Inequality on the Rise in Germany and the U.S.

As I anticipated, I got a lot of 'Facebook will steal your soul!!' reactions to the announcement of less blogging and more Facebooking, so I plan to keep blogging as time permits. However, Facebook and Twitter are better for spontaneous link-sharing and discussion, so you're invited to follow me there if you wish as well.

Here's a post I've been meaning to work on for a while, another installment in the series of 'Germany's social problems are more similar to America's than many Germans would like to acknowledge'. First, a short excerpt from an essay (g) by Hans-Ulrich Wehler in Die Zeit, on the government's most recent (and controversial (g)) report on 'Wealth and Poverty in Germany'. Here are a few of his conclusions (my translation):

Even more severe than the inequality in incomes is the inequality in wealth. They show class barriers on the bases of an unprecedented amount of wealth in Germany. In 1970, the top ten percent of Germany already controlled 44 percent of total cash wealth. In 2011, the richest decile controlled 66 percent. In a dramatic process of concentration, the top 10% has acquired control over an astonishing 2/3 of total private wealth in Germany. One hundred billionaires stood at the top of 345,000 millionaires, as measured by wealth. Rich Germany have never been so wealthy as they are now.

The situation is made more drastic by the fact that, for the first time since the 'golden years' before 1914, a generation of heirs will inherit a massive amount of wealth. In the late 1990s, the first billions created during the 'economic miracle' years was passed on to the next generation. Afterwards, however, the process started in earnest: between 2000 and 2010, two trillion Euros were inherited in Germany. Germany's 37 million households have collected total wealth of 7.7 trillion Euro. Of that, 2 trillion were in the hands of households dissolved by death during this decade. For the heirs of the next generation, the next decade will be even more beneficial: the German Institute for Old-Age Care estimates that since 2010, 260 billion dollars have been passed on as inheritance in each year. That means 3 trillion dollars will be inherited during this decade.

Meanwhile in the United States:

WASHINGTON — Incomes rose more than 11 percent for the top 1 percent of
earners during the economic recovery, but not at all for everybody else,
according to new data.

The numbers, produced by Emmanuel Saez, an economist at the University of California, Berkeley,
show overall income growing by just 1.7 percent over the period. But
there was a wide gap between the top 1 percent, whose earnings rose by
11.2 percent, and the other 99 percent, whose earnings declined by 0.4
percent.

Mr. Saez, a winner of the John Bates Clark Medal, an economic laurel
considered second only to the Nobel, concluded that “the Great Recession
has only depressed top income shares temporarily and will not undo any
of the dramatic increase in top income shares that has taken place since
the 1970s.”

There are still meaningful differences between American and German social-welfare policies, and Germany remains a somewhat more equal society than the United States. But the gap between Germany and the U.S. is certainly not the yawning chasm that some Germans like to imagine — and it's steadily narrowing, thanks in no small part to the policies of the current German government.

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