But then a funny thing happened: Europe started doing much better, while America started doing much worse. France’s prime-age employment rate overtook America’s early in the Bush administration; at this point the gap in employment rates is bigger than it was in the late 1990s, this time in France’s favor. Other European nations with big welfare states, like Sweden and the Netherlands, do even better.

Now, young French citizens are still a lot less likely to have jobs than their American counterparts — but a large part of that difference reflects the fact that France provides much more aid to students, so that they don’t have to work their way through school. Is that a bad thing? Also, the French take more vacations and retire earlier than we do, and you can argue that the incentives for early retirement in particular are too generous. But on the core issue of providing jobs for people who really should be working, at this point old Europe is beating us hands down despite social benefits and regulations that, according to free-market ideologues, should be hugely job-destroying.

Oh, and for those who believe that out-of-work Americans, coddled by government benefits, just aren’t trying to find jobs, we’ve just performed a cruel experiment using the worst victims of our job crisis as subjects. At the end of last year Congress refused to renew extended jobless benefits, cutting off millions of unemployed Americans. Did the long-term unemployed who were thereby placed in dire straits start finding jobs more rapidly than before? No — not at all. Somehow, it seems, the only thing we achieved by making the unemployed more desperate was deepening their desperation.

I’m sure that many people will simply refuse to believe what I’m saying about European strengths. After all, ever since the euro crisis broke out there has been a relentless campaign by American conservatives (and quite a few Europeans too) to portray it as a story of collapsing welfare states, brought low by misguided concerns about social justice. And they keep saying that even though some of the strongest economies in Europe, like Germany, have welfare states whose generosity exceeds the wildest dreams of U.S. liberals.

But macroeconomics, as I keep trying to tell people, isn’t a morality play, where virtue is always rewarded and vice always punished. On the contrary, severe financial crises and depressions can happen to economies that are fundamentally very strong, like the United States in 1929. The policy mistakes that created the euro crisis — mainly creating a unified currency without the kind of banking and fiscal union that a single currency demands — basically had nothing to do with the welfare state, one way or another.