July 27, 2020
Germany is one of the most unequal countries in Europe
The DIW economic institute in Berlin published a wealth survey based on a new data set, coming up with the following income distribution:
- top 0.1% have 20% of the wealth;
- top 1% have 22% of the wealth;
- top 10% have 59% of the wealth;
- Bottom 50% have 1.5% of the wealth.
The left-wing Anglo-Saxons are right in one respect. There is quite a bit of equality, at least among the bottom 50%. They own almost nothing.
The study contains a lot of technical detail, including about new ways of measuring the wealth of the rich using previously-unavailable data. It paints a much starker picture of wealth inequality than previous studies. What these data reaffirm with a vengeance is that Germany is a wealthy country of mostly poor people. The median German's biggest property is a car, a fast-depreciating asset. On the plus side, the median Germans owns a contingent asset: a good pension from the age of 67 and access to probably the best health care system in the world. But people do not perceive these intangible assets.
Our main interest here is the politics of wealth inequality. We know that a lot of commentators, not only left-wing Anglo-Saxons, believe that Angela Merkel has shifted German views on cross-country transfers. Opinion poll data appear to suggest that a small majority of Germans indeed supported an one-off act of solidarity with Italy and Spain. What the wealth data are telling us is that the proportion of Germans that own 1.5% of the country's wealth also constitute a political majority. While they are split across the political spectrum, no political parties except the Greens will find it easy to campaign on a theme of permanent EU fiscal transfers.
So, if you want a eurobond and a fiscal union, you are not going to succeed by telling that 50% of poorer Germans that they need to show solidarity. Instead, you should support taxes that redistribute income from the rich to the poor in the eurozone, irrespective of their nationality. You may not get the national fiscal transfers you want, but you may find that over 50% of Germans might support it.