10 ms·

I Win My European Unemployment Bet

104 points by shubhamjain 8y ago

kevin_b_er 8y ago
How do either statistic handle people are are slightly employed or have given up working? Barely employed doesn't make ends meet. https://www.investopedia.com/financial-edge/0609/what-the-unemployment-rate-doesnt-tell-us.aspx https://www.investopedia.com/financial-edge/0609/what-the-un... Does this bet mean anything if the only employment you can get is 10 hours a week at minimum wage?
- dv_dt 8y ago
  I find it odd that the article references the BLS, defines terms for discouraged worker and underemployment, but doesn't mention that the BLS also tracks that data and more, like labor force participation, omits the terms under which the BLS tracks the data (e.g. U-6 data), as well as omitting links to the data too. The last is maybe understandable, but the article leaves a general impression that the BLS misses that when the opposite is true.
- deburo 8y ago
  If all were forced to work or starve, I'd bet many would live in the same house and each work to pay their share of the rent, food, etc. I know I'm stating the obvious, but it seems to me that this reality is not as abject as democrats make it seem to be.
- zeroname 8y ago
  > Does this bet mean anything if the only employment you can get is 10 hours a week at minimum wage? Yes, because it's about relative rates. Unless you believe the EU is more "honest" about reporting unemployment numbers, the US numbers are just as meaningful.
sametmax 8y ago
> Europe has higher unemployment than the U.S. because it has stricter labor market regulation French here. I think he is stating the obvious, nobody is denying that. It's also the same reason it's hard to find a house in France: protective laws make both tenants and employers worried, and they filter quite hard the hiring/renting prospects. On the other hand, once you are hired, being fired is pretty hard. So you don't have to worry about your boss being as abusive as you can find in the US because you can talk back. Well, that's the theory. In practice I've rarely been talked badly by most people, the one time somebody was abusive, I told them to piss off, and they fired me. And I've never had any trouble finding a gig in my life ever since. So your milage may vary as usual, but most people around me do report having a hard time with hiring/renting because of high steaks for both parties.
- subjectHarold 8y ago
  > So you don't have to worry about your boss being as abusive as you can find in the US because you can talk back. So your main concern is being unable to be rude to your boss? And the price you are generously willing to impose for this privilege is that someone else is unemployed. You sound like quite a guy.
  - danharaj 8y ago
    That's a really dishonest interpretation.
    - subjectHarold 8y ago
      What part is inaccurate?
      - rosser 8y ago
        The "your main concern" part, just to start.
        subjectHarold 8y ago
        Okay, what other concerns does he mention? All he says is that being fired is difficult...which he then suggests is important because you can then be rude to your boss. No other reasons are used to support this idea.
        wtallis 8y ago
        You're attaching a very unreasonable interpretation to the term "talk back". It's not a pure desire to be rude to people; it's about being able to voice contrary opinions, without fear of unfair retribution and if necessary, without being constrained by political correctness or a corporate culture that demands obeisance. No employee should ever have to fear getting fired for speaking up about something that seems illegal, dangerous, or just plain stupid.
anentropic 8y ago
Correct on the numbers, but the conclusions don't necessarily follow > Most of the harm of unemployment is psychological, not material. Holding income constant, the employed are much happier than the unemployed. Hence, no sensible person would want to see U.S. workers’ wages rise by 10% if the unemployment rate rose 3.5 percentage-points as a result. And psychology aside, remember that the welfare state forces active workers to support the idle. So when regulation forces wages up, even the lucky workers who keep their jobs ultimately forfeit much of what they gain. If the goal is to improve happiness through applied economics then you should measure happiness, not make ad hoc justifications based on some other metric
- ajross 8y ago
  Yeah. It's also somewhat incomplete analysis about happiness because it views it as steady state. I mean, anedcotally, sure, being employed is good and being unemployed (even with a good safety net) is bad. But being laid off is much worse than either because of the disruption it causes. Consider, would you rather spend a career with a single 1-year blemish where you had to live on the dole because you couldn't find work after changing career paths or whatever, or one where you were laid off four times for three months at a time? Those don't seem as symmetric to me as they do to the author. That said, I think the points raised are valid. It does seem like in 2009 the market of academic economists was too bearish on the long term US unemployment situation.
  - candiodari 8y ago
    It is very well established that psychological stability, in youth and adults, comes at least partially from there being a need for psychological stability. Structure and "somewhere to be" really, really help. Therefore I have little doubt that if you looked it up, you would indeed find that it's true that employment leads to increased happiness.
  - valuearb 8y ago
    Being laid off is temporary. And it can result in a better outcome, esp. when your previous employer was dysfunctional. Source: I was just laid off.
y7 8y ago
Wow this author sounds smug. > Most of the harm of unemployment is psychological, not material. Holding income constant, the employed are much happier than the unemployed. This doesn't factor in that employed workers might be much happier in countries where they can work without the possibility of being fired at any moment for no reason hanging over their heads.
- TazeTSchnitzel 8y ago
  Also it may be more comfortable to be unemployed in a country that doesn't treat unemployment benefit claimants as “scroungers” or employ workfare.
  - eterm 8y ago
    It's insanely more comfortable to be unemployed where your healthcare isn't tied to your employment. I choose free healthcare over employer supplied health insurance every day.
    - nraynaud 8y ago
      It’s not free, it’s universal. You pay for, it but the insurer is less cynical.
      - eterm 8y ago
        Well it's effectively free if you're life-long unemployed. But almost more importantly, the healthcare isn't being delivered by companies trying to make a profit but from central funding instead. Sometimes that means making really difficult decisions such as NICE refusing to fund a cystic fibrosis drug because the US pharmaceutical company wants to charge $138,000[1] per patient per year. But those difficult decisions mean the limited funding (and no funding can be infinite) can be targeted and spent to deliver the most benefit as a whole. Heart-breaking for those with children with C.F. but hopefully the U.S. drug company will soon back down. If it weren't for brexit they likely would have done so already. This article explains NICE's QALY (Quality adjusted life year) methodology: https://www.nice.org.uk/news/blog/carrying-nice-over-the-threshold https://www.nice.org.uk/news/blog/carrying-nice-over-the-thr... One of the most important reasons to resist the privatisation of healthcare is because it would actually lead to worse outcomes for the same money spent as the decisions of where to direct funding would be less evidence based. You're right, it's not free, and in fact needs more investment to prevent it being privatised. Britons spend less on healthcare than most, even in fact spending less per person than the US does through taxation alone[2]. [1] https://www.bmj.com/content/364/bmj.l1094 https://www.bmj.com/content/364/bmj.l1094 [2] https://www.bbc.co.uk/news/uk-42950587 https://www.bbc.co.uk/news/uk-42950587
vertline3 8y ago
I sort of see Quiggins' point about incarceration and employment.
mangecoeur 8y ago
this guy has a very one dimensional view of labour regulation, there's a lot more to it than just how easily you can be fired. Things like minimum paid leave of 20 days or more.
ergothus 8y ago
> That said, I heartily commend Quiggin for actually making our bet. He towers above all of the apologists for European labor market regulation who refuse to put their money where their mouths are. I know nothing of the people or personalities involved...but this does not give me a good impression of the author. First, he never refers to anyone with a contrary opinion in any way other than "apologist". Second, he never addresses any other value than the unemployment rate as a number (for example, I can easily imagine an "apologist" being uninterested in his bet if they think he might be right about the numbers, but they value the regulation for other reasons). In never addressing their views, he dismisses them as unworthy. I'm poorly versed in economics so I don't really have an opinion on the actual matter under debate...but I can easily see him writing a smug and self-congratulatory article on this topic that nonetheless gave me a better opinion of him.
- TimTheTinker 8y ago
  > First, he never refers to anyone with a contrary opinion in any way other than "apologist". What's wrong with the term "apologist"? It simply means one who defends a particular viewpoint or belief. (It comes from the Greek ἀπολογία, which means a "formal oratory defense" of a position.)
  - gipp 8y ago
    That's just being deliberately obtuse. I don't believe I've ever in my life heard "apologist" used in a non-pejorative sense. Etymology is irrelevant here.
    - TimTheTinker 8y ago
      > That's just being deliberately obtuse. What? That's rather insulting to assume; I'm being absolutely serious. > I don't believe I've ever in my life heard "apologist" used in a non-pejorative sense. That's genuinely interesting. I've always heard it used in a respectful sense. We must run in different circles. (I've always heard it used of Christian apologetics.)
    - LyndsySimon 8y ago
nraynaud 8y ago
Maybe it’s a sign of the times, productivity is so high that there doesn’t exist work for everybody. Either you create bullshit jobs, or you have unemployment. This psychology thing is forgetting that being forced in a job that doesn’t pay enough to survive is a huge drain on the worker and their family.
ddebernardy 8y ago
> What does this all mean? To me, this bet is just a small extra piece of evidence in favor of the orthodox and blindingly obvious theory that Europe has higher unemployment than the U.S. because it has stricter labor market regulation. Insofar as I'm aware it mostly means that US unemployment is under-reported. The labor force participation rate has yet to fully recover from its pre-2008 levels, and you're not counted as unemployed if you worked an hour the previous week. European countries, by contrast, have mostly not changed their definitions of unemployment since, and have a relatively sane definition of what it means to be employed. This is not to say it's perfect -- far from it. But at least they're not counting 1h/week Uber drivers as employed. See e.g.: https://qz.com/877432/the-us-unemployment-rate-measure-is-deceptive-and-doesnt-need-to-be/ https://qz.com/877432/the-us-unemployment-rate-measure-is-de...
- jnwatson 8y ago
  Another important source of hidden unemployment is Social Security Disability. It is the new welfare in parts of the south and Midwest where globalization has hit the hardest.
- pkaye 8y ago
  The U1-U6 measures of unemployment are all published. I'm sure we can match up to the closest measure in the EU. The article mentioned a harmonized unemployment rate so maybe there is something comparable.
  - CompelTechnic 8y ago
    For those interested in how the harmonized rate is defined across countries, the link below states it as: the unemployed are persons of working age who, in the reference period: − are without work, − are available for work; and, − have taken specific steps to find work. More detail would probably be helpful, but the harmonized rate attempts to apply equally across countries. There may be methodological differences, but I doubt those differences would be stronger than the difference the author of TFA found. https://www.oecd.org/sdd/labour-stats/44743407.pdf https://www.oecd.org/sdd/labour-stats/44743407.pdf
- 8y ago
carleverett 8y ago
> I’m not afraid to repeat that I have publicly demonstrated that my judgment is good. And in my demonstrably good judgment, radical deregulation of Europe’s labor markets is long overdue. I’m happy to make the Quiggin bet all over again with anyone who’s interested, but what’s the point? My homeschooled sons understood all of this when they were 12. Is this satire?
- hirundo 8y ago
  Brian Caplan is well known for placing long term bets on such things and having won all of them so far. Though his bet against Brexit happening is in jeopardy. As for his pride in his home schooled sons, and their agreement with their teacher, I'd call that expected and understandable bias.
- mjfl 8y ago
  He's right. Is there any better way to quantitatively measure one's judgement than to make public bets on future events against people who are willing to put money on the other side? Yeah it comes across as smug, but 19-0 is 19-0. I think your response is unproductive and dismissive without directly addressing anything, and is therefore annoying.
- exolymph 8y ago
  For most people this would be astonishing braggadocio, but Bryan Caplan has quite literally put his money where his mouth is. Of course, he's able to selectively make bets when he feels most confident — but anyone else would be able to the same thing, and yet they don't.
TomMckenny 8y ago
Are prisoners counted as unemployed? Are they employed when assigned to "penal servitude"? The are at several other reason US unemployment numbers are lower: they have different percentages in prison and, on the opposite side, nonstandard employment like the military. They have more clout to enforce favorable trade agreements. The numbers are calculated differently. There maybe a difference in real employment numbers but these are not the figures and the conjectural cause for this unknown difference is just a conjecture.
- harryposner 8y ago
  Prisoners aren't counted at all---not even as "not in the labor force" [0]. The employment statistics are based on the civilian non-institutional population, and prisoners are institutionalized. [0] https://www.bls.gov/cps/cps_htgm.htm#concepts https://www.bls.gov/cps/cps_htgm.htm#concepts
  - TomMckenny 8y ago
    Is "not in the labor force" the right category? Treating it that way will reduce unemployment numbers by reducing the counted population. No matter what category you put these groups in, you will have an uncomfortable discrepancy similar, although to a lesser degree, of comparing apples to oranges. This is because prisoners are not identical with non-exsistant people nor are they identical to employed people. Additionally, since military is considered employment, Europeans could boost employment just by expanding their military: as if unemployment is caused by a small military. I sense this is not the conclusion the authors would like. So I too will bet that 10 years from now, European unemployment numbers will be higher than the US. My explanation: the counting techniques, prison ratios, relative world influence, military sizes as well as greater employment security will remain about the same.
    - candiodari 8y ago
      Governments have a vested interest in keeping the numbers low. Right now people who don't want a job (e.g. stay-at-home-parents) aren't in the workforce. Also it's counting jobs vs people in the labor force. Meaning if someone has 2 jobs, there's really also an extra unemployed person. Also 1h/week counts as a job. Without those modifications US unemployment is over 10%, EU unemployment well in the 20% even in the Netherlands. An even fairer measure would be "active population" which is number of people working on jobs divided by the full population. Of course at that point babies and comatose patients count as unemployed, but I think it's fair because it correctly points out that the employed have to pay (in work, not money) for the entire population. At that point US is high 30% unemployed, EU low 40% (about a 5% difference).
komali2 8y ago
> while the people currently in American prisons might not be model workers, most of them could easily be gainfully employed on the outside. A point easily refuted PDF - https://www.urban.org/sites/default/files/publication/59416/410855-Employment-Barriers-Facing-Ex-Offenders.PDF https://www.urban.org/sites/default/files/publication/59416/... https://money.cnn.com/2015/10/30/news/economy/former-inmates-unemployed/index.html https://money.cnn.com/2015/10/30/news/economy/former-inmates... https://www.nytimes.com/2015/03/01/business/out-of-trouble-but-criminal-records-keep-men-out-of-work.html https://www.nytimes.com/2015/03/01/business/out-of-trouble-b... Even if the excons are model, PERFECT employees, the conviction could prevent them from getting a job. Even if they have the greatest work ethic in the world, they might have gone into prison at 18 due to mandatory minimum sentences, came out at 23 with no skills and no money for education (or housing as a base of operations). And, often the case, the system has fucked them, and they have no desire to participate in the system that fucked them. I appreciate the author making such clear and well-stated points, that makes it easy to use to simple facts to refute his/her argument.
- chimeracoder 8y ago
  > Even if the excons are model, PERFECT employees, the conviction could prevent them from getting a job. I appreciate the author making such clear and well-stated points, that makes it easy to use to simple facts to refute his/her argument. It's pretty clear in context that this isn't actually what they're talking about at all. Caplan is responding to Quiggin's claim that mass incarceration has a measurable effect of targeting people who would otherwise have been unemployed if they had never been arrested and incarcerated in the first place. He's not literally arguing that releasing those people from prison overnight would result in them getting a job.
- CompelTechnic 8y ago
  It is no surprise that ex-cons have a high unemployment rate compared to the average member of society. A full refutation of his argument would give an analysis of the number of ex-cons, their unemployment rate, the hypothetical unemployment rate based on the assumption that the US's current prison stock were diminished to that of Europe, and demonstration that US unemployment numbers would be higher than Europe's in this case. You have made the motions of charitably interpreting the author's argument without actually doing so.
sveme 8y ago
Subdivide it into economies that are broadly similar and the conclusion does not hold anymore. Germany‘s unemployment is smaller than the US despite having a much more regulated job market. Problem is, the EU isn‘t really one homogeneous entity when it comes to job market regulation (Denmark is pretty laissez-faire, France much less so), so it‘s disingenious to treat them all the same. On another note, his smug tone doesn‘t really help.
ww520 8y ago
That's an interesting bet. It would also be interesting to see how UK fares compared to Euro zone in the next 10 years after the breakaway with Bexit. Some economists should do a bet on it. Nothing invigorating academic debates more than when money is on the line.
- tonyedgecombe 8y ago
  I’d like to see some politicians on both sides of the Brexit argument lay down some bets.
maxxxxx 8y ago
People like this author are the people who give economists a bad name. What arrogant writing and totally one dimensional thinking.
- schizoidboy 8y ago
  Dr. Caplan is a big proponent of betting. Disputes in academic journals are endless and inconclusive. Betting gets people to put their money where their mouth is. I think this is the best part of the economics profession and needs to be applied to more parts of society.
  - maxxxxx 8y ago
    I am ok with betting. But the writing is horrible and the thinking is one dimensional.
pickle-wizard 8y ago
Humm. I find his assertion that employed people are happier than unemployed people interesting. I wonder if this is because a lot of people live pay check to pay check and the loss of income puts them in a serious bind. I was laid off last year, and I've been fortunate that I had a good salary and have been able to save a lot. Those few months I was unemployed were the happiest I've been in a decade. I did some traveling and projects around the house I've been wanting to do. In fact I quit claiming unemployment because the required job searches were killing my buzz.
- maxxxxx 8y ago
  Same here. When I was unemployed for a while the only thing that made me unhappy was the fear of running out of money. If I had a guaranteed income of some level that allows me to survive I would not need a job to be happy.
jerven 8y ago
I think it is much more interesting to look at the inverse. i.e. employment rate and it is quite a surprise to see this in the last 10 years between a slight growth in the euro area and decline in the US. Also the difference between unemployment rate over time and labour force participation is interesting. https://d3fy651gv2fhd3.cloudfront.net/charts/united-states-labor-force-participation-rate@2x.png?s=unitedstalabforparra&v=201903081350a1&d1=2004&d2=20190308&url2=/united-states/unemployment-rate https://d3fy651gv2fhd3.cloudfront.net/charts/united-states-l...
andrepd 8y ago
I would very much like to see Quiggin's reply to this, or some kind of independent rebuttal. His arrogance, the pejorative way he refers to those who disagree with him, the blatant one-sidedness and poorly concealed rhetoric of his arguments, all that leads me to not believe a single thing he says without independent commentary.
schizoidboy 8y ago
I think the meta-point is that betting on intellectual ideas is an underused tool in the toolbox of decision making. Endless academic journal debates don't seem to help much in moving people across ideological divides. For all of those that disagree with his methodology or conclusions, if you can reach him, I recommend putting your money where your mouth is and proposing a different bet with Dr. Caplan. I see a lot of people in the comments offended by his tone. I see his tone as analogous to a soccer player celebrating after a goal. We should socially encourage such behavior for those who win fair intellectual bets. (Although there is such a thing as unsportsmanly gloating, although I don't think this is such an example.)
- exolymph 8y ago
  everybody read Robin Hanson and google "futarchy" it won't work because people don't like it, but super interesting ideas that could potentially be applied in narrow domains
cjbenedikt 8y ago
In theory people incarcerated might be gainfully employed once released, in practise they're not
- RugnirViking 8y ago
  Why?
rawland 8y ago
"Let’s all join hands, admit that labor market regulation is a scourge, and tear down these paper walls." This thinking is as cropped at it can be. The US is also the country with the highest consumption of anti-depressants. And what not other social problems. Besides the whole article being a bunch of patting one self's back.
telchar 8y ago
No mention here of the fact that European governments went much harder on austerity policies than the US after the financial crisis? I seem to recall reading for years that European countries were lagging in recovery rate due to policies of austerity while the US largely resisted calls from erstwhile deficit hawks to do the same.
zeroname 8y ago
"And psychology aside, remember that the welfare state forces active workers to support the idle. So when regulation forces wages up, even the lucky workers who keep their jobs ultimately forfeit much of what they gain." Even a doubling in unemployment claims would be drop in the bucket compared to pension liabilities.
driftonhedgehog 8y ago
I would just like to point out that many people who have been incarcerated have little chance to build a career outside of starting their own businesses. Once they get out of jail they would actually be unemployed most likely for some time if it wasn’t for sheer necessity of some paycheck. Often people would rather stay incarcerated for 3 meals, a bed, a roof, and basic medical care.
ggm 8y ago
I like Quiggin. He's an almost lone voice of reason about privatization and the shocking effects on public utility functions like electricity supply. I wish him well even if he is down $1k on the bet.
RGamma 8y ago
I'm sorry in advance to those economists who try hard to actually try to be rigorous and scientific about their subject.* Rant follows: > Forget ideology. Let’s all join hands, admit that labor market regulation is a scourge [..] But let's not forget who the real scourge here are. Wanna-be rulers of the planet who dress themselves up as economists (though they come in many forms and degrees) making up just-so stories about why their next excuse to circumvene (or prevent) standards for upholding apparently not so common decency or (down to) basic human rights in the work place is justified. Or "economists", and the politician who lay in bed with them (sorry to those truly led astray though!), who enable business practices that profit just their interests. Or those that think it's okay to bleed the planet dry and destroy our biosphere for a quick buck. The list goes on... Not saying the author is one of such, but they sure as hell must be out there (I'm sure their decisions are all nicely dressed in numbers and growing curves and big words!). As a particularly egregious example what sufficiently unregulated labor markets can do, slave labor conditions in low-cost countries are unfortunately _really_ "efficient", the higher the wealth gap the better. Or even outright slavery: Esp. uneducated people in poverty have a lot of kids to support themselves, creating an endless fountain of cheap (unqualified) laborers (don't let them get too rich or educated though!). Got a prison population sitting idly? Well, they seem like an easy target to be extorted for un(der)paid labor. Obviously there's a need for regulation here. I don't think however the author would condone any of the above, yet historically and contemporarily there have been several instances of stuff like this. Of course there's a lot of nuance involved, modern discussion in developed countries revolves more about the /amount/ of social safety the state guarantees to the citizens plus the implementation of which, not about the /whether/ it should at all. Violations of human safety and dignity at the work place esp. in developing countries are kept behind a comforting veil of cheap prices in the rich nations. Luckily things often improve when total wealth in a country rises, mostly because you need an at least somewhat educated and satisfied population at some point to keep growing which precludes subjecting them to the direst of existences. People's desires to not be screwed with too much play a big role as well (it's not all bad, after all). Nonetheless social systems are lacking in many countries worldwide in aspects like education, healthcare, sanitation, housing, public services or (somewhat tangentially) good ol' infrastructure. "But who will pay for all this fancy social security?". Well, who has all the money? It's basically the top 1% who possesses half the net wealth globally, which is a lot even should the number be off by a fair amount (https://en.wikipedia.org/wiki/Distribution_of_wealth#Inequality https://en.wikipedia.org/wiki/Distribution_of_wealth#Inequal...). They don't seem to have been paying all that much then it seems. However, like above, I don't want to make this seem about /whether/ we should have unequal wealth or not but about /how much/. Instead of trying to minimize welfare, let's ask the other way round: How much welfare could the economy sustain (without choking itself off!)? How much economic inequality is actually sustainable without tearing society apart and making it blow up like has happened in mankind's history many times? There's an intricate balance here and many structures and parameters to tune... At the both extreme ends of wealth distribution lies dystopia and history has not been nice to countries who have left the safe zone for one reason or another. The world is complicated, many economic statements are purely statistical. But arguing in a world with lots of known unknowns and even unknown unknowns is complicated. Abductive reasoning, which is what he attempted to do, tries to find an explanation for an observed phenomen given some background knowledge. It is an inherently unsafe type of inference in the real world. And in this instance it's non-rigorously done by a human, meaning it likely suffers from one of the many kinds of glitch in naive probabilistic/statistical reasoning (long list at https://en.wikipedia.org/wiki/List_of_cognitive_biases https://en.wikipedia.org/wiki/List_of_cognitive_biases) our species has. If you add your ability change the world as an agent yourself, things get even more complicated (self-fulfilling prophecies anyone?). Good job on his bet though. Let's make a new bet: We have people "work or die": I bet unemployment would rapidly approach 0% (dead people can't be unemployed!). Man I should get into economics with this idea. An important reason why we can't have nice things to a degree that should be possible today is ourselves, and to fix the woes of the modern world requires an extensive look at how we organize our societies and how we cause them to be or become dysfunctional. Statements like "hurr durr I win 19 bets" in a field that is riddled with conflicts of interests and that seems just as much to be about ideology and opinion (how come there exist so many "schools of economy"? I thought we all observe the same world) as about actual evidence and rigorous reasoning seem not very impressive. * see https://en.wikipedia.org/wiki/Demarcation_problem https://en.wikipedia.org/wiki/Demarcation_problem

104 points by shubhamjain 8y ago

How do either statistic handle people are are slightly employed or have given up working? Barely employed doesn't make ends meet. https://www.investopedia.com/financial-edge/0609/what-the-unemployment-rate-doesnt-tell-us.aspx https://www.investopedia.com/financial-edge/0609/what-the-un... Does this bet mean anything if the only employment you can get is 10 hours a week at minimum wage?

dv_dt 8y ago
I find it odd that the article references the BLS, defines terms for discouraged worker and underemployment, but doesn't mention that the BLS also tracks that data and more, like labor force participation, omits the terms under which the BLS tracks the data (e.g. U-6 data), as well as omitting links to the data too. The last is maybe understandable, but the article leaves a general impression that the BLS misses that when the opposite is true.
deburo 8y ago
If all were forced to work or starve, I'd bet many would live in the same house and each work to pay their share of the rent, food, etc. I know I'm stating the obvious, but it seems to me that this reality is not as abject as democrats make it seem to be.
zeroname 8y ago
> Does this bet mean anything if the only employment you can get is 10 hours a week at minimum wage? Yes, because it's about relative rates. Unless you believe the EU is more "honest" about reporting unemployment numbers, the US numbers are just as meaningful.

sametmax 8y ago

> Europe has higher unemployment than the U.S. because it has stricter labor market regulation French here. I think he is stating the obvious, nobody is denying that. It's also the same reason it's hard to find a house in France: protective laws make both tenants and employers worried, and they filter quite hard the hiring/renting prospects. On the other hand, once you are hired, being fired is pretty hard. So you don't have to worry about your boss being as abusive as you can find in the US because you can talk back. Well, that's the theory. In practice I've rarely been talked badly by most people, the one time somebody was abusive, I told them to piss off, and they fired me. And I've never had any trouble finding a gig in my life ever since. So your milage may vary as usual, but most people around me do report having a hard time with hiring/renting because of high steaks for both parties.

subjectHarold 8y ago
> So you don't have to worry about your boss being as abusive as you can find in the US because you can talk back. So your main concern is being unable to be rude to your boss? And the price you are generously willing to impose for this privilege is that someone else is unemployed. You sound like quite a guy.
- danharaj 8y ago
  That's a really dishonest interpretation.
  - subjectHarold 8y ago
    What part is inaccurate?
    - rosser 8y ago
      The "your main concern" part, just to start.
      - subjectHarold 8y ago
        Okay, what other concerns does he mention? All he says is that being fired is difficult...which he then suggests is important because you can then be rude to your boss. No other reasons are used to support this idea.
        wtallis 8y ago
        You're attaching a very unreasonable interpretation to the term "talk back". It's not a pure desire to be rude to people; it's about being able to voice contrary opinions, without fear of unfair retribution and if necessary, without being constrained by political correctness or a corporate culture that demands obeisance. No employee should ever have to fear getting fired for speaking up about something that seems illegal, dangerous, or just plain stupid.

anentropic 8y ago

Correct on the numbers, but the conclusions don't necessarily follow > Most of the harm of unemployment is psychological, not material. Holding income constant, the employed are much happier than the unemployed. Hence, no sensible person would want to see U.S. workers’ wages rise by 10% if the unemployment rate rose 3.5 percentage-points as a result. And psychology aside, remember that the welfare state forces active workers to support the idle. So when regulation forces wages up, even the lucky workers who keep their jobs ultimately forfeit much of what they gain. If the goal is to improve happiness through applied economics then you should measure happiness, not make ad hoc justifications based on some other metric

ajross 8y ago
Yeah. It's also somewhat incomplete analysis about happiness because it views it as steady state. I mean, anedcotally, sure, being employed is good and being unemployed (even with a good safety net) is bad. But being laid off is much worse than either because of the disruption it causes. Consider, would you rather spend a career with a single 1-year blemish where you had to live on the dole because you couldn't find work after changing career paths or whatever, or one where you were laid off four times for three months at a time? Those don't seem as symmetric to me as they do to the author. That said, I think the points raised are valid. It does seem like in 2009 the market of academic economists was too bearish on the long term US unemployment situation.
- candiodari 8y ago
  It is very well established that psychological stability, in youth and adults, comes at least partially from there being a need for psychological stability. Structure and "somewhere to be" really, really help. Therefore I have little doubt that if you looked it up, you would indeed find that it's true that employment leads to increased happiness.
- valuearb 8y ago
  Being laid off is temporary. And it can result in a better outcome, esp. when your previous employer was dysfunctional. Source: I was just laid off.

y7 8y ago

Wow this author sounds smug. > Most of the harm of unemployment is psychological, not material. Holding income constant, the employed are much happier than the unemployed. This doesn't factor in that employed workers might be much happier in countries where they can work without the possibility of being fired at any moment for no reason hanging over their heads.

TazeTSchnitzel 8y ago
Also it may be more comfortable to be unemployed in a country that doesn't treat unemployment benefit claimants as “scroungers” or employ workfare.
- eterm 8y ago
  It's insanely more comfortable to be unemployed where your healthcare isn't tied to your employment. I choose free healthcare over employer supplied health insurance every day.
  - nraynaud 8y ago
    It’s not free, it’s universal. You pay for, it but the insurer is less cynical.
    - eterm 8y ago
      Well it's effectively free if you're life-long unemployed. But almost more importantly, the healthcare isn't being delivered by companies trying to make a profit but from central funding instead. Sometimes that means making really difficult decisions such as NICE refusing to fund a cystic fibrosis drug because the US pharmaceutical company wants to charge $138,000[1] per patient per year. But those difficult decisions mean the limited funding (and no funding can be infinite) can be targeted and spent to deliver the most benefit as a whole. Heart-breaking for those with children with C.F. but hopefully the U.S. drug company will soon back down. If it weren't for brexit they likely would have done so already. This article explains NICE's QALY (Quality adjusted life year) methodology: https://www.nice.org.uk/news/blog/carrying-nice-over-the-threshold https://www.nice.org.uk/news/blog/carrying-nice-over-the-thr... One of the most important reasons to resist the privatisation of healthcare is because it would actually lead to worse outcomes for the same money spent as the decisions of where to direct funding would be less evidence based. You're right, it's not free, and in fact needs more investment to prevent it being privatised. Britons spend less on healthcare than most, even in fact spending less per person than the US does through taxation alone[2]. [1] https://www.bmj.com/content/364/bmj.l1094 https://www.bmj.com/content/364/bmj.l1094 [2] https://www.bbc.co.uk/news/uk-42950587 https://www.bbc.co.uk/news/uk-42950587

vertline3 8y ago

I sort of see Quiggins' point about incarceration and employment.

mangecoeur 8y ago

this guy has a very one dimensional view of labour regulation, there's a lot more to it than just how easily you can be fired. Things like minimum paid leave of 20 days or more.

ergothus 8y ago

> That said, I heartily commend Quiggin for actually making our bet. He towers above all of the apologists for European labor market regulation who refuse to put their money where their mouths are. I know nothing of the people or personalities involved...but this does not give me a good impression of the author. First, he never refers to anyone with a contrary opinion in any way other than "apologist". Second, he never addresses any other value than the unemployment rate as a number (for example, I can easily imagine an "apologist" being uninterested in his bet if they think he might be right about the numbers, but they value the regulation for other reasons). In never addressing their views, he dismisses them as unworthy. I'm poorly versed in economics so I don't really have an opinion on the actual matter under debate...but I can easily see him writing a smug and self-congratulatory article on this topic that nonetheless gave me a better opinion of him.

TimTheTinker 8y ago
> First, he never refers to anyone with a contrary opinion in any way other than "apologist". What's wrong with the term "apologist"? It simply means one who defends a particular viewpoint or belief. (It comes from the Greek ἀπολογία, which means a "formal oratory defense" of a position.)
- gipp 8y ago
  That's just being deliberately obtuse. I don't believe I've ever in my life heard "apologist" used in a non-pejorative sense. Etymology is irrelevant here.
  - TimTheTinker 8y ago
    > That's just being deliberately obtuse. What? That's rather insulting to assume; I'm being absolutely serious. > I don't believe I've ever in my life heard "apologist" used in a non-pejorative sense. That's genuinely interesting. I've always heard it used in a respectful sense. We must run in different circles. (I've always heard it used of Christian apologetics.)
  - LyndsySimon 8y ago

nraynaud 8y ago

Maybe it’s a sign of the times, productivity is so high that there doesn’t exist work for everybody. Either you create bullshit jobs, or you have unemployment. This psychology thing is forgetting that being forced in a job that doesn’t pay enough to survive is a huge drain on the worker and their family.

ddebernardy 8y ago

> What does this all mean? To me, this bet is just a small extra piece of evidence in favor of the orthodox and blindingly obvious theory that Europe has higher unemployment than the U.S. because it has stricter labor market regulation. Insofar as I'm aware it mostly means that US unemployment is under-reported. The labor force participation rate has yet to fully recover from its pre-2008 levels, and you're not counted as unemployed if you worked an hour the previous week. European countries, by contrast, have mostly not changed their definitions of unemployment since, and have a relatively sane definition of what it means to be employed. This is not to say it's perfect -- far from it. But at least they're not counting 1h/week Uber drivers as employed. See e.g.: https://qz.com/877432/the-us-unemployment-rate-measure-is-deceptive-and-doesnt-need-to-be/ https://qz.com/877432/the-us-unemployment-rate-measure-is-de...

jnwatson 8y ago
Another important source of hidden unemployment is Social Security Disability. It is the new welfare in parts of the south and Midwest where globalization has hit the hardest.
pkaye 8y ago
The U1-U6 measures of unemployment are all published. I'm sure we can match up to the closest measure in the EU. The article mentioned a harmonized unemployment rate so maybe there is something comparable.
- CompelTechnic 8y ago
  For those interested in how the harmonized rate is defined across countries, the link below states it as: the unemployed are persons of working age who, in the reference period: − are without work, − are available for work; and, − have taken specific steps to find work. More detail would probably be helpful, but the harmonized rate attempts to apply equally across countries. There may be methodological differences, but I doubt those differences would be stronger than the difference the author of TFA found. https://www.oecd.org/sdd/labour-stats/44743407.pdf https://www.oecd.org/sdd/labour-stats/44743407.pdf
8y ago

carleverett 8y ago

> I’m not afraid to repeat that I have publicly demonstrated that my judgment is good. And in my demonstrably good judgment, radical deregulation of Europe’s labor markets is long overdue. I’m happy to make the Quiggin bet all over again with anyone who’s interested, but what’s the point? My homeschooled sons understood all of this when they were 12. Is this satire?

hirundo 8y ago
Brian Caplan is well known for placing long term bets on such things and having won all of them so far. Though his bet against Brexit happening is in jeopardy. As for his pride in his home schooled sons, and their agreement with their teacher, I'd call that expected and understandable bias.
mjfl 8y ago
He's right. Is there any better way to quantitatively measure one's judgement than to make public bets on future events against people who are willing to put money on the other side? Yeah it comes across as smug, but 19-0 is 19-0. I think your response is unproductive and dismissive without directly addressing anything, and is therefore annoying.
exolymph 8y ago
For most people this would be astonishing braggadocio, but Bryan Caplan has quite literally put his money where his mouth is. Of course, he's able to selectively make bets when he feels most confident — but anyone else would be able to the same thing, and yet they don't.

TomMckenny 8y ago

Are prisoners counted as unemployed? Are they employed when assigned to "penal servitude"? The are at several other reason US unemployment numbers are lower: they have different percentages in prison and, on the opposite side, nonstandard employment like the military. They have more clout to enforce favorable trade agreements. The numbers are calculated differently. There maybe a difference in real employment numbers but these are not the figures and the conjectural cause for this unknown difference is just a conjecture.

harryposner 8y ago
Prisoners aren't counted at all---not even as "not in the labor force" [0]. The employment statistics are based on the civilian non-institutional population, and prisoners are institutionalized. [0] https://www.bls.gov/cps/cps_htgm.htm#concepts https://www.bls.gov/cps/cps_htgm.htm#concepts
- TomMckenny 8y ago
  Is "not in the labor force" the right category? Treating it that way will reduce unemployment numbers by reducing the counted population. No matter what category you put these groups in, you will have an uncomfortable discrepancy similar, although to a lesser degree, of comparing apples to oranges. This is because prisoners are not identical with non-exsistant people nor are they identical to employed people. Additionally, since military is considered employment, Europeans could boost employment just by expanding their military: as if unemployment is caused by a small military. I sense this is not the conclusion the authors would like. So I too will bet that 10 years from now, European unemployment numbers will be higher than the US. My explanation: the counting techniques, prison ratios, relative world influence, military sizes as well as greater employment security will remain about the same.
  - candiodari 8y ago
    Governments have a vested interest in keeping the numbers low. Right now people who don't want a job (e.g. stay-at-home-parents) aren't in the workforce. Also it's counting jobs vs people in the labor force. Meaning if someone has 2 jobs, there's really also an extra unemployed person. Also 1h/week counts as a job. Without those modifications US unemployment is over 10%, EU unemployment well in the 20% even in the Netherlands. An even fairer measure would be "active population" which is number of people working on jobs divided by the full population. Of course at that point babies and comatose patients count as unemployed, but I think it's fair because it correctly points out that the employed have to pay (in work, not money) for the entire population. At that point US is high 30% unemployed, EU low 40% (about a 5% difference).

komali2 8y ago

> while the people currently in American prisons might not be model workers, most of them could easily be gainfully employed on the outside. A point easily refuted PDF - https://www.urban.org/sites/default/files/publication/59416/410855-Employment-Barriers-Facing-Ex-Offenders.PDF https://www.urban.org/sites/default/files/publication/59416/... https://money.cnn.com/2015/10/30/news/economy/former-inmates-unemployed/index.html https://money.cnn.com/2015/10/30/news/economy/former-inmates... https://www.nytimes.com/2015/03/01/business/out-of-trouble-but-criminal-records-keep-men-out-of-work.html https://www.nytimes.com/2015/03/01/business/out-of-trouble-b... Even if the excons are model, PERFECT employees, the conviction could prevent them from getting a job. Even if they have the greatest work ethic in the world, they might have gone into prison at 18 due to mandatory minimum sentences, came out at 23 with no skills and no money for education (or housing as a base of operations). And, often the case, the system has fucked them, and they have no desire to participate in the system that fucked them. I appreciate the author making such clear and well-stated points, that makes it easy to use to simple facts to refute his/her argument.

chimeracoder 8y ago
> Even if the excons are model, PERFECT employees, the conviction could prevent them from getting a job. I appreciate the author making such clear and well-stated points, that makes it easy to use to simple facts to refute his/her argument. It's pretty clear in context that this isn't actually what they're talking about at all. Caplan is responding to Quiggin's claim that mass incarceration has a measurable effect of targeting people who would otherwise have been unemployed if they had never been arrested and incarcerated in the first place. He's not literally arguing that releasing those people from prison overnight would result in them getting a job.
CompelTechnic 8y ago
It is no surprise that ex-cons have a high unemployment rate compared to the average member of society. A full refutation of his argument would give an analysis of the number of ex-cons, their unemployment rate, the hypothetical unemployment rate based on the assumption that the US's current prison stock were diminished to that of Europe, and demonstration that US unemployment numbers would be higher than Europe's in this case. You have made the motions of charitably interpreting the author's argument without actually doing so.

sveme 8y ago

Subdivide it into economies that are broadly similar and the conclusion does not hold anymore. Germany‘s unemployment is smaller than the US despite having a much more regulated job market. Problem is, the EU isn‘t really one homogeneous entity when it comes to job market regulation (Denmark is pretty laissez-faire, France much less so), so it‘s disingenious to treat them all the same. On another note, his smug tone doesn‘t really help.

ww520 8y ago

That's an interesting bet. It would also be interesting to see how UK fares compared to Euro zone in the next 10 years after the breakaway with Bexit. Some economists should do a bet on it. Nothing invigorating academic debates more than when money is on the line.

tonyedgecombe 8y ago
I’d like to see some politicians on both sides of the Brexit argument lay down some bets.

maxxxxx 8y ago

People like this author are the people who give economists a bad name. What arrogant writing and totally one dimensional thinking.

schizoidboy 8y ago
Dr. Caplan is a big proponent of betting. Disputes in academic journals are endless and inconclusive. Betting gets people to put their money where their mouth is. I think this is the best part of the economics profession and needs to be applied to more parts of society.
- maxxxxx 8y ago
  I am ok with betting. But the writing is horrible and the thinking is one dimensional.

pickle-wizard 8y ago

Humm. I find his assertion that employed people are happier than unemployed people interesting. I wonder if this is because a lot of people live pay check to pay check and the loss of income puts them in a serious bind. I was laid off last year, and I've been fortunate that I had a good salary and have been able to save a lot. Those few months I was unemployed were the happiest I've been in a decade. I did some traveling and projects around the house I've been wanting to do. In fact I quit claiming unemployment because the required job searches were killing my buzz.

maxxxxx 8y ago
Same here. When I was unemployed for a while the only thing that made me unhappy was the fear of running out of money. If I had a guaranteed income of some level that allows me to survive I would not need a job to be happy.

jerven 8y ago

I think it is much more interesting to look at the inverse. i.e. employment rate and it is quite a surprise to see this in the last 10 years between a slight growth in the euro area and decline in the US. Also the difference between unemployment rate over time and labour force participation is interesting. https://d3fy651gv2fhd3.cloudfront.net/charts/united-states-labor-force-participation-rate@2x.png?s=unitedstalabforparra&v=201903081350a1&d1=2004&d2=20190308&url2=/united-states/unemployment-rate https://d3fy651gv2fhd3.cloudfront.net/charts/united-states-l...

andrepd 8y ago

I would very much like to see Quiggin's reply to this, or some kind of independent rebuttal. His arrogance, the pejorative way he refers to those who disagree with him, the blatant one-sidedness and poorly concealed rhetoric of his arguments, all that leads me to not believe a single thing he says without independent commentary.

schizoidboy 8y ago

I think the meta-point is that betting on intellectual ideas is an underused tool in the toolbox of decision making. Endless academic journal debates don't seem to help much in moving people across ideological divides. For all of those that disagree with his methodology or conclusions, if you can reach him, I recommend putting your money where your mouth is and proposing a different bet with Dr. Caplan. I see a lot of people in the comments offended by his tone. I see his tone as analogous to a soccer player celebrating after a goal. We should socially encourage such behavior for those who win fair intellectual bets. (Although there is such a thing as unsportsmanly gloating, although I don't think this is such an example.)

exolymph 8y ago
everybody read Robin Hanson and google "futarchy" it won't work because people don't like it, but super interesting ideas that could potentially be applied in narrow domains

cjbenedikt 8y ago

In theory people incarcerated might be gainfully employed once released, in practise they're not

RugnirViking 8y ago
Why?

rawland 8y ago

"Let’s all join hands, admit that labor market regulation is a scourge, and tear down these paper walls." This thinking is as cropped at it can be. The US is also the country with the highest consumption of anti-depressants. And what not other social problems. Besides the whole article being a bunch of patting one self's back.

telchar 8y ago

No mention here of the fact that European governments went much harder on austerity policies than the US after the financial crisis? I seem to recall reading for years that European countries were lagging in recovery rate due to policies of austerity while the US largely resisted calls from erstwhile deficit hawks to do the same.

zeroname 8y ago

"And psychology aside, remember that the welfare state forces active workers to support the idle. So when regulation forces wages up, even the lucky workers who keep their jobs ultimately forfeit much of what they gain." Even a doubling in unemployment claims would be drop in the bucket compared to pension liabilities.

driftonhedgehog 8y ago

I would just like to point out that many people who have been incarcerated have little chance to build a career outside of starting their own businesses. Once they get out of jail they would actually be unemployed most likely for some time if it wasn’t for sheer necessity of some paycheck. Often people would rather stay incarcerated for 3 meals, a bed, a roof, and basic medical care.

ggm 8y ago

I like Quiggin. He's an almost lone voice of reason about privatization and the shocking effects on public utility functions like electricity supply. I wish him well even if he is down $1k on the bet.

RGamma 8y ago

I'm sorry in advance to those economists who try hard to actually try to be rigorous and scientific about their subject.* Rant follows: > Forget ideology. Let’s all join hands, admit that labor market regulation is a scourge [..] But let's not forget who the real scourge here are. Wanna-be rulers of the planet who dress themselves up as economists (though they come in many forms and degrees) making up just-so stories about why their next excuse to circumvene (or prevent) standards for upholding apparently not so common decency or (down to) basic human rights in the work place is justified. Or "economists", and the politician who lay in bed with them (sorry to those truly led astray though!), who enable business practices that profit just their interests. Or those that think it's okay to bleed the planet dry and destroy our biosphere for a quick buck. The list goes on... Not saying the author is one of such, but they sure as hell must be out there (I'm sure their decisions are all nicely dressed in numbers and growing curves and big words!). As a particularly egregious example what sufficiently unregulated labor markets can do, slave labor conditions in low-cost countries are unfortunately _really_ "efficient", the higher the wealth gap the better. Or even outright slavery: Esp. uneducated people in poverty have a lot of kids to support themselves, creating an endless fountain of cheap (unqualified) laborers (don't let them get too rich or educated though!). Got a prison population sitting idly? Well, they seem like an easy target to be extorted for un(der)paid labor. Obviously there's a need for regulation here. I don't think however the author would condone any of the above, yet historically and contemporarily there have been several instances of stuff like this. Of course there's a lot of nuance involved, modern discussion in developed countries revolves more about the /amount/ of social safety the state guarantees to the citizens plus the implementation of which, not about the /whether/ it should at all. Violations of human safety and dignity at the work place esp. in developing countries are kept behind a comforting veil of cheap prices in the rich nations. Luckily things often improve when total wealth in a country rises, mostly because you need an at least somewhat educated and satisfied population at some point to keep growing which precludes subjecting them to the direst of existences. People's desires to not be screwed with too much play a big role as well (it's not all bad, after all). Nonetheless social systems are lacking in many countries worldwide in aspects like education, healthcare, sanitation, housing, public services or (somewhat tangentially) good ol' infrastructure. "But who will pay for all this fancy social security?". Well, who has all the money? It's basically the top 1% who possesses half the net wealth globally, which is a lot even should the number be off by a fair amount (https://en.wikipedia.org/wiki/Distribution_of_wealth#Inequality https://en.wikipedia.org/wiki/Distribution_of_wealth#Inequal...). They don't seem to have been paying all that much then it seems. However, like above, I don't want to make this seem about /whether/ we should have unequal wealth or not but about /how much/. Instead of trying to minimize welfare, let's ask the other way round: How much welfare could the economy sustain (without choking itself off!)? How much economic inequality is actually sustainable without tearing society apart and making it blow up like has happened in mankind's history many times? There's an intricate balance here and many structures and parameters to tune... At the both extreme ends of wealth distribution lies dystopia and history has not been nice to countries who have left the safe zone for one reason or another. The world is complicated, many economic statements are purely statistical. But arguing in a world with lots of known unknowns and even unknown unknowns is complicated. Abductive reasoning, which is what he attempted to do, tries to find an explanation for an observed phenomen given some background knowledge. It is an inherently unsafe type of inference in the real world. And in this instance it's non-rigorously done by a human, meaning it likely suffers from one of the many kinds of glitch in naive probabilistic/statistical reasoning (long list at https://en.wikipedia.org/wiki/List_of_cognitive_biases https://en.wikipedia.org/wiki/List_of_cognitive_biases) our species has. If you add your ability change the world as an agent yourself, things get even more complicated (self-fulfilling prophecies anyone?). Good job on his bet though. Let's make a new bet: We have people "work or die": I bet unemployment would rapidly approach 0% (dead people can't be unemployed!). Man I should get into economics with this idea. An important reason why we can't have nice things to a degree that should be possible today is ourselves, and to fix the woes of the modern world requires an extensive look at how we organize our societies and how we cause them to be or become dysfunctional. Statements like "hurr durr I win 19 bets" in a field that is riddled with conflicts of interests and that seems just as much to be about ideology and opinion (how come there exist so many "schools of economy"? I thought we all observe the same world) as about actual evidence and rigorous reasoning seem not very impressive. * see https://en.wikipedia.org/wiki/Demarcation_problem https://en.wikipedia.org/wiki/Demarcation_problem