Masters of the Universe: Hayek, Friedman, and the Birth of Neoliberal Politics by Daniel Stedman Jones

Author:Daniel Stedman Jones [Jones, Daniel Stedman]
Language: eng
Format: epub, pdf
Tags: Political Science, Non-Fiction, 21st Century, v.5, Amazon.com, Retail, Economics, Economic History
ISBN: 9781400844739
Google: x-lnOd088FQC
Amazon: B0091XBOU2
Barnesnoble: B0091XBOU2
Goodreads: 14891848
Publisher: Princeton University Press
Published: 2012-09-15T15:00:00+00:00

To avoid misunderstanding, let me emphasize that by using the term “natural” rate of unemployment, I do not mean to suggest that it is immutable and unchangeable. On the contrary, many of the market characteristics that determine its level are manmade and policy-made. In the United States, for example, legal minimum wage rates, the Walsh-Healy and Davis-Bacon Acts, and the strength of labor unions all make the natural rate of unemployment higher than it would otherwise be. Improvements in employment exchanges, in availability of information about job vacancies and labor supply, and so on, would tend to lower the natural rate of unemployment. I use the term “natural” for the same reason Wicksell did—to try and separate the real forces from monetary forces.

But the central point about the natural rate of unemployment was that it was hard to know what it actually was. “The “market” rate will vary from the natural rate for all sorts of reasons other than monetary policy”; thus, if monetary authorities decide to respond to sporadic variations, it will be like a random walk:68

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