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Elites turning a blind eye to social inequality

This text was also published in German in ZEIT ONLINE on December 23 as part of the op-ed column “Fratzschers Verteilungsfragen“.

Germany’s widespread social inequality is real – but politicians are still in denial.

“The people may get most facts wrong, but their feelings are mostly correct,” wrote Kurt Tucholsky, with a dash of irony, on the political manipulation of Germany’s citizens. Though the quote is from 1931, it still holds true today. Significant portions of Germany’s population are feeling discouraged and left behind, and they’re worried about the future. They point to increasing levels of social inequality as the source of their problems – and they are right.

In the eyes of some elites, however, social inequality is not a pressing issue, and Germany’s doing just fine: the social market economy is thriving, and everyone is receiving equal treatment. What these elites are conveying is a belief that the masses are simply unable to see things as they are.

But is it possible that it’s not the people who don’t understand, but rather the inner circle of decisionmakers in politics, business, and the media who are not getting the story straight?

According to surveys, 70 percent of Germans believe social inequality is too high. They live with persistent fears and concerns about the lack of opportunities available to them. They feel like they are working harder but earning less. They do not believe that the social security system will be able to protect them from a massive decline in their quality of life if they get sick, lose their jobs, or retire. They are facing the reality that their children and grandchildren will not actually have it better than they did.

In their eyes, the social market economy – which includes not only a functioning market, but also a solid security network that gives citizens a high level of independence and autonomy – has broken its promises.

Breaking the taboo

Many German elites react negatively to the assertion that the social market economy has failed these workers. To express such a sentiment is to break a widespread taboo: after all, the social market economy is our social contract, the foundation for Germany’s economic miracle in the decades following World War II.

To back up their claims, these elites may point to the economic successes of the past ten years, such as a drop in the number of unemployed individuals from 5 million to 2.7 million – that is, by nearly 50 percent – or the fact that Germans are leaders in world exports. That Germany boasts top players on the global markets, or that it has emerged from the financial crisis in better shape than most of its neighbors.

All of these things are true. But what the elites are ignoring is the fact that such successes have benefited only a select few, and that there’s much more to the story. The real income of over one-third of all German households has shrunk over the past 15 years. A considerable number of people are either stuck in precarious employment situations or expressing a desire to work more hours or earn more money. The income inequality among individuals under age 40 is now twice as high as it was in their parents’ generation.

Equal opportunity and social mobility are low compared to those of other countries. Children from socially disadvantaged families have a hard time exploiting their talents and abilities to gain independence and autonomy. Women are clearly discriminated against in the labor market, with policy doing little to end this. And individuals with migration backgrounds also find it far more difficult to make use their skillsets and get a fair chance when it comes to education, the labor market, and society at large.

Elites see no failure in policy and society to address this inequality and mitigate the ensuing social conflict. Some argue that the increase in political extremism and dissatisfaction in Germany is the result of a growing distrust toward Europe, globalization, or both; others want to blame immigration, the difficulty of integrating refugees, or the fact that Germany has been taking in migrants for several decades.

Isolationism misses the point

Neither globalization nor Europe nor cultural conflicts within the country are to blame for the widespread dissatisfaction in Germany. That’s why the solutions that the elites have come up with are both misguided and potentially damaging. Many of the pension increases and tax cuts that are under discussion do not benefit the people who are most dependent on this assistance, and more welfare spending does not solve the problem of pervasive and destructive social inequality. The current attempts by political parties to buy votes for the upcoming election is just as deplorable.

Many elites do not want to accept an uncomfortable fact that requires a fundamental rethinking of targeted economic and social policy as well as major level of investment. Renationalizing politics, weakening Europe and its institutions, rejecting the presence of other cultures and religions in Germany – none of this will do anything to solve the problems underlying social inequality. What’s needed is a massive investment in education and training, better labor market integration, and a strengthening of the social security system.

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