Quiggin on the Caplan-Quiggin Bet
By Bryan Caplan
Until now, I’ve been consistently ahead. EU-15 and US
unemployment rates were very close during 2009 and 2010. A gap has
opened up in the last few months and is now about 1.5 per cent. Given
the dismal prospects for the EU economy in the coming year, and the
likelihood of some kind of recovery in the US, I expect to be losing
ground on the bet this year, and probably for a couple of years after
Having said that, the original premises of the debate have pretty much
ceased to apply. I was expecting a longish recession followed by a
gradual recovery in both the US and EU. Macro policy has been worse than
I expected in both cases, but dramatically more so in the eurozone,
where the ECB seems determined to turn a recession into a depression.
It’s this, rather than differences in labor market performance that’s
driving the present divergence in unemployment rates.
I agree that macro policy has been worse in both cases. But one of my original premises turned out to be wrong, too: the U.S. labor market has become much more European than I expected. 99 weeks of unemployment benefits is insane – and Obamacare is going to start hurting employment soon if it hasn’t already.
In any case, since Quiggin initially bargained me practically to my breakeven point, I still wouldn’t claim better than a 60% chance of winning.