Germany's economy has been doing fairly well in Europe and internationally.
Wages have been held down. And, yet, the ratio of the highest income decile to
lowest is very small, compared to other countries.
According to calculations by Michael Spence, published by the Council on
Foreign Relations, the ratio of the income of the richest 10% to the poorest
10% in Germany was 6.9, compared with 15.9 for the USA. Sweden's was 6.1 but
all the other countries Spence listed were much higher.
So if the wages were low and the income of the richest was not at a much higher
ratio, where was the money going?
Spence also gives the ratios for the richest 20% / poorest 20% and a similar
relative result shows up.
Here's Spence's table. Where does the income go in Germany? Or am I not
understanding this at all?
Table 2. Measure of Income Distribution in Selected Economies
Country Gini Coefficient R/P 10%
R/P 20%
Israel 39.2 13.4 7.9
United States 45 or 40.8 15.9 8.4
China 41.5 21.6 12.2
United Kingdom 34 13.8
7.2
Germany 27–28 6.9
4.3
Sweden 23 6.1
3.9
Brazil 57 51.3
21.8
India 36.8 8.6
5.6
Source: Author’s compilation. R/P 10 percent means the ratio of the average
income of the richest 10 percent
is to the poorest 10 percent.
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