The natural rate of unemployment assumption survived despite the failure of monetarism itself

Evidence

Monetarism, as a specific policy of targeting the money supply to fight inflation, foundered on the rocks of defining what money in the modern world actually is back in the 1980s. But its legacy of assuming a natural rate of unemployment has been critical in sustaining arguments against spending and compensation. After all, why spend to get past the natural rate when that will only ever produce more inflation? If unemployment is “structural,” and not due to a lack of demand, then spending will not have any effect on it, so we should not try. The fact that the “natural rate” jumps around far too much across countries and time periods to be reduced to structural factors or unionization rates has done nothing to discredit it. — Mark Blyth, Austerity, 427

Categorization

• XREF: Directly relevant to how austerity’s legitimacy was built on the natural-rate premise; connects to standard critiques of NAIRU. — connects to: Friedman’s monetarism assumes all unemployment is voluntary choice — Mark Blyth, Austerity: The History of a Dangerous…, 409; Money illusion and natural-rate logic make Keynesian stimulus self-defeating under monetarism — Mark Blyth, Austerity: The History of a Dangerous…, 410; Debt-aversion ideology survives despite being spectacularly disproven by history — Mark Blyth, Austerity: The History of a Dangerous…, 290 (+1 more)
• QUESTION: Worth chasing the empirical instability of the natural rate across countries — a potentially devastating internal critique.

Broader Connections

• Debt-aversion ideology survives despite being spectacularly disproven by history #expands (0.82) — Mark Blyth, Austerity, 290
• 1970s stagflation discredited Keynesian demand management and empowered monetarism #contradicts (0.75) — Donald MacKenzie, An Engine, Not a Camera, 47