Body
An award ceremony is a funeral oration with the right of reply. And this one comes at a good time because I have things to say.
I belong to a republican family. My maternal grandfather, Abel Ferry, received the Legion of Honor from the hands of [Georges] Clemenceau in September 1918, just before dying from his wounds. My father, Edgard Pisani, received it from the hands of Jules Jeanneney, and he always refused to be promoted because in his eyes nothing was worth more than a knight's rank acquired for acts of resistance. These precedents put into perspective the merit that is mine today.
However, we are not at a moment when one can simply rejoice in having completed one's little journey. We are at a moment when everyone is compelled to question their responsibility in the current state of our country and to find out what they can do to help.
I have been an advocate of the open economy, European integration, and the transition to a green economy. I do not disown these causes, any more than I renounce my social-democratic commitment, to which I believe I have been faithful—I will return to this. But on each of these fronts, we must admit that we are regressing.
I began my professional life at CEPII [Centre d’Études Prospectives et d’Informations Internationales], with Anton Brender who is here. At the end of the 1970s, we didn't yet speak of globalization, but then-Prime Minister Raymond Barre, aware of the ongoing changes, wanted to create this institute specialized in international economics. I worked there twice before directing it from 1992 to 1997. I recruited Agnès Bénassy-Quéré, Laurence Boone, Lionel Fontagné, as well as Philippe Martin, who suddenly left us two years ago. What was called the "CEPII gang" had a positive perspective on economic opening. In part, rightly so: It provided to the world a powerful growth engine and allowed a billion and a half people to escape extreme poverty.
But only partly: We did not anticipate the magnitude of the shock that this globalization would imply for advanced countries, nor its consequences for employment and affected regions, nor a fortiori its political implications. It took, to open our eyes, the article on the China Shock published in 2013 by Autor, Dorn, and Hanson. They indeed showed in the case of the United States that the rise in Chinese exports had devastated industrial sectors and caused the United States to lose more than 2 million jobs. Subsequent work indicated that France was in the same league.
Today they are telling us that the second Chinese shock, which is coming, will be even more devastating, because it is no longer labor-intensive industries that are threatened, but the heart of our innovation systems. In an overwhelming majority of key areas for industrial innovation, Chinese research now surpasses that of the United States, and of course also that of Europe.
China's key asset is that it is able how to combine 10-year planning and competition. This is not our case, and yet, as Philippe Aghion keeps on repeating, this is the key to success. Planning without competition is a sure way to let unproductive rents develop. Competition without planning is running the risk of letting short-termism prevail.
Will we be able to combine planning and competition? Or will we let an authoritarian regime take all? What is at stake in the rivalry with China is today the capacity of liberal democracies to remain at the forefront of innovation and to transform its advances into industrial assets. At Bruegel, a few hours ago, we had a lively discussion about the respective economic efficiency of democracies and autocracies. But thirty years ago, our hubris led us to believe that the former had won the Cold War. Today we measure the magnitude of our error.
Let me come to Europe. As for many French people of my generation, my "passage to Europe" began in 1983. It was that year, that illusions about "the other policy" dissipated and that President [François] Mitterrand made the fundamental choice to remain in the European Exchange Rate Mechanism. A few years later, Jacques Delors, then president of the [European] Commission, would set in motion the machinery that would lead us to the euro.
I was fortunate to join the Commission when the European monetary project was taking shape. I am certainly not one of the fathers of the euro, but I have worked on its genesis, as a coauthor of the 1990 report "One Market, One Money" and I have, over the years, played the gadfly, criticizing the incompleteness of the European monetary architecture or formulating proposals for its reform.
The euro is today the most striking European success and it is, despite the fact that only 20 of the 27 EU members have adopted it, the most tangible sign of European unity. Between 2011 and 2015, the eurozone underwent a very violent crisis, and back then few were betting on its survival. It took Mario Draghi's audacity in 2012 and François Hollande's tenacity in 2015 to maintain the integrity of this monetary bloc, avoid a Greek exit, and prevent a path out of the common currency from being mapped out.
The limits of this success, however, are that it did not lead to any other. The European currency induced neither an intensification of trade within the eurozone, nor the formation of a unified capital market and an increase in the community budget, and it was only in response to an acute risk of financial fragmentation that Europeans decided, in 2012, to set up an integrated banking supervision. As for the non-economic implications of the common currency, they are tenuous: Mario Draghi recently observed that the year 2025 had ended the illusion that the economic dimension alone could guarantee any form of geopolitical power.
More than 20 years ago, with Nicolas Véron, we embarked on the Bruegel venture. Our intuition was that Europe needed to equip itself with the intellectual means for global economic influence. The project was born, we were fortunate to convince Mario Monti to take its presidency, it was a very beautiful entrepreneurial experience, and I am proud that Bruegel, led after me by Guntram Wolff and now by Jeromin Zettelmeyer, has become a recognized and influential hub of reflection and proposals. The intuition from 20 years ago has become obvious.
But the battle for European assertion is far from won. On the contrary. I may tell myself that it was, as Sylvie Kauffmann says in a very recent Le Monde piece, the price to pay for the United States not to totally abandon Ukraine, but the photo of Ursula von der Leyen, all smiles, concluding a totally unbalanced trade agreement with President [Donald] Trump remains for me the image of what Gilles Gressani called "happy vassalization." This is not the result for which Monnet, Delors, and generations of Europeans fought. This is not the Europe to which I adhered. It is not the one that can win the support of the people.
The third theme on which I have engaged professionally is that of ecological transition. Unlike the previous two, this is not a long-standing commitment: It has only been five years since I started working on it seriously and since I took, at Benoît Leguet's request, the non-executive chair of the Institute for Climate Economics.
My first significant publication on this theme was a Peterson Institute note where I observed that it was at least strange, from a macroeconomic point of view, that a negative supply shock would have expansionary effects as so many advocates of climate transition claimed. This paper caught the eye of Gilles de Margerie, who was then directing France Stratégie, and earned me the commission of a report for then-Prime Minister Élisabeth Borne, whom I want to thank for entrusting me with this task—and for honoring me with her presence this evening.
I prepared this report under somewhat particular conditions, since the letter of mission was addressed to me when I had just begun a demanding medical treatment, but I do not regret having done it. First, because this work prevented me from lamenting my fate. Then because the preparation of the report was an extraordinary collective experience: Those who participated in it shared the same sense of urgency and the same diagnosis that analysis was lagging behind as far as the economic implications of climate action were concerned. No one hid their game; on the contrary, all participants in the exercise shared their questions and intuitions. And when I temporarily disappeared, for a longer duration than I had planned, the work continued. Partly, of course, because in my absence, Selma Mahfouz took command. But also because we all shared the same determination to succeed.
It is today essentially in emerging countries that the future of the planet is being played out. But why would countries that are not responsible for the stock of greenhouse gases accumulated in the atmosphere, and for whom investment in decarbonization risks crowding out investment in development, make this choice if advanced countries do not set the example? This is a point on which Europe initially showed courage but has recently multiplied signs of hesitation when not outright regression.
I was in Brussels this week. I noticed that climate has become a dirty word. We try to preserve the ambition, but we no longer dare to name it. This is a sign that national-populism does not need to be in power to influence the direction of public policies. The temptation of demagogy is enough. Through pusillanimity and tactical retreats, Europe today risks missing the great transformation at the forefront of which it had endeavored to place itself. This would be tragic, not only because of the counterexample it would give but because unlike the United States, it is not richly endowed with fossil fuels.
On the three issues that have marked my professional life—the open economy, Europe, and climate transition—the reality is, as I said at the beginning, that we are retreating. Undoubtedly for lack of political courage but certainly also because we have seriously underestimated the social and territorial consequences of our collective choices. Economists bear part of the responsibility: For years they reasoned on aggregates and neglected to take interest in the distributive effects of the orientations they advocated, on the pretext that the efficiency gains thus generated would allow compensation of losers.
As labor unions leaders know, this is a dangerous approximation. What is needed is to assess, policy by policy, who the winners and losers are and to determine concretely by what tools—fiscal, budgetary, or industrial—the gains will be transferred from the former to the latter. This is the only way to prevent those who know they are losers from blocking collectively essential changes.
Whether it concerns economic openness, European reforms, or ecological transition, my conviction is that transformations do not happen if equity is not a primary component. This is true regarding the distribution of gains. It is even more true regarding the sharing of sacrifices. Between weak productivity, defense effort, and the cost of climate transition, the phase we have entered will be much more difficult than anything we have experienced in 80 years. This is why equity must be at the forefront of public action priorities.
Until now I have only spoken of policy, not politics. Two words nonetheless on this subject:
First to say that if I have practiced both, I have always endeavored to allow my readers or interlocutors to know in what capacity I was taking a position on this or that subject. Economics aspires to be an empirical discipline, but it cannot abstract itself from doctrinal a priori. This is a question I have thought about a lot over the course of a collaboration that has lasted more than 20 years with my coauthors of the textbook Economic Policy: Agnès [Bénassy-Quéré], Benoît [Coeuré], Pierre [Jacquet], and now Alexandra [Roulet], who joined us to work on the sixth edition. We have endeavored to always say how theories and empirical analysis combine to found economic policy prescriptions and never to confuse these with our political preferences.
As a citizen, however, I remain essentially a social democrat. This may [come as a] surprise, because since I joined his presidential campaign in 2017, I have been identified as a supporter of Emmanuel Macron. I made this choice because I thought that the role-playing between the left and the right, who exaggerated their differences—before conducting, once in office, policies less opposed than they had claimed—was feeding democratic disenchantment and contributing to the electorate drifting toward extremism. This is why I took seriously the promise of a policy "both of the right and of the left" and prepared myself to make compromises such as are practiced among many of our neighbors. I believe the 2017 program was faithful to this inspiration.
However, I understood quite quickly that the balance between ideas from the left and those from the right was not equal, and that those who, like me, had committed to a project of emancipation and equality of rules had difficulty finding themselves in the executive's policy. This is how I gradually transformed into a vieux grognard of Macronism: too disappointed to still adhere, but too faithful to truly break away.
Forgive me this response without joy or humor. Unlike Mario Monti, who gave us last night at Bruegel a speech both full of humor and imbued with great gravity, I do not know how to mix genres well. And above all, I did not want to, on the eve of a political episode that once again will probably mark that our country has entered an era of serious political instability.
Commentary Type