Growing inequality in ... Germany!

The distribution battle
Christopher Sheil
One of the surprising findings of Evatt's new report on The Wealth of the Nation is that the only OECD countries that the statistics unequivocally show have a more unequal distribution of wealth than Australia are the United States of America, Austria, the Netherlands and Germany.
The United States apart, who knew that what we might crudely describe as 'greater Germany' was so inegalitarian?
Marcel Fratzscher, apparently, according to this review of his new book in the Financial Times, Verteilungskampf: Warum Deutschland immer ungleicher wird (which translates as The distribution battle: Why Germany is becoming ever more unequal).

Fratzscher directs the German Institute for Economic Research (DIW) in Berlin and nominates Amartya Sen as his favourite economist. According to the review in the Times by Martin Sandbu, his message is that Germany is one of the most unequal rich countries in the world.

Fratzscher finds that the market incomes of Germans (before redistributive policies) are as unequal as those of Americans. As average wages have been stagnant for the past quarter-century, the low paid have seen their pre-tax pay fall in real terms.

As usual, wealth is even more unequally distributed than incomes. Fratzscher finds that in no other European country is wealth so inegalitarian.

Wealthy Germans are richer than their counterparts in other European countries. Echoing Thomas Piketty's thesis, as capital returns are growing faster than wages, unequal wealth is also exacerbating income inequality.

The concerns are not alleviated by social mobility. Fratzscher argues that the life chances of Germans are overwhelmingly fixed by the position or background they are born into. The economy tends to keep people stuck in their place in the distribution of income and wealth, and within occupational roles.

Read the full review of Verteilungskampf: Warum Deutschland immer ungleicher wird, by Marcel Fratzscher, Carl Hanser (€19.90), 264 pages. See also: 'Economist stirs debate by challenging German orthodoxy'.

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