Cutting unemployment and cutting inflation used to be a straight tradeoff
In 1958, economist Bill Phillips plotted nearly a century of UK wage and unemployment data and found a clear pattern: when unemployment fell, wage inflation rose, and vice versa. Economists built decades of policy around this tradeoff — until 1970s stagflation, when unemployment and inflation rose together, bearing out Milton Friedman's prediction that the tradeoff only holds in the short run.