Uploaded July 2021 | Updated September 2026, 1 week ago
Unemployment is a Deliberate Choice. Not by the people who are unemployed, but by governments the world over. It is their intention that a significant portion of the community are always unemployed. This comes from a concept called the Non-Accelerating Inflation Rate of Unemployment, or NAIRU.
The idea is that if we don't keep a large pool of people unemployed at all times then inflation will increase. The problem is that NAIRU has never been shown to exist in the real world. As unemployment rates fall the constant warning of inflation gets louder, but even during times of record employment the inflation never materialises.
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Sources:Debunking the NAIRU myth by Matthew C Klein (2017) ft.com/content/facf6989-7cd2-3724-a6d4-dfe7c755175fFed Chair Jerome Powell's House testimony on the state of the economy – 07/10/2019 youtube.com/watch?v=n9I_9-eqHoE Fed Chair Jerome Powell's Senate testimony on monetary policy – 07/11/2019 youtube.com/watch?v=iSRfoBp_Fq0 (Very relevant section at 34:00)The Case for a Job Guarantee by Pavlina R. Tcherneva (2020) pavlina-tcherneva.net/the-case-for-a-job-guarantee Should We Reject the Natural Rate Hypothesis? By Olivier Blanchard (2018) pubs.aeaweb.org/doi/pdf/10.1257/jep.32.1.97 Full Employment In Australia (The 1945 Australian Government White Paper)billmitchell.org/White_Paper_1945/index.html What is full employment? An economist explains the latest jobs data by Jay Zagorsky (2018)theconversation.com/what-is-full-employment-an-economist-explains-the-latest-jobs-data-95908 Salemi, M.K. 1999, "Estimating the natural rate of unemployment and testing the natural rate hypothesis", Journal of Applied Econometrics, vol. 14, no. 1, pp. 1-25. Storm, S, & Naastepad, CWM 2012, Macroeconomics Beyond the NAIRU, Harvard University Press, Cambridge. Available from: ProQuest Ebook Central. [28 May 2021]. Servaas Storm & C. W. M. Naastepad (2007) It is high time to ditch the NAIRU, Journal of Post Keynesian Economics, 29:4, 531-554, DOI: 10.2753/PKE0160-3477290401Servaas Storm & C.W.M. Naastepad (2008) The NAIRU reconsidered: why labour market deregulation may raise unemployment, International Review of Applied Economics, 22:5, 527-544, DOI: 10.1080/02692170802287490Credits:Written by Andrew Johnson & Jackson WinterSpoken by Andrew JohnsonEdited by Jackson WinterIcons made by MD Badsha Meah, www.wishforge.games, Charlie, icon king1, Raj Dev, fengquan li, Free Preloaders, Gayrat Muminov, Muhammad Haq from www.freeicons.ioConfuse by evi1000, Watch by la-fabrique-créative, Retiree, Headache, Broken Window, Giving to the Poor, Fat Rich Man and Successful Businessman by Gan Khoon Lay, Speech by parkjisun, Fail by Adrien Coquet from the Noun ProjectAll other graphics created by Jackson WinterMusicWaking to Reality by Unicorn Heads1940's Slow Dance (Sting) by Doug Maxwell, Media Right Productions
Unemployment is a Deliberate Choice. Not by the people who are unemployed, but by governments the world over. It is their intention that a significant portion of the community are always unemployed. This comes from a concept called the Non-Accelerating Inflation Rate of Unemployment, or NAIRU.
The idea is that if we don't keep a large pool of people unemployed at all times then inflation will increase. The problem is that NAIRU has never been shown to exist in the real world. As unemployment rates fall the constant warning of inflation gets louder, but even during times of record employment the inflation never materialises.
Come discuss this with us on
Twitter twitter.com/PEGSInstitute
Instagram instagram.com/pegsinstitute
Facebook facebook.com/PEGSInstitute
Support us on Patreon patreon.com/PEGSInstitute
Sources:Debunking the NAIRU myth by Matthew C Klein (2017) ft.com/content/facf6989-7cd2-3724-a6d4-dfe7c755175fFed Chair Jerome Powell's House testimony on the state of the economy – 07/10/2019 youtube.com/watch?v=n9I_9-eqHoE Fed Chair Jerome Powell's Senate testimony on monetary policy – 07/11/2019 youtube.com/watch?v=iSRfoBp_Fq0 (Very relevant section at 34:00)The Case for a Job Guarantee by Pavlina R. Tcherneva (2020) pavlina-tcherneva.net/the-case-for-a-job-guarantee Should We Reject the Natural Rate Hypothesis? By Olivier Blanchard (2018) pubs.aeaweb.org/doi/pdf/10.1257/jep.32.1.97 Full Employment In Australia (The 1945 Australian Government White Paper)billmitchell.org/White_Paper_1945/index.html What is full employment? An economist explains the latest jobs data by Jay Zagorsky (2018)theconversation.com/what-is-full-employment-an-economist-explains-the-latest-jobs-data-95908 Salemi, M.K. 1999, "Estimating the natural rate of unemployment and testing the natural rate hypothesis", Journal of Applied Econometrics, vol. 14, no. 1, pp. 1-25. Storm, S, & Naastepad, CWM 2012, Macroeconomics Beyond the NAIRU, Harvard University Press, Cambridge. Available from: ProQuest Ebook Central. [28 May 2021]. Servaas Storm & C. W. M. Naastepad (2007) It is high time to ditch the NAIRU, Journal of Post Keynesian Economics, 29:4, 531-554, DOI: 10.2753/PKE0160-3477290401Servaas Storm & C.W.M. Naastepad (2008) The NAIRU reconsidered: why labour market deregulation may raise unemployment, International Review of Applied Economics, 22:5, 527-544, DOI: 10.1080/02692170802287490Credits:Written by Andrew Johnson & Jackson WinterSpoken by Andrew JohnsonEdited by Jackson WinterIcons made by MD Badsha Meah, www.wishforge.games, Charlie, icon king1, Raj Dev, fengquan li, Free Preloaders, Gayrat Muminov, Muhammad Haq from www.freeicons.ioConfuse by evi1000, Watch by la-fabrique-créative, Retiree, Headache, Broken Window, Giving to the Poor, Fat Rich Man and Successful Businessman by Gan Khoon Lay, Speech by parkjisun, Fail by Adrien Coquet from the Noun ProjectAll other graphics created by Jackson WinterMusicWaking to Reality by Unicorn Heads1940's Slow Dance (Sting) by Doug Maxwell, Media Right Productions
