Bryan Caplan is willing to bet ("one meeelion dollars") that the U.S. unemployment rate will recover and remain significantly lower than the European average over the next ten years. I'm tempted to agree.
Normally, this would be a no brainer, if all we were doing was betting whether U.S. labor policy is superior to European policy at employing its labor force near capacity. But what Bryan is really gambling is that the U.S. policy will remain superior. That's a political bet, not an economic bet. (He, author of the Myth of the Rational Voter, should know better!)
What are the odds that the U.S. raises its minimum wage again? What are the odds that a bailout of California happens? And if so, that other states become more reckless? What are the odds of card-check legislation that chills entrepreneurship? What are the odds that technology allows entrepreneurs to circumvent labor law by building up virtual companies of independent contractors? What are the odds that Justice Sotomayer casts the deciding Supreme Court vote ruling virtual business forms unconstitutional?
Either Bryan has more faith in American democracy than I do (unlikely), or he's much more risk loving than I am (surprisingly likely).
I do expect U.S. labor policy to get more European over the next ten years. If I didn't, I would have given a point spread of 2 percentage-points instead of 1.5. :-)
Posted by: Bryan Caplan | May 29, 2009 at 10:51 AM
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