well-worn joke comparing the "Laffer curve" to his expanding waistline.
The official reason for this free-market love fest was a weeklong colloquium on France's unemployment crisis. But the real purpose was to put free-market economics back on the map in France by offering a clear-cut choice to Prime Minister Alain Juppe's slightly diluted form of state interventionism. The organizers of the seminar were France's small clutch of liberal--that is, free-market--economists. Their weapon of choice: a direct assault by Laffer and other prominent U.S. economists, including Nobel laureates Douglass C. North and Gary S. Becker, a columnist for BUSINESS WEEK, on French government policies that the visitors say are doomed to destroy, not create, jobs.
CONSENSUS CRITICS. The seminar shows how desperate France's liberal thinkers are to be heard. During the Eighties, free-market thought enjoyed some popularity in France, with policymakers pushing for privatizations and other moves to unshackle the economy. But the reforms were never as radical as those in Margaret Thatcher's Britain. France's free-market backers had hoped for a taste of real power after conservative Jacques Chirac's election as President last year. Their hopes were dashed when Prime Minister Juppe dismissed Alain Madelin, his liberal Finance Minister, in August. Crippling strikes then forced Juppe to drop reform.
Since then, the government has pursued what the liberals figure is a disastrous policy to build consensus among business and unions to create jobs. Such social pacts, say the free-marketers, rely on more government spending and intervention just when the economy needs lower taxes and flexible labor markets. "The government dreams of building a social consensus [like that] in Germany," says Florin Aftalion, a finance professor and one of the conference organizers. "But Germany is crumbling."
The core of the group reaching out to the Americans is an association called Les Nouveaux Economistes, which was founded by Aftalion in the 1970s. They have contacts with Italian and Swedish free-marketers and two other French think tanks, the Mont Pelerin society and ALEPS, or Association pour la Liberte Economique et le Progres Social.
FEELING ISOLATED. Although these French academics would be gardenvariety economists in U.S. universities, in France they feel cut off from the mainstream. An elitist education system, says Pascal Salin, another conference organizer, produces "a monopoly on economic theory" that stresses state intervention and the role of top civil servants in running government and industry. Yet over time, figures Jacques Garello, an economics professor at the University of Aix-Marseille, "people will be so disappointed by Chirac, they'll search for a third way" other than the almost identical policies of Juppe and his socialist opponents. "Our position is to show we're that third way." Proving that point will take a lot of seminars.