Studies of Economic Change

Evolution

High wages lead to maximum welfare in a leisure-oriented society!

You think this is impossible!

How does this work? Now I would like to try another explanation:

1. Labour market:
   According to the economic equilibrium theories about supply and demand of the labour market high wages causes a decline of the labour demand; unemployment is the result. The actual economic measures are usually based on this relation. It would be correct if there weren't point 3 and 5.
2. Decline of purchasing power:
   The decrease of the labour demand decreases employment and increases unemployment. Less people have to bear the social costs for more and more people. Taxes and duties have to be increased. Therefore the decrease of the labour demand is connected with a decline of purchasing power.
3. The idea of the evolution theory (according to Charles Darwin):
   High wages are equal to high demand for employers and entrepreneurs. Some of them avoid high demands and shift their production to low-wages countries whereas others face the demands and optimise their processes. They are getting highly efficient and competitive. The innovation and productivity rates increase. (Avoiding high demands is cowardly, facing high demands is courageously.)
4. "Law" of diminishing marginal utility:
   On the one hand the efficiency of the production processes enables cost savings which causes redundancies. According to the "law" of diminishing marginal utility it is furthermore likely that the demand for goods and services does not increase substantially anymore.
5. Generation of needs:
   On the other hand innovations lead to the creation of new needs. The people are getting curious. They promise themselves a higher social status and a higher quality of life as innovations offer problem solving capacities for everyday's life. Therefore the demand for goods and services increases.