Germany’s hidden hunger
edition.cnn.com
edition.cnn.com
So why is the woman portrayed in the article visiting the "Tafel"? The mentioned surplus is really small. For example, if your kid wants to be soccer goal keeper and needs soccer shoes and gloves, that would not be covered by social support. By visiting the "Tafel", the mother can save money otherwise spent for food, and can buy such extras for her kids.
tl;dr: being poor in Germany is very different from being poor in the USA. The CNN article does not understand these differences.
See how other EU5 did not follow this model and their struggles.
Not arguing ethics here, welcome a discussion on these mechanics of fiscal policy.
Uhh, there are so many differences between nations, one can hardly compare on this basis alone. Of course, most Western European nations have pretty strong social safety nets, one way or another.
Even just the Eurozone's monetary policy, which heavily favours Germany (simply by have very strict monetary policy) - could be enough to explain most of the differences in economic outcomes.
> But rents are high — and rising — in Fürstenfeldbruck. Kus’s apartment alone costs her more than 800 euros ($960) per month.
That's one expensive rent for a small town in Germany. Usually one would not spend that much in rent with that income if they can help it.
Munich rents are pretty insane.
It's like if they subsidized everybody winning at auction for a limited supply (real estate is an auction basically).
Which would yield 98 hours or 24 hours a week. that's way below the average, especially for a single. yes, she has kids, but she would prolly have a better life if working for 36-40 hours a week and bring their children to a kita.
I don't have any kids and live in Belgium, but I sure as hell couldn't manage. How do people survive on that?
"On the breadline in Europe’s richest country"
Germany isn't Europe's richest country, not even close. They may be Europe's most influential economy due to size. The rich title goes to Luxembourg or Switzerland; then to Norway. Or take Belgium as an example a notch down the list: their median wealth per adult is nearly four times that of Germany.
One of Germany's problems is precisely that they're not such a rich nation at all. Their median net wealth per adult is a mere $42,000 and has not improved in over a decade. It's lower than Spain (which has over 1/3 less GDP per capita), Taiwan and the US.
Their median income is also not impressive, given the way they're widely perceived as being Europe's most powerful economy. Their median income is near ~25% below that of the US.
Their economic growth for a decade has been nearly flat. $3.4 trillion in 2007, $3.4 trillion in 2016. To make matters worse, in 1995 it was $2.6 trillion - adjusted for even a small amount of annual inflation, they've seen between zero and very little economic growth for two decades. All of this while Germany has been free riding on an artificially cheap Euro (artificially cheap for Germany), while simultaneously harming most of the other Euro-zone members (such as Spain or Portugal), with the end result being propped up exports for Germany.
What does that all add up to? Record poverty problems:
https://www.thelocal.de/20170303/german-poverty-hits-record-...
http://www.newsweek.com/poverty-germany-record-high-says-stu...
Plus, the stagnation and low level of their median net wealth aligns with the other figures/problems I referenced. When you're lauded as Europe's most powerful economy and you fail to see your relatively low median net wealth climb for a decade or more, there is something wrong when it comes to household prosperity / household wealth formation. For example, if we accept a strict premise that Germany's low median net wealth is due to not having seen a big property bubble - then what accounts for those home owners having not paid down a lot of mortgage debt in the last 10+ years and significantly boosting household wealth accordingly? Not to mention, where is the traditional savings formation that one would expect to see outside of home ownership.
Well, for starters, differences in pension systems. Some types of retirement savings are counted as part of your net wealth, some aren't. In Germany, most don't, even though they're probably worth hundreds of thousands of Euros per person. If you look at net pension wealth, Germany is much closer to the top [1].
Second, net wealth is dominated by property owned, and German's don't buy homes as much, both for good and bad reasons.
1. The German tax system discourages property speculation (and to a lesser degree, also buying property). Fees and taxes on property sales can be hefty. If you buy, you generally buy for life and only once you've settled down. The upside is that controlling property speculation contributes to stable and affordable rents.
2. Renting is both more affordable and also otherwise an attractive, non-stigmatized alternative to owning. Tenants have strong rights vis-à-vis their landlords (arguably, too strong, but that doesn't make renting less attractive).
3. Germans tend to be debt-averse and are less likely to take up a mortgage even if they could afford one. A recent study showed that one third of German renters could buy ... if they wanted to, which they apparently don't. That said, due to a strong economy, the home ownership rate has been growing in recent years.
4. Higher population density and exacting building codes make homes comparatively more expensive.
It's easy to gloss over the realities of peoples day-to-day life when comparing countries with different economies and social structures by only looking at high level statistics or only at the more highly visible government services.
The top 1/3 in the US pay nearly all income taxes, for example. The bottom 1/2 in the US pay almost no income taxes (the bottom 1/3 have a large negative income tax level), while deriving substantial tax payer benefits. The US has an extremely progressive taxation system.
Medicaid, Food Stamps, SNAP, Disability, Unemployment Benefits, Free Healthcare at any Emergency Room hospital that accepts Medicare, Food Staples (Cheese, Peanut Butter, etc), free phones, free defense lawyer, etc.
Same for public transit, the lack thereof in most of America severly handicaps the poor who do not have a car.
Education too: the poor have the opportunity to put their kids through college or even med school. Yes there are higher failure rates among the poor, but 75% of the poor still graduate HS and if they make it past that, they've cleared the hardest hurdle (fewer dropouts among poor in college than MS/HS). http://www.education.gouv.fr/cid5008/les-trajectoires-scolai...
This is isn't about who has better public institutions (which plays a part) but the fact economics and quality of life are complex, deep subjects, and debates about who 'takes care of their poor' are so often reductive and narrowly focused.
That's not adjusted for prices. Living in the US is easily 25% more expensive at current exchange rates, if not more. The Euro is still massively overvalued if you think living costs should be roughly equal.
Living in the US is not more expensive than living in Germany. A typical - median - house in the US costs beween $175,000 and $225,000 for example. Germany's prices are higher than that. US food and energy costs are also lower than Germany's.
This is also why the US has a far higher disposable income than Germany: precisely because not only does the US have a higher median income, it has a lower cost of living.
The only places that it's more expensive in the US, is in a select few cities such as NYC or San Francisco.
GDP per capita is important, but not the only important indicator. Total GDP is also important, and it justifies the "Europe's richest country" headline.
Tax havens are special cases, and so is Norway. Sweden and the Netherlands are more useful examples of somewhat richer countries that aren't rich because of one of those factors.
In general, it's more interesting to study wealth at the regional level (notice in particular the pretty vast difference between the former West and East Germany [1]).
> Their median net wealth per adult is a mere $42,000 and has not improved in over a decade. It's lower than Spain (which has over 1/3 less GDP per capita), Taiwan and the US.
This is largely a result of the low home ownership rate, second only to Switzerland in Europe. Net wealth is not a useful source of comparison, especially when it comes to poverty (poor people are generally more interested in the cost of renting than buying).
> Their median income is near ~25% below that of the US.
And so are annual hours worked per employee. It's a different tradeoff, work-life balance vs. income. And no, this is not the result of underemployment. Underemployment in Germany is pretty much middle of the road [2].
> What does that all add up to? Record poverty problems:
Ugh, no. Have a look at the income curves [3]. The bottom quintile in Germany is actually doing okay, other than compared to the Nordics. Yes, relative poverty and inequlity has risen over the past 25 years, but if you want to look for reasons, I'd start with reunification and the fall of the Iron Curtain. Living standards still differ greatly between the former West and the former East Germany and wage competition from and outsourcing to Eastern Europe hasn't helped, either (though that was good for Eastern Europe, something that shouldn't be forgotten).
[1] http://ec.europa.eu/eurostat/statistics-explained/index.php/...
[2] http://ec.europa.eu/eurostat/statistics-explained/index.php/...
[3] https://www.washingtonpost.com/news/wonk/wp/2013/08/15/this-...
(as to that devil in the details, one could argue that the Rhine and the Meuse are natural resources that a) make farming way more productive by keeping the grass green and b) make it way easier to become a trading nation)
I think that the point of the article is to demonstrate that a country's power and wealth doesn't translate into good lives or more wealth for its citizens. The statistics you brought up demonstrate that very nicely too.
[1]: https://en.wikipedia.org/wiki/List_of_sovereign_states_in_Eu...
(We should probably pay subsidies to old/disabled people on condition that they move away from centers of economic activity and into more rural, economically depressed areas)
Old and disabled people -- particularly if poor -- may find it easier to get about in cities, as places they want to travel to will be nearer and there will be more public transport.
And by doing that you're making economy healthier. By propping up big cities you're contributing to feet of clay situation.
Worse compared to that? Channeling more money to landlords in SF and NY?
It's basically people on early disability choosing between whisky on payday and making extra buck on hauling other people like them around.
Face it, many less-fortunate areas are on the bottom already even in developed nations.
Failing that, let them eat cake.
Uber, taxi service, and most forms of public transportation do not exist at all in rural areas.
Anyway, out here in the middle of nowhere, Uber, taxi and (high frequency) bus service are not economically viable. Low population means low numbers of fares means low suppliers means long delays for service means lower numbers of fares. All of which is made worse by distances.
Medium and large cities do have taxi service and public transport, but those are lower priority since everyone has a car.
WRT "made worse by distances" Bay Area is actually pretty sprawling itself. I don't think any rural community will have its points of interests further apart than Bay Area has.
But even these are for micropolitan areas with populations on the order of 40,000. There is still no service for more remote areas.
Because there's plenty of real estate offered cheap once you don't have to hang out near a big economic center?
Real estate is commodity in many places, why won't it be? People will just move there.
Less stupid people would move to a location where UBI will allow comfortable living for them.
People may end up not so stupid. Imagine you live in SF, you've got $500 UBI while your rent grew $300. This leaves you with extra $200 of leg room, yay for UBI!
Condensed space with a lot of working class people... Best place to beg.
For me, UBI would need to have an expectation that people may have to move around a bit as it is introduced, they would have a choice on where to go though.
Once you can't pay your rent and apply for subsidies, naturally we should see where the compromise is.
Otherwise you will not help yourself landing in the situation where X can fit in a city comfortably, but 10*X people consider the particular city the center of their life. What do we do?
It's well inside of my control to demand that my taxes are not wasted on subsidies going directly to rent-seeking landlords in already economically overheated areas.
I would prefer they go to underdeveloped areas and give more economic effect. This means that people asking for subsidies should be ready to shift away from the core.
Who said money should buy you the right to a life with strong social bonds?
Some things, including the ones mentioned above, should not be on the market.
Augmented social bounds with economic ones.
Germany is traditionally a country with low personal wealth, low homeownership rates. On the other hand renting is relatively cheap. Most people simply cannot afford to buy property. Already in Nürnberg, which is the second biggest metropolitan area in Bavaria after Munich where the housing prices are around half of that of Munich people with normal wages struggle to be able to acquire a home.
So basically you are working like an ant, but with grasshopper's security[0]? Maybe it's time to change that?
> On the other hand renting is relatively cheap.
Not anymore now that winter is here!
0. https://en.wikisource.org/wiki/Fables_(La_Fontaine,_tr._Wrig...
On the the US’s historical economic strengths was the ease with which people could move in order to find work. One major influence in the US is economic slowdown of the past decade or so comes from peoples inability to move to find work
Can you see a problem here?
I also see the value in pop 13 in california (for residences, not commercial) at the same time I see its problems.
Few solutions are effective (nor problems soluble) when cast in black and white.
800 Euros is quite a lot for rent.
Is that more fair?
Now I can either be poor in my home town (no good jobs) or poor in a big city, where my wage is largely consumed by high taxes and rent. Why do other people deserve a subsidized house but I don't? I want more disposable income too.
Germanys wages are that low that other EU countries (France, Italy for example) find it hard to compete in terms of labour cost.
I think that's also the main cause of Germany being "Exportweltmeister" every year.
[1] http://www.dw.com/en/germanys-labor-costs-rising-faster-than...
[2] https://krugman.blogs.nytimes.com/2014/06/17/german-labor-co...
[3] https://www.destatis.de/DE/ZahlenFakten/GesamtwirtschaftUmwe...
They might've grown above EU average since then, but they certainly got some catching up to do.
Real wages have increased since '07, yes, but that was also the lowest year in decades. The fact is, that it's barely above where it was 25 years ago: http://www.bpb.de/cache/images/7/61767-1x2-article620.gif?FF...
And I don't see, how the reunification of Germany would've caused real wages in '07 to be lower than in '93. I'm no economist, but Hartz 4 and the Agenda 2010 in general seem like a more plausible cause to me.
Several reasons. The botched currency union led to inflated wages (in no relation to productivity) in East Germany in conjunction with the Treuhand mismanagement to Germany being the sick man of Europe, with unemployment rising to 10%+. To this day, employees in East Germany earn about a quarter less than in West Germany. Production was outsourced to Eastern Europe, and Eastern European workers started to compete with German workers. You may remember that Volkswagen went from a 5-day to a 4-day week in late 1993 with a proportionate reduction in wages to save jobs. Wages are not immune to the laws of supply and demand, and consequently they stagnated. Reunification was an economic disaster and it took Germany a long time to recover from that.
> I'm no economist, but Hartz 4 and the Agenda 2010 in general seem like a more plausible cause to me.
Except that they've pretty much constantly grown since then, except for recessions. That's an indisputable hard fact. Real wages stagnated between 1990 and 2007 and have been rising since then. Whether there's a causal connection between Hartz IV and the rise in wages is something that nobody knows, but given that Hartz IV was introduced in 2005, it pretty much could not have had an effect before then, barring a time machine.
It appears to me that Germans are very aware of social inequality. Minimum wages and restrictions around contract work were attempts to slow down the trend of growing social inequality. It hasn't stopped it but I think no country has yet found a way to stop/reverse the inequality brought by technology.
Maybe, but I don't think they are in the sense that really matters. First, I think a lot of people just see social inequality as a global problem, like all the refugees coming there from poorer countries.
Second, the impression that I often get from Germans is that they are all for helping people in dire straits but at the same time thinking that they are somehow excluded from ever getting into such a situation and that for people that do it's their own fault and they are somehow worth less for it.
[1] https://www.ipsos.com/sites/default/files/2017-08/what-worri...
However if you show people what social inequality actually looks like in their own country they will dismiss it because that's not social inequality, that's just talking about 'Assis' (i.e. the people in dire straits who are themselves to blame for their situation, as I mentioned in my previous comment).
It did help to break Merkel's popularity when Martin Schulz was first elected as a candidate of the SPD and a lot of people thought social inequality and social justice would be a big topic of the election. The SPD lost all that support again when it turned out their strategy for making social inequality a topic in the election was just saying the words "social justice" a lot with no substance to follow up with.
You seem to think that you have more in common with them, than with people who haven't been in Germany as long, but to the rich you are all just "the plebs".
How fascinating, please tell me more...
Everybody in Germany is eligible for social benefits, which includes material things like paying the rent, health insurance and a certain amount of money to get though the month. The food banks make it easier to get through the month if you don't have much money, but they don't imply that people can't get by without them. Often articles about poverty in Germany forget to count in the free health care and free rent, which is worth a couple of hundred EUR at least. I bet many Americans would kill for having that kind of health care, in fact. Unemployed receive the same level of health care are everybody else.
Sometimes there are issues with bureaucracy, for example people are forced to move into a smaller flat even if their current larger flat is cheaper, because of regulations (benefits recipients can only have so much space or whatever). That sucks and needs to be remedied. Those are hiccups in the system, though, not a large scale phenomenon.
Also there are people who don't accept help, like homeless people with mental issues.
Other than that, the issue is really overblown.
But the mistake is on you, CNN: we have networked systems which provide instant information at our fingertips, and some of us aren't illiterate, we read lots and lots of books: you are attempting to manipulate the American public at large by attempting to prevent protests about inequality and fairness using communist-like tactical war methodology. Oh my, how the times haven't changed.