Bryan Caplan  

Why I Still Think I'll Win My Unemployment Bet

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I've grown slightly anxious about my bet with John Quiggin on European unemployment.  But Sumner's a great therapist:
An optimist like me would argue that we aren't about to copy the French statist model; dramatically higher minimum wages, generous UI benefits, national health care, higher taxes, etc.  Oh wait . . .  Seriously, as bad as it looks to conservatives, there is a lot of ruin in a nation.  So I still think there is only a 10% or 20% chance we will experience French-style " hysteresis"...
Indeed, I think there's a modest probability (say 5%) that a viable candidate with emerge in 2012 to play Reagan to Obama-Bush's Carter-Ford-Nixon.


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COMMENTS (9 to date)
Liam writes:

My money would be on Ron Paul for 2012

libfree writes:

Maybe what we really need is a strong Republican congress, coupled with a Democratic president. Call me Madisonian.

fundamentalist writes:

libfree, I agree. Gridlock is the best form of government we can hope for. I'm confident Obama will be re-elected in 2012. The Repubs will take Congress this Fall and usher in gridlock. As a result, the economy will do so well that by 2012 Obama will win easily.

An econ prof at the Univ of Central Oklahoma has a model that has been very successful at predicting presidential elections. He has just one predictor variable - gdp growth in the second quarter of the election year. If gdp grows 2.5% or more in the second quarter of 2012, Obama will will easily.

Dan Weber writes:

In most circumstances, I would agree on split government. Reagan, Bush 41, and Clinton all had good runs with opposition Congresses.

The Republicans seemed to go a bit beyond the pale this past year, though. I'm still stinging about the "death panels" stuff. And I have yet to decide if the Tea Party would be a moderating or intensifying influence.

Doc Merlin writes:

@Dan Weber
I prefer the extremists fighting stuff out. When moderates get in charge they tend to pass lots of stuff and ruin any hope of gridlock.

Douglass Holmes writes:

I'm not so sure. In the 90's, Newt Gingrich balanced the budget, but Clinton got the credit for it. (They did give Gingrich credit for shutting down the government.)
Do you think there's a Republican in the House that wants to do that again?

blink writes:

Oh, boy. Your probabilities rate the French model 2-4 times as likely a Regan-esque president and you call that optimism?

John Quiggin writes:

As I mention here, the gap in employment/population ratios between the US and EU (including France, which seems to be the perennial target) has virtually disappeared over the past 15 years. So, assuming similar macro experience, I expect similar rates of unemployment.

Troy Camplin writes:

How long have we had job creation with no change in the unemployment figures? It's beginning to smell of structural change to me.

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