Oops ... the number of people infected with the coronavirus is increasing at an exponential rate again, both in our European neighborhood and in Germany itself. We are now realizing that the notion from the months of June, July and August that the chalice had already passed in spring – with manageable economic, social and health-related damages – is really an illusion. Some European countries have already re-imposed lockdowns. In these minutes, German politicians are deciding on the concrete measures for a second lockdown.
Questions such as those raised briefly in spring regarding our way of living together, our values, how to deal with our finances, and the lack of equal opportunities are once again coming to our minds. What happens with the local small businesses when a second lockdown is implemented? Will Amazon become even richer when we will once again only be able to buy online? Can families with small to medium income still live well when only short-time working allowances continue to be paid and more people are affected by insolvencies and thus are required to apply for unemployment benefits?
The inequality in the distribution of wealth and income in Germany, Europe and the United States will become even more evident in this case. A recent study published in the German weekly magazine ‘DIE ZEIT’ in July shows that in Germany the poorest 50% of the adults together own only 1.4% of the total wealth, while the richest 1% (10%) of the adults own 35% (67%) of the total wealth. And this wealth will remain within the families where it currently is, and it will be inherited within those families over and over again!
This means that how successful anyone of us can be or how much wealth he or she can own very much depends on what family he or she was born into. Well, this insight is hardly new. However, now would be a perfect moment in my view to openly talk about this matter of fact and to discuss within our communities how much of inequality we want to afford. In his article “How to close the gap and why we should do so” (published in Neue Narrative #9), Sebastian Klein puts an end to the meritocratic fairy tale in which we talk ourselves and our kids into believing that the guiding principle of our society is the principle of merit, meaning equal opportunities for all. Because sadly, that’s really not the case: you cannot achieve everything you want only by working hard enough.
No, this is not a showing of personal discontent; in fact, quite the reverse: I am extremely grateful that I was born in Germany. I am privileged and almost certainly most of the subscribers to my newsletter as well: I went to a state secondary school, graduated from high school (the German Abitur) and on top of that I also obtained a university degree afterwards – the first to do so in my family. This all was possible without my parents being required to pay tuition fees. I am well aware that not everyone will manage to do that, despite the allegedly existing equal opportunities and the free-of-charge education in Germany. It’s because I am not from a migration background and lived in a medium-sized city with easy access to all educational institutions. Education was important for my parents; they encouraged me to go to college, and they had enough (though not much) money, so I wasn’t required to work excessively and was able to focus on my studies. I continued to be fortunate after that.
Therefore, there is plenty of room as regards “reducing inequality”, even in Germany. Needless to say that it is the policymakers who need to step forward, but it is us, the citizens, who influence which issues politicians have to tackle now simply through our mindset and our actions.
The French economist Thomas Piketty addresses the core of this issue in his book ‘Capital and ideology’ which was published this year. While I don't believe that German, European and, least of all, U.S. poIiticians would follow his radical recommendations, they are certainly worth the read. His approach does not reflect communism, but suggests a radical re-distribution of wealth. He proposes an annual wealth tax of 0.1% for the poor and 60% for the wealthy. For Amazon's CEO Jeff Bezos, this would mean annual payments to the government of 100 billion U.S. dollars from his personal assets, not including income tax. These high levies paid by the rich could then be used by the government as one-off payments to young adults as a start-up aid. The German daily Tagesspiegel has used this concept for the following headline: “Why Thomas Piketty would donate 120,000 euros to each German citizen now”. Of course, this principle suggested by Piketty would only work if all countries equally adjusted their tax laws; otherwise, all the wealthy people would move to the remaining tax havens.
And at least the latter fact is the reason why nobody – including myself – seriously would believe that this principle in its entirety will be embedded in our social and political framework in the near future. However, you may well classify Piketty’s ideas as wild ideas, expand on them and use them as inspiration – entirely in line with the Design Thinking approach called “Building on the ideas of others”. Examples include:
- Really adjust tax legislation since it has always been a means for re-distribution of wealth in the context of our social market economy.
- Ensure equal opportunities in the area of education and facilitate individual support, for example by dividing school classes in halves. By the way, this is also very helpful in times of a pandemic!
- Align salaries and thus reduce differences: what was it again, these systemically important professions which we had recognized as such during spring? Here’s hoping that the second wave of the pandemic helps to remind us of these people...
- Consider the “Why?” in terms of dealing with our finances. What’s the purpose and the objective of my company? Who I want to serve? No, even this issue does not contradict capitalism. In his concept ‘Golden Circle: Start with Why’, the communications expert Simon Sinek explains that an organization that knows what its overarching aim is and communicates this aim to its customers authentically can make lots of money. Creating meaning and earning money do not necessarily rule out each other... However, accumulating wealth as a company as an end in itself is not reasonable in a responsible social market economy.
In a nutshell: It is certain that when we want to protect our Western-type democracies, we have to immediately reduce this inequality. The current pandemic has made evident the urgency for this and it will continue to do so in the coming months to an even larger extent.
This text first appeared in my newsletter 'Innovation on Wednesday'. It is published every other Wednesday. For subscription click here