Werden die Armen immer ärmer und die Reichen immer reicher? - Zehn Thesen zur Ungleichheitsdebatte

ZEW policy brief No. 16-03 // 2016
ZEW policy brief No. 16-03 // 2016

Werden die Armen immer ärmer und die Reichen immer reicher? - Zehn Thesen zur Ungleichheitsdebatte

Barely a day goes by without claims of increasing inequality making the headlines. According to a study carried out by Credit Suisse, 0.7 per cent of the world population owns 45 per cent of all wealth. The organisation Oxfam claims that the wealth held by the world's richest has increased by 44 per cent in the last five years. In the same period, the wealth held by the world's poorest has fallen by 41 per cent. The French economist Thomas Piketty has warned of a society in which incomes are becoming ever more unequal. In response to such claims, many are calling for the "rich" to be subject to higher levels of taxation and for further development of a social state. This debate throws up three essential questions. Firstly, if income and wealth inequalities really do increase, will the poor become ever poorer and the rich ever richer? Secondly, how do developments in Germany compare to those in other countries? And finally, should the German government take action, and if so, in what form? The most important thing to note in response to all of these questions is that the claim that poverty and inequality are generally increasing is incorrect. Over the last several decades, levels of global poverty have fallen dramatically. Income inequalities have also reduced. This is the result of advancements in newly industrialised countries. In wealthy industrialised countries, inequalities in "market income" are increasing. But ultimately, "disposable income", income after taxes and transfers which individuals are able to spend, is the most important. The social state cushions the impact of increasing inequalities. In Germany, incomes are distributed to a much greater extent than in nearly any other country. The disposable income of the poorest 25 per cent of the population has therefore remained almost stable over the past 20 years. From this perspective, the current inequality debate seems to be somewhat overblown. Political bodies ought to concentrate on reforming the German welfare state in order that it continues to provide cover in the future. How economic inequalities develop, and the consequences that this will have for German politics, can be summarised in ten hypotheses.

Fuest, Clemens (2016), Werden die Armen immer ärmer und die Reichen immer reicher? - Zehn Thesen zur Ungleichheitsdebatte, ZEW policy brief No. 16-03, Mannheim

Authors Clemens Fuest