Studies of Economic Change

Phase 2

Because of the scientific and technological development the productivity increases. Therefore the demand for highly educated experts increases as well, the wages are going up. The increasing labour productivity makes a lot of manufacturing jobs redundant. Furthermore the globalisation of the world economy causes a shift of jobs to low-wage countries. The further industrialisation brings unemployment.

The additional demand for highly educated experts induces a wage increase for the upper wage group. Consequently the demand for goods and services increase with the effect that the prices increase. Increasing prices mean for the lower wage groups that the level of the poverty line increases as well. As a result more and more people are becoming impoverished and pauperised.

The area of the wages below the poverty line is supplemented by the arise resp. increase of unemployment if the economic growth rates are permanently below the increase of the productivity rate. Collective labour agreements might improve the living conditions of the labour force but the unemployed have to be subsidised by unemployment pays or social welfare.

Unemployment and wage dumping arises system-related. An increasing share of the population is systematically excluded from the use of the social structures while high wages are enabled by a high productivity rate. The following applies: Wages dumping and poverty are the necessary condition for wealth, therefore high taxes and duties on high wages are according to their reason.

The consequence is the necessity to introduce a basic income for everybody regardless of eventually existing property and income. This reflects the fact that unemployment is not caused individually. A basic income avoids unnecessary psychological pressure. Compulsory minimum wages compensate wages below the poverty line and ensure the achievement principle at the same time. The progression of the income taxes - as they are imposed according to their reason - can regulate the gap between the rich and the poor and finance the basic income. [Note: The same progression effect is caused by a basic income which is not reduced despite of receiving wages plus an uniform income tax rate.]

Furthermore the collective bargaining parties unions have to consider the increasing gap between the rich and the poor. Minimum wages for example can avoid wage dumping. And last but not least the reduction of unemployment by creating unproductive jobs has to be avoided as it leads to a lack of international competitiveness in the long-term according to the idea of the evolution theory.