The development of social welfare and benefits

Since early last century, many countries have been developing their social welfare systems that people with disadvantageous backgrounds in many countries, especially in those developed European countries, have been given social benefits to support their livings.

During our history, the first turning point of significant increases in ordinary labour wages was that the US car company, Ford, increased its employees' wages and its employees could be possible to afford a Model T car, which was a cheap type of car produced by Ford. Before Model T, cars had been seen as luxury goods; in addition, the majority of labour forces at the time around the world received very limited incomes. The increase in average labour incomes could increase the revenues of many companies because of the increase in the number of their potential consumers.

Nowadays, when many companies see opportunities of lowering their costs of production, they could start to replace some of their employees with computers and other machinery. However, such transformation could increase the unemployment rate in the society. When more people become unemployed, their consumption will significantly reduce so the consumption will reduce and the revenues for the companies will decrease. Without any intervention, the companies have to balance the reduction in the revenues and the reduction in the costs of production via replacing labours with machinery.

However, if the government is able to provide more social benefits for the unemployed population than previously, the incomes of those whose jobs are replaced by machinery do not change significantly. Under such circumstance, the companies are able to replace their labour forces with machinery without any limitation and the governments provide the population with higher and higher benefits to prevent the consumption from dropping, this could lead to many people losing incentives to develop their skills and seeking new jobs. Therefore, in the future, it is likely for the social class boundaries to be more solid.