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Bryan Caplan reports that he has just won a bet with Tyler Cowen over whether unemployment would ever drop below 5 percent. It might be worth remembering the context.

You see, when the Great Recession struck — a demand-side shock if ever there was one — it took no time at all for a strange consensus to develop in elite opinion, to the effect that a large part of the rise in unemployment was “structural,” and could not be reversed simply by a recovery in demand. Workers just didn’t have the right skills, you see. Many of us argued at length that this was foolish. If skills were the problem, where were the occupations with rapidly rising wages? I pointed out that people said the same thing during the Great Depression, only to see it disproved when we finally got a big fiscal stimulus called World War II.

But the doctrine somehow just got stronger and stronger in elite circles, because it sounded serious and judicious, unlike the seemingly flighty proposition that all we needed was more spending. In fact, the notion that our unemployment problem was mainly structural began to be presented as a simple fact rather than as a hypothesis most professional economists rejected.

And here we are.