Capitalism inevitably generates inequality?
Not always. In the 1950s and 1960s, the wealth gap between countries and between rich and poor within each country narrowed.
Why have social inequalities stopped decreasing afterwards?
Because the rules of world trade have changed. Let's analyze the one that has taken place between Spain and Germany and you will see how it determines how many Spaniards are rich or poor.
Forward.
Until 2003, the German economy had a trade deficit –it earned less from sales than it paid for purchases from other countries–, but it grew, and their salaries, too, until it approved the Hartz reforms, which left workers unprotected, reduced their salaries and soared business profit.
After the Hartz, Germany did not gain competitiveness by selling cheaper?
That was argued, yes, but Keynes already demonstrated that countries that tighten their belts to their citizens grow faster; but not only at the expense of its workers, but also at the expense of those of other countries.
If in Spain we worked more for less, would we also sell more to Germany?
That is why it was said that the Spanish should tighten their belts like the Germans until they achieve surpluses like them, especially those of German businessmen.
If the employer wins, doesn't he create employment?
That the businessman earns more is neither good nor bad: it depends on whether he reinvests what he earns and where and how. But, in general, the richest tend to save more than to consume, and the rest, to consume more than to save.
And is that not good for the country?
If you are a developing country and you need to invest to build everything, and your citizens are so poor that they cannot save to finance it, then yes: the rich earning a lot and reinvesting in it is good for everyone and reduces inequality.
Is it the spillover effect, whereby what falls from the table of the rich feeds the poor?
But that wealth spillover can also fall from the table of the rich from one country to another. In 2003, the rich Germans were richer, but they did not reinvest in Germany.
Where did they put all their fresh money?
In Spain! That huge German trade surplus from exporting so much went to Spain, Portugal, Greece... Because there they gave them more interest than in Germany –and also, already in euros– without the risk of changing currency.
And that inflated the bubble?
It was crazy! My family lives in Malaga, and it was filled with buildings in four days financed with German savings. When the bubble burst in 2008, they were sold at bargain prices.
Did the great German savings go to the billet?
In addition, it flooded the Spanish banks, which is why banks and savings banks had to start giving cheap loans to anyone to place it.
Thus many boxes sank after having persecuted us to place credits.
In the eighties, having a credit card in Spain was the success; in 2008, for many who overdo it when using it, it was ruin.
What had changed?
Everywhere there are people who spend more or less than they can. So imposing the balance is up to the banker; if you have a lot of liquidity, lower the requirement to lend; if little, raise it. And then, in Spain, banks and savings banks gave credit to those who did not deserve it.
Why didn't he deserve it?
Do you know the amount of absurd Mercedes that my friends accumulated in Malaga?
Is that why we stick it and it still lasts?
After the bursting of the bubble and the collapse of savings banks and banks, Spanish unemployment skyrocketed. But not because the Spanish are lazy and wasteful and the Germans austere and industrious, but because of that trade that depends on the laws and who imposes them.
Why do you think we are not lazy?
Because in the same decade the same thing that happened in Spain in France, Italy, Greece... Are they all lazy spendthrifts or is it just that they were all subject to the same rules after adopting the euro? The prosperity of nations and the inequality in distributing it do not depend on their culture, but on trade and its laws.
How to measure it?
The key measure is the percentage –whether it goes up or down– of wages in GDP.
Does that percentage reflect inequality?
And to reduce global inequality, it would be necessary to rebalance the system that causes the majority of world savings to end up in the US and ends up invested in dollars.
As?
For example, by imposing a tax on foreign investment, as Democratic and Republican senators have already proposed.
Why limit your wealth and power?
Because the artificial strength of the dollar benefits financiers, but penalizes medium and small producers who have to export at high prices and compete at home with those of Japan, Germany, the Netherlands, China...
