The school of macroeconomics believes as a core tenet that workers benefit from gaining efficiency through increased wages, as economics believes that the marketplace is fair and reflective of reality. However, corporations no longer pass efficiency gains to workers, which has undercut that key tenet of the macroeconomic model and thus threatens a basic assumption: that the government can lower inflation without regulating that banks loan out excess reserves or that corporate efficiency gains be paid to workers rather than to shareholders.
Critically, they believe that anything that raises the wages per hour will raise inflation, because their model fails to recognize that corporations have a Profit Level that is stickier than the macro Price Level. Graphing the real profit level versus the real price level of American corporations over the past eighty years would put it into stark contrast, and no existing lever held by the FOMC can influence that.
Only intolerable to current leaders policy ideas like, and this is drastic to convey it clearly, “impose a tax on earnings in excess of 3% real (inflation-adjusted) profits at 100%, due quarterly, to be paid out as a nationwide quarterly basic income”, would help reduce Profit Level to the target of 3% and thus pass efficiency gains to workers. This example explicitly carves off excess profits from domestic GDP efficiency gains that are not being repaid to workers and repays it to domestic households. It would crater the speculative-unprofitable VC market overnight, because sale of a firm for profit not distributed to its workers would be miserably unprofitable for the investor-gambler’s earnings — but the carrot on the stick is that if businesses simply lower their Profit Level, which they can easily do by paying higher wages, then they get to keep more of their profits and the macroeconomic imbalance corrects itself.
It’s of course also possible businesses would choose to lower prices rather than pay workers more, as prices as much less sticky than wages, which would directly reduce both Profit Level and Price Level in lockstep and creating positive supply and demand shocks across the marketplace as the previously-held efficiency gains shake out into higher basic income, higher wages, and/or lower prices.
Arguments that this would increase inflation do not hold water, as those efficiency gains were already priced into inflation when they occurred (or else the efficient market hypothesis itself is disproven, demonstrating the need for more invasive policy of this sort). Redistributing that resulting purchasing power from businesses to households has a net zero macroeconomic impact.
Some tax code finessing would need to be done to deal with e.g. Amazon’s manipulation of Profit Level to keep it at 0% in order to mask true gains, which under this model would need to be labeled a ‘for the primary purpose of’ tax avoidance scheme by IRS auditors, though I would tend to suggest taxing research at a fraction of the excess Profit Level tax, since research is a necessary step in having efficiency gains - but not when it’s used to avoid paying any of a firm’s efficiency gains back to workers as wages.