Jim Devine wrote:
CB: > But Friedman counts low unemployment as bad for his class too,
doesn't he ?
Tight labor market causes, well, wages to rise, because there aren't as many
unemployed competing for jobs, no ?
I don't know what he thinks about his class. He uses the word
"natural," which suggests that he sees a certain amount of
unemployment as something Nature bestows upon us. And if you mess with
Mother Nature (getting the actual unemployment rate too low), then
Mother Nature punishes you (with accelerating inflation).
To be fair to Friedman, he did acknowledge that the "natural" rate
could move about, depending on the state of social affairs
<http://nobelprize.org/economics/laureates/1976/friedman-lecture.pdf>:
"The 'natural rate of unemployment', a term I introduced to parallel
Knut Wicksell's 'natural rate of interest', is not a numerical
constant but depends on 'real' as opposed to monetary factors - the
effectiveness of the labor market, the extent of competition or
monopoly, the barriers or encouragements to working in various
occupations, and so on."
Doug
