Inequality | Wealth: When is enough?

Photo: nd / Stephanie Schoell Some time ago, the Hans Böckler Foundation took a closer look at the salaries in the 40 companies in the German stock index. In 2023, Adidas boss Bjørn Gulden received around 9.2 million euros - 81 times as much as an employee who works for the company in Germany for an average salary. That means: "After he retires, the employee would have to start working all over again and then again and again - in total he would have to complete 81 working lives in order to get the boss's salary," says social economist and business ethicist Sebastian Thieme. "That's absurd."

There is a lot of research and widespread reporting on the unequal distribution of income and wealth. The debate often goes like this: If inequality rises sharply in a year, that is considered worrying. If it then remains at the same level, it's hardly worth mentioning, and sometimes it's even seen as a positive thing. What was a problem yesterday is no longer a problem today. This normalization is easier if you have no idea at what point inequality is actually too great.

Criticism of the “gap between rich and poor” is often linked to the demand for higher minimum limits: higher wages or social benefits. However, upper limits are less often an issue. The question actually arises when one denounces excessive assets: When does the problem begin and which assets are still okay? “A purely diagnostic finding that rich people have too much would have to be able to indicate how much they have too much,” writes the economist Martin Schürz in his book “Excessive Wealth.”

Sebastian Thieme is one of the researchers who are looking into how much wealth and inequality can be justified. For him it is clear that upper limits on income and assets are needed.

A central reason for salary differences is: those who do more should earn more. However, it is ultimately a matter of opinion whether, for example, an educator or an engineer does more. Nevertheless, this argument is also made strong when corporate executives earn millions of dollars, says economist Julian Bank from the University of Duisburg-Essen. The enormous wage spread also contradicts the liberal idea of ​​fair performance: “If someone works hard and earns little, that goes against this principle,” he tells “nd”. Even millions in remuneration at the other end of the income scale cannot be justified: "You cannot prove that a manager is 40 or 80 times more productive than a normal employee." Because many people work together in a company, it cannot be calculated what exact share a single person has in the economic success.

Especially after the global financial and economic crisis of 2008/2009, there was widespread criticism of the high remuneration of CEOs in many places. In the USA and Germany this resulted in more or less strict, time-limited salary limits for managers in banks that had been rescued by the state with particularly large sums. In the USA, managers' cash salaries were limited to $500,000, although donations in the form of shares were still permitted. In 2009 this affected a total of seven companies.

It's basically a tradition of the Graz Communist Party: KPÖ officials there have been donating part of their salaries since the late 1990s. The wages of skilled workers, most recently between 2,300 and 2,500 euros net per month, are now common practice for the Austrian communists. And part of their recipe for success. The excess money flows into a social fund. During consultation hours, KPÖ politicians advise people in emergency situations and refer them to possible offers of help. If that doesn't work, the fund supports you. During the discussions, the officials also gain inspiration for political measures. At the turn of the year, they present on “Open Accounts Day” how much of their salaries they have passed on – and where. A large part of the money usually helps applicants with their housing costs. The party kills several birds with one stone. Firstly, it builds proximity to voters. On the one hand, because it gives the impression of being in a similar life situation as workers. On the other hand, because of the everyday contact during consultation hours. Secondly, it gives the feeling of taking action. Thirdly, it makes leftist ideas tangible in a simple way. Conversely, she was also accused of relying on buying votes instead of content. In any case, the KPÖ can no longer get rid of the title of service party - sometimes meant affectionately, sometimes derogatorily. syk

In France, the socialist politician François Hollande demanded during the 2012 election campaign that the heads of state-owned companies should receive a maximum of 20 times the lowest salary. Hollande became president and the government actually decided on a permanent cap, namely a fixed salary cap of 450,000 euros per year for CEOs of state-owned companies.

20 times is enough: This demand comes up again and again. The non-governmental organization Oxfam International advocates that CEOs should receive a maximum of 20 times the median income in the company. In Germany, the Left Party advocates focusing on the lowest wage. Last year, left-wing politician Maximilian Schirmer called for this specifically for companies that receive state subsidies or in which the state has a stake.

And why would 20 times be appropriate? Thieme misses arguments for this value. “From an ethical point of view, twice as much is actually questionable,” says the researcher at the Austrian Catholic Social Academy to “nd”. »If the boss earns twice as much as the employee, the employee would have to live twice and work for two lifetimes to get the same salary. The question already arises here as to why this should be ethically justified. Of course, you also have to ask to what extent this is a realistic goal.

Without any set upper limits or ranges, the trend has so far been clear: the researchers Enrico Prinz and Joachim Schwalbach examined the long-term salary development in 14 companies in Germany a few years ago. In 1987, board members received 15 times as much as an employee with an average salary. Three decades later it was 58 times higher.

You can perhaps still imagine how much a million-dollar salary is. However, the wealth of the richest has now reached almost unfathomable proportions. Perhaps it can be illustrated like this: There are currently 13 people in Germany who have a net worth of more than ten billion euros. According to the Bundesbank, the average household wealth was recently around 103,000 euros. Assume that the median wealth corresponds to a stack of money that is four inches high. Then the ten billion stack is 9.7 kilometers high.

A minimum tax on billionaires would provide the state with additional resources. However, Thieme points out that it would at best dampen the growth of their wealth. The resistance that even a one-off tax of five percent for billionaires meets with was recently observed in California. Billionaires had invested hundreds of millions of dollars in commercials against the referendum - with success. Only 47.2 percent of voters voted for the billionaire levy. This shows the power of the rich.

So when does wealth become a problem? The Viennese economist Schürz speaks of excessive wealth and writes: "The power associated with it and the unjustified privileges make social interaction more difficult and make democracy impossible." On the one hand, the very rich could distance themselves from the rest of society through private schools and private insurance. Neglected public schools will then not affect them. On the other hand, they have exclusive opportunities to exercise power. “One entrepreneurial way to gain wealth is to be able to buy workers,” writes Schürz succinctly.

The richest people are usually the owners of companies, entire companies or shares in corporations. According to Bloomberg, Dieter Schwarz, owner of the Schwarz Group with Lidl and Kaufland, was recently the richest in Germany, with a net worth equivalent to around 42 billion euros (stack of money: a good 40 kilometers high). The multi-billionaires include, for example, Reinhold Würth (Würth Group), Ludwig Merckle (Heidelberg Materials) and the siblings Stefan Quandt and Susanne Klatten, who own around 50 percent of BMW.

The central benchmarks for companies are sales and returns; what promises to be profitable is produced and investments are made when a profit is expected. The large shareholders benefit from this and part of the profits go to them. They can also decide or influence which specific strategy the company pursues, what is manufactured where and whether plants are closed.

In addition to their economic power, billionaires have a wide range of opportunities to exert political influence - for example by threatening to relocate. Thieme gives further examples: They can decide which research they grant funding to, set up foundations and influence the public debate with studies, pay lobbyists to advance their interests and sponsor parties. According to MPs Watch, Klatten and Quandt have donated millions to the CDU in recent years.

Other people don't have all of these options. This contradicts the democratic principle of equality, which states that everyone's political voice is of equal value, emphasizes Thieme.

In addition, there is the enormous contribution of the rich to global warming: In Germany, the richest ten percent of the population cause an estimated 50 tons of greenhouse gas emissions per year - eight times as much as the entire poorer half of the income group. Researchers Lucas Chancel and Yannic Rehm came to this conclusion in an analysis from 2023. They not only took into account the consumption of the rich, but also took their assets into account. Roughly speaking, emissions from factories were attributed to their owners.

For all of these reasons, Thieme believes that an upper limit on assets makes sense: "It would help to better protect democracy and the climate." The economist emphasizes that the amount would have to be negotiated socially. He himself advocates an upper limit of one million euros and is based on a proposal by the Belgian-Dutch economist and philosopher Ingrid Robeyns. It also points to the power of the rich, which needs to be limited. She also argues that greater wealth can usually only be accumulated through unethical means such as disregard for employee rights and tax evasion or avoidance.

In German politics, the Left Party is campaigning for there to be a limit at all: taxes of twelve percent should apply to assets over a billion. This is intended to reduce assets to around this limit in the long term.

An upper limit that is already at one million would ultimately result in the socialization of larger companies, says Thieme. For everyone who sees this as a gigantic expropriation, he adds: “The proposal is not monstrous. What is monstrous is that so few people have so much economic and political power. It is probably clear to everyone that the fortunes were not created by individual people, but by many workers.

He is not interested in simply redistributing the money. Like other climate and social researchers, he has a different vision: the creation of collective, public ownership such as public transport, education, medical care and affordable housing for everyone. “Climate protection can only be achieved if people are not afraid of decline,” adds Julian Bank. "A remedy for this fear is to secure basic needs such as housing, education, health care and mobility at a high level."

There are significant differences not only in salaries and assets, but also in the income that households in Germany actually have at their disposal. This income includes, in particular, net wages and capital income as well as social benefits such as pensions, unemployment benefits and basic security. In 2022, a couple with two children who are among the poorest ten percent had 1,584 euros at their disposal per month. For a family of four among the ten richest percent, however, it was 13,900 euros. Markus Grabka from the German Institute for Economic Research (DIW) made this data available to “nd” some time ago. Incomes diverged, especially after the turn of the millennium: the price-adjusted income of the richest ten percent rose by 47 percent from 2000 to 2021. Households with the lowest incomes, however, had five percent less after adjusting for inflation. DIW data also shows this. A decisive reason for this divergence was neoliberal reforms, in particular Agenda 2010, emphasizes economist Julian Bank from the University of Duisburg-Essen: At that time, the red-green government reduced taxes, promoted the low-wage sector and cut social benefits. All of this depressed the incomes of poorer households. The wealthy group, on the other hand, has not only labor but also capital income, which is taxed relatively low, emphasizes Bank. rt

With an annual turnover of more than eleven billion euros, the Basque Mondragón Coporación Cooperativa (MCC), which consists of 80 individual cooperatives, is one of the ten largest corporate groups in the Spanish state. More than 70,000 people work at the Mondragón Group; The consortium includes industrial companies, banks and insurance companies. Although MCC now produces in 40 countries, egalitarian principles continue to play an important role in the holding company. According to the statutes, the ratio between the highest and lowest income in the company cannot exceed six to one. The salary cap is somewhat less strict for top executives in the holding company. Here the permissible ratio is nine to one. The fact that the principles of equality have been maintained more strongly in the cooperative group than in other cooperatives has to do with the political environment. Although the group of companies was originally social-Christian, the left-wing socialist Basque independence movement has long been the dominant political force among the cooperative members. This also has an impact on the debates in the company. Despite the salary cap, MCC says it has no problems filling its management positions. In an interview with the Spanish daily newspaper "El Diario", Leire Mugerza, President of the Mondragón Congress, emphasized that solidarity and salary caps are core elements of the corporate culture. In addition, the company's managers often come from the region and are educated at the cooperative's own university - so they feel an obligation to MCC. However, the cooperative holding company is still regularly criticized by the Basque unions.Around half of the employees at MCC are wage earners who have fewer rights than cooperative members. raz

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