DW the German national brodcaster has an amazing free high-quality docs channel on youtube. I watch every new one when it comes out (occasionally they're German-centric). They've done a lot on wealth and inequality and I found them to be extremely interesting:
Just a note: DW is not the german public broadcast.
The public broadcast is for a great part indipendent from politics.Recently a german court issued a veto for an rejection of an raise for the finding if the public broadcast. Deutsche Welle(DW) is 100% funded by the german state, while the public broadcast is forbidden by law to receive similar funds. Dw is more like an channel to promote the german state.
Germans aren't poor. Source: living in Germany for 10+ years, and in its poorer parts. There is a quite surprising economic inequality from top to bottom, but that doesn't make people living here poor, just the top filthy rich. Poor people in Germany still have health care, still can go to good schools, still can study at a university for basically free, and can get money to study if they don't have enough. Jobs are not difficult to find and there's a safety net. There are even things like money for housing if you have a job, but it's not paying that well and e.g. you have a big family. Etc. etc.
Germans are however angry all the time, but this is true of pretty much every country in the world, especially the developed world. But the angry parts are not the ones that are poor, it's been in my experience that the more they have the more they bitch and complain. Could be that fearing losing what you have is a lot worse than not having it.
There is absolute and relative poverty. And while there is little to no absolute poverty in Germany, the relative poverty is still relevant for the poor people.
> The median wealth of a household in eastern Germany stood at €43,400 in 2021, compared to €127,900 in western Germany.
Even almost 25 years after the reunification, there are large differences between East and West, even though large sums of money were transferred into East Germany. For many charts (income, stocks, ...) one can clear see the difference between East and West Germany. That's one of the unsolved problems...
Large sums of money were transferred out of East Germany too. E.g. a lot of real estate was bought of by investors from the West. Unsurprisingly because the economy of the east was crushed after reunification.
Of course it's a question of where the money flows from and to. The money flowing into East Germany comes from taxes, paid by all. The money flowing from East Germany ended up in the pockets of "investors". Which is yet another example of why inequality is rising.
Are there still people living in East Germany, I mean who didn't move to the wealthier West? And if yes, why aren't industries and everybody moving their factories and whatnot to cheaper centers? Because all they do is offshore? I understand offshoring has capped, maybe they'll finally notice what's directly under their noses...
Yes, there are people living in East Germany. The larger cities (Berlin, Leipzig, Dresden, ...) are doing kind of okay, but the less populated regions struggle a lot and people are moving away.
> Because all they do is offshore?
Germany can do nearshore, since there are countries next/near to Germany with lower wages/costs, which at the same time are in the European Union. A common large economic region (the EU and its associated countries) makes nearshoring attractive. Thus "East Germany" is often in competition with other EU countries for new factories.
East Germany was stripped bare by the Soviets after WW2 and then by the Globalists after the fall of the Berlin wall, so its no wonder its poorer. Yes, Western Germany poured money into Eastern Germany post Berlin Wall but was that really going to help if you strip all of its assets for cheap?
Out of all the Soviet bloc states East Germany had the highest standard of living. This despite the draconian dismantling of its Industrial base by the Soviets.
The average German, while nominally poorer than people from other countries, is often richer. Living in the UK and knowing people in Germany, I realized that the average Briton is significantly poorer than the German.
For example renting in Germany is comparable to buying a leasehold flat in the UK, but doesn't count as personal/household wealth and doesn't require high capital in order to be acquired. Similarly, free education and functional healthcare are indeed assets, but aren't counted as household wealth. Even their pensions are significantly higher, their unemployment benefits are enough to pay the rent and the bills of a 4 people-household (compare to the 82£ a week you'd get in the UK).
Over their lifetimes, Germans receive benefits worth tens of thousands of euros every year, that, while not being counted as personal wealth, make them factually richer than the Brit. I am sure this applies to many other countries.
I was in Germany a couple months ago. My experiences are entirely anecdotal but I’ve never seen so much anger before. I kept seeing fights and hearing angry yelling everywhere I went in Berlin.
This is a useless article that only looks at wealth of households, not at income. Germans own traditionally less real estate than the average Italian. But average income is a lot higher, easily €500K over a lifetime.
I wonder what is the more general solution to fixing the wealth distribution problem? This is not a unique problem and it is playing out in most western countries to varying degrees.
Cost of housing has skyrocketed, social mobility is down, a large portion of the population is bifurcated into “haves” and “have nots” which due to more limited social mobility is perpetuated across generations.
One thing that I notice in my country is that there are very strong social programs to ensure that home owners do not lose their house. For example there was a moratorium on mortgage payments during covid, the government runs a mortgage insurance corporation to bail out defaulted mortgages, home owners get many tax breaks. What this does is it syphons money from public funds to protect home owners - which makes up the majority of people’s net worth — further ossifying the social classes. If you can scrounge enough money or have rich parents you can make that jump to property ownership and then the government will do everything in it’s power to stop you from losing that asset even if you are way over-leveraged, or the economy fails, or the house is a lemon.
I think this is part of what makes the USA so wealthy is that they are willing to accept more pain during economic busts which efficiently allocates resources to where they are more efficiently used for the next boom.
The first question to be asked is: is there a will to fix the wealth distribution problem? You'd be surprised how many will answer "no, just give me more".
Doesn't "X is rich but people from X are poor and angry" apply to other countries, like the US for example?
But more importantly the lede to this article is "Germany’s grossly unequal distribution of wealth is contributing to the country’s malaise." but Bloomberg is a journal that aggressively argues for and supports this exact situation in the US?
Tbf there are some (mostly rich) people that believe wealth inequality isn’t a problem as long as the standard of living keeps going up for everyone. But that falls apart once you consider monopolization generally leads to rent seeking and not better services
The average net worth in Germany is a couple hundred thousand while the average in the US is over a million. Just taking median it goes to around double for the US compared to Germany. There is real social mobility in the US that isn’t there in Germany.
So, one thing you have to be careful of here. Germany is one of the few countries where defined benefit pensions (that is, pensions where your pension is a fraction of final salary or similar) are still common; in most developed countries, including the US, peoples' pensions are far more likely to be some sort of tax-advantaged investment, which they probably have restricted access to pre-retirement, which their employer may contribute to or may be required to contribute to, and so on.
The latter is clearly wealth, and relatively easy to account for; the former is _much_ harder to account for, as it's an obligation by something to the pensionee, but not stuff actually owned by the pensionee.
(Not that people don't try; Ireland, for instance, has additional taxes on pensions worth over 2m, and actually does produce a notional valuation for DC pensions where they exist for this purpose)
Social mobility is why the saying goes that the USA is full of temporarily embarrassed millionaires. Including the ones sleeping on the streets. They're all one lucky break away from the big one. Of course you can't generalize like that across a whole population but if you take out the 'white, male, well educated, from a wealthy background' out of the stats then suddenly the social mobility in the USA looks totally different, exceptions notwithstanding. Your average includes Jeff Bezos, Elon Musk, Bill Gates and Warren Buffet.
Actually the income distribution for Americans is mostly the same across all races with the exception of native Americans and Pacific Islanders. It’s true there’s a larger wealth gap but even that is changing with time and is mostly due to the white Americans being able to build wealth the longest.
I think you're confusing Bloomberg and WSJ. Bloomberg is a newswire service focused on business, it doesn't argue for inequality, at least anywhere that I've seen.
All the economics papers do this. There's a column here or there about inequalities and vague ideas how to address it. When it comes to actual concrete policy, the wealth will trickle down.
Yeah, a lot of this article is just gratuitous sniping at the German economy for not being as nutso gung-ho as the US:
> Much of Germany’s wealth is held by private, family-owned small and medium-sized companies known as the Mittelstand. These are an engine of job creation, but their thrift underpins the current account surpluses Germany is often criticized for
Seriously, what does that even mean. Bloomberg would presumably prefer fewer Mittelstand companies, more venture capitalists and the occasional swashbuckling Adam Neumann?
> An aging population is also straining Germany’s generous social insurance system
Your social insurance system can't go bust if you don't have a social insurance system tapsheadmeme.gif
Instead in Italy we say that the government is poor but its citizens are rich [0]. A country of shopkeeper and small business owners never too keen to pay duties to government and always looking for some scheme to game welfare/subsidies.
Italian median / mean wealth by person: 107,315 / 221,370 euro
Germany median / mean wealth by person: 66,735 / 256,179 euro
Italy by capita has 48k euro of public debt vs 30k by capita of Germany
It's a sad thing, really. Italy could theoretically be doing better than Switzerland but in practice they are doing far worse due to the never ending corruption, tax evasion and organized crime all of which drag the country down tremendously. But it will take many generations to repair that.
The main problem for Italy is its public debt [1][2]. The debt is so big that Italy can barely pay interests to stay within the boundaries defined by EU. This means there is no remaining money to fund growth.
That's fair, but I see that debt as a consequence, not as a direct cause. If not for a stupendously inefficient government, tax evasion and organized crime that debt would be far lower than it is and much easier to service. Though probably there are now positive feedback loops between these that essentially make it impossible fix the direct causes without being able to fix the debt first.
As a student here in Germany, I was talking to my German flatmate, who practically never experienced anyone else besides Merkel as chancellor. He mentioned something that struck me as rather interesting - the "Traffic Light" coalition, as a new entity in power of the federal government is increasingly scapegoated for the damage caused by decades of policy crafted by the CDU.
The blame is being put on the new government which has the monumental job of fixing several years of policy which caused rising inequality. IMO, with populist journalism from Axel Springer's subsidiaries and Spiegel, people are blaming the current government for things which it has nothing do with and some are even calling for the return of CDU.
This whole "article" sidesteps the problems at the core of the issue: housing, income, and taxes on income.
There's only so much you can do with a welfare state and Germany hasn't even exhausted that, take neighboring Denmark as an example in housing where home ownership is much higher due to the govt backing that mortgages have.
The article also discusses giving young people money but not taking it from the rich -- where then does it come from?!
The tax problem isn't unique to Germany, it's a common theme in Western Europe: if you make minimum wage and barely scrape by you're still taxed too much, and god forbid you actually have a high paying job well into the 6 figures you'll get disincentivized to earn more by the progressive tax system..
The "progressive" tax system all dissolves at certain 7-8 figures of income or net worth where you can just hire an army of tax consultants and pay the least amount possible.
You get hit the hardest as a middle class and upper middle class citizen, which in a developed nation is quite a large percentage of the productive workforce.
> I’m also in favor of a citizen’s inheritance — a cash distribution of, say, €20,000 to every young adult that could be reserved for specific expenses like acquiring property or paying for education.
Yea sure. Wait.. where does the money come from? Yea let's take it from the rich.
> Broadening wealth need not mean taking it from the rich.
Hmm.. I don't know but I think the essay needs some rethinking..
It's interesting to me that the income inequality statistics don't seem that bad. It's my US bias showing I suppose. The chart about Ultra High Net worth shows 109 UHNW per million Germans, compared to 374 UHNW per million Americans.
Ultra high net worth individuals don't matter at all when it comes to statistics, they're an anomaly. The interesting part is the lower 50% and how they are doing. If those people are ok then a country is doing fine, if the lower 50% are at or near the poverty line then you have serious problems.
Income inequality stats are never as bad as wealth inequality stats. Wealth inequality stats are the ones that really matter though.
Income inequality is cited in almost every attempt to downplay inequality in a political context. Income inequality is what is used to say "look! compared to the rest of the planet you have it great! STFU already!"
Not sure about the numbers in the article, but in general the comparisons of household wealth between countries are a bit tricky. One item that is often not counted for Germany is the pension, which is mandatory for regular employees.
Another issue is using household here instead of a per person value, this will be distorted by differences in typical household sizes across countries.
This article raises a few good points but I think it falls short on answering the question posed in the headline. That is unsurprising, though, because the topic is so complex, it would probably take a book rather than a website article to really go to depth.
Wow... that percentile plot is terrible. Is that common practice in economics or what? I understand percentiles and cumulative curves and all that but reading and understanding this plot took a lot of brain bending.
The only ones who had sinking profits are the winegrowers.
Wheat producers increased 27%, cattle too, all the while help by the state fell by 10%.
So I’m pretty much over the poor farmers protesting in Germany -
of course the growing inequality __overall__ is a huge problem.
The problem is more corrupt politicians, a more and more unhinged “free market” and just the dystopian hellscape that capitalism is becoming.
Of course cutting social services and benefits for 30 years+ straight will have some effect on the general population.
Thank Schröder and the SPD for starting this and Merkel and the CDU for decades of inaction until it was too late and there was no more room for action.
Now we will have a far right government next election cycle and the best plan they can come up with is to peddle the same lies that the AFD is spouting: that immigration is to blame for growing problems - when in reality immigration is the one thing that props up this failing system.
> Germany’s grossly unequal distribution of wealth is an underappreciated cause of this malaise: The top 10% of households have at least €725,000 ($793,000) of net assets and control more than half of the country’s wealth, while the bottom 40% of households have at most €44,000 of net assets, according to a Bundesbank survey in 2021.1
>This includes medical debt (#1 reason for bankruptcy), which is considered a consumer PRODUCT.
Only 4% of US bankruptcies are because of medical bills <https://www.washingtonpost.com/blogs/post-partisan/wp/2018/0...>. A tipoff that [insert large percentage here] of bankruptcies aren't actually because of medical costs is that only 6% of bankruptcies by those without health insurance are because of that cause. The biggest cause of bankruptcies is lack of income, which health insurance doesn't affect.
>The Kaiser Family Foundation showed that 41% of U.S. citizens carry some sort of medical debt, and 24% were considering bankruptcy to solve a medical debt issue.
You're correct my phrasing of "large percentages" wasn't correct; instead, what I meant to have said was that health issues in USA are largest single contributing issue affecting bankruptcy within our country.
I'm not trying to smear shit — I dropped out of medical school fifteen+ years ago and haven't myself had health insurance for the majority of my adulthood [decades+]. If I had a family, I would approach my insurance needs differently... but I just choose to opt-out (knowing this is not good for healthcare management, long-term).
So yes, technically you're correct to say that "The biggest cause of bankruptcies is lack of income." The best kind of correct [technical, misunderstanding the premise].
The EU lets in goods, especially food, from Ukraine unregulated ('we must help them!') and Germany, and no one else in the EU, can do the same. It destroys the market > hence the farmers protesting.
This is not true for Germany. The farmer protests in Germany were started by the government announcing that they want to increase taxes / drop tax brakes on diesel fuel ("Agrardiesel") and remove subsidies.
Farmers are heavily subsidised everywhere in the EU, half of them won’t have a sustainable business without tax discounts and transfers from the EU or the government.
They have nothing to complain about and, yes, we should help Ukraine is every way we can.
Hm no never heard that as part of the farmers protests. They say it's rather the amount of bureaucracy that skyrocketed in the past decades and the recent (rather naively) cut farmer subsidies made them protest.
(It appears that Americans are over-optimistic about social mobility, Europeans over-pessimistic. Americans are very unlikely to go from poor to rich (bottom quintile to top in this case), but think it's easy. Europeans are rather more likely to, but think it's impossible.)
This is actually kind of what you'd expect (in particular because of how expensive university education is in the US), but it doesn't really gel with how people _think_ the world works.
This also reflects on family relationships. It's fairly rare for Europeans to 'move to where the work is' whereas in the USA it is very normal. As a result social cohesion differs considerably. Though institutions such as churches compensate for this to some extent in the USA.
I haven’t lived in Europe but my impression has always been that it’s a trade off. Less mobility, but less chance of being completely fucked by poverty.
Sort of depends where you are. I was working in the UK and moved to the USA and my earnings and lifestyle shot up. The USA is very variable depending on the state you are in. The studies mentioned may not properly account for that variability.
There are some European countries with worse mobility than US, but the top countries on most indices I've seen are mostly European, and the US is a ways down.
I see the study posted above but I seriously doubt this and think there’s some statistical nuance being lost here. Looking at a list of the worlds richest people outside of the US most of it is entirely inter generational while the US citizens shot from middle class to billionaires thanks to tech and what not. The income disparity alone means it’s gonna be hard to argue against US citizens having a better chance at building wealth than Europeans and median/average wealth in the US vs the biggest European countries confirms this.
Are you sure that's the case? My intuition would tell me that that's the 'myth' that keeps the American dream alive, but you might actually have a much harder time in the US getting out of poverty because of the lack of social safety nets. I don't have data to back that intuition up either, though.
It turns out that unrestrained capitalism leads to the end result that a very few hold almost all the resources. That's because the more money you have, the options you have and can make, and thus every transaction rich do make more money.
The rest of us don't have those choices, so our money ends up going TO the rich.
Housing is going up because the last 20 years, housing was the big thing to capitalize (aka: price all but the rich out of the market). And then, housing doesnt make money by itself, so they then rent out to the humans whom they deprived access to begin with.
But in this housing endgame, rich people have options to remove options from the average people, in which the result is "Rich people profit on the backs of the normal people".
And also, this is not a "Germany-only" phenomenon. We're seeing this happen across all the "Western Nations", wherever unrestrained capitalism has reared its ugly head. Even Adam Smith wrote the last 80% of his book about how unrestrained capitalism would do this.. but no economist ever appears to read or heed his words.
Also, this isn't some "socialism and/or communism" is the answer post. Neither of them can handle the fact that most of what we create isn't physical matter, but instead knowledge and content. No economic system as of yet can handle the fact that something costs $x million to create, but $0 to copy. But whatever we do *must* be able to handle that respectably to all participants. And alongside that, maximums of what people can own - extreme income inequality is massive scourge to any government and people.
Germany does not have "unrestrained capitalism". It has an extensive social safety systems: health ensurance, unemployment benefits, pensions, low-cost education system, job protection against dismissal, workers councils in many companies, low youth unemployment, ...
I think it'd be fair to say that Germany's govt does restrain more than the USA.
HOWEVER, the very article title is "Why Germany Is Rich but Germans Are Poor and Angry", and the article discusses the usual extreme income inequality and mostly unrestrained capitalism that allows the extreme rich to become more rich.
This isn't some unique extreme income inequality we only see in the USA. This is happening nearly everywhere, EVEN in places with supposed better controls on capitalism.
> Germany does not have "unrestrained capitalism". It has an extensive social safety systems: health ensurance, unemployment benefits, pensions, low-cost education system, job protection against dismissal, workers councils in many companies, low youth unemployment, ...
Are people thriving or are they just going through the motions of living? Sounds like to me that most people are just surviving, and suffering the whole time, while the richies live on the backs of everyone else. Again, the article talks about "farmers protest against the German government's planned cuts to agricultural sector subsides".
Again, this is playing out around the whole world.
There are other factors for inequality. One is that "East Germany" has 1/3 the median wealth compared to "West Germany".
We have a million refugees from the Ukraine here. That makes the housing situation difficult, because available space is scarce and expensive.
Energy was very expensive last year, due to the Russian energy war against Europe (and especially Germany).
Financing an apartment or a house got very expensive due to higher interest rates for credits and rising construction costs.
People lost jobs during the covid pandemic.
Still there is little unemployment.
> Are people thriving or are they just going through the motions of living? Sounds like to me that most people are just surviving, and suffering the whole time, while the richies live on the backs of everyone else.
"most people are just surviving" ? Have you ever been to Germany?
> Again, the article talks about "farmers protest against the German government's planned cuts to agricultural sector subsides".
"subsides" - they are fighting to keep these privileges. Nowhere else is the agriculture sector so much protected than in Germany (and the EU). They are driving with tax-free diesel to the protests. Agriculture for example has quite a different structure in Germany compared to the US.
This particular protest might be an internal German matter, but distribution of wealth is not. The message should reach as broad an audience as possible.
Us who have zero influence on German government policy? Why does it matter what language we discuss it in? What matters is persuading the people that can influence German government policy, and one does not influence them in English.
My guess: it refers to the 'Fridays for Future' movement. More or less arguing that caring about the climate does not matter if the farmers go bankrupt.
Farmers go bankrupt because organized and technified farming displace them. I have seen all along in-develoopment countries, farmers trying to farm manually as they ancestors did, getting outmatched by Jhon Deere and complaining about the system, instead of modernizing
