How far apart the social gap really is

0
118

Rich get richer and poor get poorer. Is that really true? A new study has investigated this and comes to surprising conclusions.

The gap between the richest and the poorest in Germany has increased

How rich are the Germans, who has a lot, who has less and, above all, how much are the financial circumstances changing? There are always studies on this, some of which make waves. The tenor is often: The wealth of the super-rich continues to grow, while the socially disadvantaged remain socially disadvantaged. But is the social gap really widening?

Germans are richer than you think

Three scientists – Thilo Albers, Charlotte Bartels and Moritz Schularick – have taken a closer look at the prosperity of Germans and the development of wealth since the 19th century. One of their results: The Germans are richer than previously thought. And by a good 4000 billion euros.

According to the study, how wealth changes depends on the period under consideration. In the last hundred years, the wealth of the richest one percent of the population has not increased disproportionately. In 1895, the richest one percent of the population still owned half of the wealth, today they only own 25 percent, i.e. a quarter.

During the Second World War, residential buildings and industrial plants, such as the factory premises of the Badische Anilin- und Soda-Fabrik AG in Ludwigshafen, were completely destroyed and a lot of assets were destroyed.

The two world wars provide more Equality

One of the reasons for this is that many rich people lost part of their wealth during the two world wars. Many businesses and buildings were bombed. In addition, in the period between the two world wars, assets in the form of real estate, shares and bonds lost massively in value. The hyperinflation of 1923 also caused the wealth of the wealthier in Germany to shrink sharply. During the global economic crisis in the 1930s, business assets also fell because many companies lost value or had to file for bankruptcy.

The so-called Burden Equalization Act in the post-war period at the beginning of the 1950s brought another major boost to the equalization of assets. Anyone who was able to save significant assets from the world wars now had to pay half of the assets (spread over 30 years) into a compensation fund as a so-called burden equalization levy. The money was used to financially compensate those who had lost their fortune in the war. This tax made Germany one of the most egalitarian countries at the beginning of the post-war period.

The richest Germans according to the Forbes list 2021 are the Aldi Süd heirs Beate Heister and Karl Albrecht jr. with over 39 billion dollars. Dieter Schwarz, whose Schwarz Group is followed by the discounter Lidl and the supermarket chain Kaufland, with assets of a good 17 billion dollars.

Redistribution has come to a standstill in recent decades

After that, however, in the past 70 years, the rich got richer, but the middle class was also able to accumulate more wealth just as quickly. This is partly due to the fact that between 1950 and 1980 more and more people bought their own homes. this enabled the middle class to benefit from constantly rising real estate prices.

Interest rates have been low for a long time, house prices have risen and risen. Good for those who made early home investments

From this point of view, wealth is less unequally distributed than before the First World War. German households currently have assets of 420,000 euros on average. But if you look at how much a household owns, from which half of all households have more and the other households have less income, then the result is a fortune of only 120,000 euros. This shows that wealth is unequally distributed – in favor of the wealthy half of the population.

The poor stay poor

So while half of Germans can afford more, people in the lower income brackets have not accumulated more assets in the past forty years. Strictly speaking, the average wealth of the poorer half of Germans at the end of the 1970s was just as large – or low – as it is today, namely around 20,000 euros (adjusted for inflation). However, entitlements from social insurance are not taken into account.

This development was due to the fact that, on the one hand, income has hardly increased, so that this population group was able to save less than the wealthy. On the other hand, the accumulated savings were invested less in real estate or stocks and more in savings accounts or life insurance policies with lower returns. As a result, the socially disadvantaged households have had little share in the rapid property price development.

While the wealth of the wealthier half of households has doubled over the past 25 years, the less wealthy half has had no wealth gains. The proportion of the total assets of this less affluent half has halved from five percent to three percent. From that perspective, wealth inequality has increased.

Half of the Germans were able to accumulate a lot of new wealth, while the accumulation of wealth in the other half is almost stagnating

Inaccurate data basis

But how is it that the wealth of Germans has been underestimated so far? A major problem that the three authors had to deal with was the imprecise data situation. For example, it is difficult to weight real estate assets correctly. For the tax, real estate in Germany is only recorded with standard values, but they do not correspond to the actual market values ​​by far. Because the standard values ​​are based on the values ​​of 1964 (old federal states) or even 1935 (new federal states). Conurbations with high market prices are valued far too low based on the unit values.

Business assets, especially those of family businesses that are not listed on the stock exchange and which form the basis of the German economy, are undervalued by the Federal Statistical Office and the Bundesbank and do not give such a value realistic picture of the fortunes of the wealthy.