Also, all kinds of stressors can create recessions - from a supply shock (the sudden increase in oil prices in 1979 forcing the US economy to restructure to adapt), to a demand shock (a sudden drop in consumer access to credit in 2008), to sudden shifts in the type of demand (both WWI and WWII ended in steep, short recessions during the switchover from wartime to peacetime production).
Businesses need to be made to squeal in pain here. Run the economy as hot as we can get it for as long as we can and shove wages through the roof at the cost of business margins (which were just considerably boosted via the tax cuts).
If the Republicans and Democrats weren't collectively so stupid, they'd be cooperating on hammering out a massive infrastructure spending plan paid for by a trillion dollars printed by the Fed across 10-15 years (or similarly constructing an infrastructure bank filled courtesy of abusing the global reserve currency while we still have it). And doing that would juice things that much more right now and for the next decade.
But from a business standpoint, no point in increasing wages above inflation until workers revolt. So what's needed is a healthy dose of inflation to get workers to revolt, and make business compete for workers by taking the risk, instead of hoarding, and paying more. Businesses and their shareholders have had it really good compared to workers, because workers have been docile and shareholders have been there to scoop of the profits that workers refuse to fight for.
Wages will naturally adjust to the equilibrium supply and demand. If the needed increase in wages to increase production pushes prices up such that supply falls then production will be cut to adjust. That is what actual economic theory says.
In the real world their is a lot of lag, so some market participants will be increasing wages and producing too much, and then they lose money, and have to overcut on the other side, but in a massive diverse economy this random noise balances out.
The market will never over price labor, therefore inflation cannot come from increasing wages.
Inflation comes from printing money (or creating it digitally since we don't actually print any more). When the inflation from printing money results in rising wages, then that is a sign to the bankers that they should cut back so that they can keep the poor in line, and keep them from paying off their loans so that they can't get out of debt.
Real world economics.
i gotta say, this idea has some appeal. since businesses tend to use the new tax savings for stock buybacks or paying out dividends instead of hiring and expanding, force their hand a little.
Yet the experience of towns like Ames and Des Moines show that such “labor shortages” might be due to insufficient wages and crummy working conditions — not an unwillingness of workers to switch industries or improve their skills for a job.
What does such a restructuring look like, in concrete terms?
The dependent part is where these slashes and cuts are accompanied by lowering prices in a race to the bottom within the industry, to the point where every business in the sector is operating on near-zero margins. Then, when wages overall start to go back up, the first business in the industry to flinch has to raise prices immediately as well, and ends up getting out-competed into oblivion. But if nobody flinches, the entire industry's labour pool dries up, harming everyone.