Wolfgang Münchau on wealth disparities in the eurozone

This highly stimulating column — one of the best of this year — may be gated for you (try googling “The riddle of Europe’s single currency with many values”), so let me redo my own version of the argument (modified a bit from his claims):

1. Wealth measures in the eurozone portray Germany as relatively poor.

2. Germany cannot be so poor and Spain and Cyprus cannot be so rich.

3. Therefore there must already be “more than one euro” in the eurozone.

4. Therefore the “value of a euro in Spain” must fall relative to the value of a euro in Germany, so that (eventually) Germany rightfully appears to be the wealthier country.  The single currency has to break up, and/or we need to see a mix of high inflation in Germany (unlikely) or extreme deflation in Spain, Cyprus and other locales.

TC: Now that is either somewhat false, or perhaps a new and Nobel-worthy theory of exchange rate movements, with added oomph for the wealth and perceived relative wealth variables.  Since I do think the euro is likely to split into pieces, I do not disagree with the conclusion, but I am less sure about this stated reason. Here is one excerpt from the article:

Since the start of the eurozone, wages and consumer prices have remained broadly constant in Germany. In southern Europe, the general level of wages and prices has increased year-in, year-out. Over the period, this persistent inflation gap has led to a large discrepancy in asset prices. This is why an apartment in Milan costs much more than one in Munich, the city with the highest property prices in Germany. A German euro buys more real estate in Munich than an Italian euro buys in Milan.

You will note, by the way, that this differs from the usual story of these economies being whacked over the head with the deficient aggregate demand hammer (thank goodness we are getting away from that distorting obsession, though let’s not throw out the bebe with the bathwater).

In any case, I would redo the argument with these:

5. The extent of labor migration from Spain to Germany will be high and is being underestimated, precisely because Germany is so cheap in some parts.

6. Spain, Cyprus and other countries are not as wealthy as is currently measured by market prices.  The world has (perhaps) not yet seen that those locales are due to lose a permanent 15% to 20% of wealth or more, relative to current measurements.  How does this sound: “We are not as wealthy as the ECB research department thought we were”?

6b. Average, marginal, total, private vs. social value, what do those home prices really mean? Keep in mind that varying home ownership rates are driving the varying wealth measures.  Recently I read this: “German house prices are actually lower in real terms than they were in 1970” and thought it was a sign of German wealth and wisdom rather than poverty.  I thought it was a sign that in Germany the young are not merely in thrall to the elderly.  The correct metric here is lifetime consumption and by that measure I strongly suspect the Germans come ahead of most of the other European nations.  Still I find it a residual puzzle that the higher Mediterranean wealth measures do not get converted into higher lifetime consumption (if indeed they do not).

7. Most wealth is held in the form of human capital, and that is another unmeasured plus for Germany.  (By the way, there is a recent claim that the Irish are the most educated people in the EU.)  Let’s compare two societies.  In one you move to Stuttgart to learn how to become a Flugzeugmaschinenmechaniker.  In the other you hang around Genoa to rent-seek and make sure you inherit Daddy’s paid-off house.  The latter may produce higher measured net median wealth, but the resulting society will be less flexible and produce lower positive social externalities from such “labor market decisions.”

8. #5-7 together.

9. We badly need new theories of how Mediterranean Europe can have positive inflation (for the most part), nominally overinflated wealth levels, and yet be crushed by some kind of destructive economic process that we don’t yet have a good enough label for.

10. Wolfgang Münchau, despite his considerable plaudits, remains a remarkably underrated columnist.  There is no one better to read.

Addenda: Don’t forget pension funds, and also that German households start earlier, which makes the median poorer.


What's really missing from the wealth comparisons is the value of social security pensions. I'm guessing the median German household has much more than 50k in implied social security savings. Also, much more than the median Spanish household

Are German pensions pay-as-you-go? If that's the case, then pensions don't represent net wealth, since the asset of the old is just a debt for the young. But if Germans are sitting on retirement accounts full of Sony stock and Aussie bonds, then maybe you are correct.

The biggest part of German pensions are pay-as-you-go and the Schröder government introduced the 'Riester-Rente' to encourage germans to invest into stocks/bonds for their pensions. However, the 'Riester-Rente' is not really popular.

Are German pensions pay-as-you-go? If that’s the case, then pensions don’t represent net wealth, since the asset of the old is just a debt for the young.

I'm not sure this fully describes the situation. If Germany has a well developed economic system (including public retirement pension) which can be expected to reliably provide those future payments and the southern states do not, then Germans are wealthier.

I think the key point is that the southern state real estate assets are valued on their expected present value assuming they can be widely sold for a commiserate value in the future. If there aren't enough future buyers then the south is still sitting on a housing bubble and they aren't as rich as they think they are.

Yeah, I think this is sensible, but it's really Tyler's human capital point. German pensions _are_ just a debt for the young. But the German young are much more capable of paying off such a significant debt than the Cypriot young because human capital.

I agree that this in part human capital, but I think to a large degree it's also societal/cultural capital. Isn't the general consensus that Germany's economy functions better than the southern state's economies? It's significantly more efficient and productive. It doesn't seem like this type of household survey is capturing that historical difference.

Does anyone here think that the nominal median household worth is higher in Spain than in Germany? If so, why aren't a substantial amount of Germans immigrating to Spain?

> I agree that this in part human capital, but I think to a large degree it’s also societal/cultural capital.

That's a fair point and again I mostly agree. It's not the pension that's the wealth; it's the ability to pay the pension that's the wealth. And that ability to pay is tied up in a bunch of hard to measure things.

That said, moving from a low-wealth place to a high-wealth place doesn't make you wealthy, though it might change your income. And immigration is much harder than one would think. People don't move from New York to North Dakota, despite the prospect of higher incomes and vastly improved standard of living at the same nominal wealth. Moving between countries with different languages and cultures seems much harder. So I'm not sure this is a really great test of revealed preference because the transaction costs are so high. Plus I have difficulty seeing how anyone would prefer to live in Germany over Cyprus or Spain, regardless of the economic situation. :)

Yeah, I think this is sensible, but it's really Tyler's human capital point. German pensions _are_ just a debt for the young. But the German young are much more capable of paying off such a significant debt than the Cypriot young because human capital.

This may print twice... Tyler, you have lousy blog software.

I'm far from sure of exactly what the problem is, but there's got to be something wrong with equating high housing costs with the wealth of the people who have to pay those costs. If I were to move from Indiana, where housing is inexpensive, to someplace like Los Angeles, where a house the size of the one I have here would cost maybe five times as much, I'd think I'd gotten a lot poorer, because I'd have the same sort of house and a lot less money, or a much worse house and no more money. On paper, though, I'd be just as rich. How can that make sense?

Especially since you would be using Indiana dollars, right?

What I find most amusing is that this line of argumentation for breaking up the euro would have equally applied to the U.S. of the 1960s and 1970s. Detroit and Houston coming to mind, for example.

What I find most amusing is that this line of argumentation for breaking up the euro would have equally applied to the U.S. of the 1960s and 1970s.

Except for the US having an integrated Federal taxation system, welfare system and banking system. Which pretty much means that they are not at all comparable.

'Except for the US having an integrated Federal taxation system, welfare system and banking system.'

Except that in the 60s (though certainly changing by the later 70s into the 80s), one of those was not true (the S&L crisis showed the limits of state, not federal insurance), and the another one was significantly different back then - that being the welfare system.

The point of taxation is also interesting, as states also tax, in different degrees - in other words, the U.S. does not actually have as unified a tax system as one might think at first blush.

It might be an interesting thought experiment, whether 3 or 4 "Americas" would have higher total GDP, with separate currency control. Not that "split the US for the GDP" would ever be attractive politics.

You would be exactly as rich, since you always have an option of selling your LA house, buying an Indiana house and exchange the price difference for real goods and real labour.

You should read Noah Smith's most recent post. Housing in LA isn't more expensive by some magic dust. There is real value to living in LA, as opposed to the middle of nowhere. And you gotta pay for that: http://noahpinionblog.blogspot.in/2013/04/will-land-prices-rise-as-population.html

Now I have some qualms with his overall argument (see comments), but to say that you're poorer ipso facto is just wrong...

Whether you're richer or poorer depends on how much you value the amenities that LA provides. It won't be the same for everyone.

There is real value to living in LA, as opposed to the middle of nowhere.

It's quite possible that ease of transport and the ability to telecommute from anywhere has effected those long term values, but the effect has yet to fully trickle through the economy. My firm does quite a bit of work in Carson, CA. We handle a substantial amount of support through VPN access and fly in for major changes from the mid-south. Our billing rates are cheaper than the local southern California engineering rates, even when factoring in the cost of travel.

On one flight, I met a cop who works in LA, but lives in Ohio. He works a 10 day shift (living in a cheap apartment) and flies back to Ohio.

All of that leaves me to believe that California is bouncing against a ceiling on it's average cost of living and cost of housing. The locals can't afford to charge a lot more, because out-of-state workers effectively cap the wage price. This means, that long term, they can't afford to pay more taxes or housing costs.

Kind of like waiting for rents in Londinium to fall? ;-) I think some of these patterns are quite long lasting.

(In concrete terms, I read yesterday that much of LA's high industrial value is tied to the Port of LA, which can't move.)

'the Port of LA, which can’t move'

Let's see what happens after the so-called big one.

+1. If this is such a universal, massive, and robust effect, what happens if we *exclude* housing? After S. Europe just had massive housing booms and busts. Trader Joe's charges the same price for groceries in NY, SF, LA that it does in the swamps of South FL--both when the latter's house prices were skyrocketing and now that they've cratered. I'm very confused about the argument here.

The European problem is the opposite from the US. Here, you pay a premium to live in LA over Indiana. But in European terms Berlin is LA and Milan is Indianapolis.

We would find it odd if housing prices (and other costs) in Indianapolis were notably higher and rising faster than in LA.

Sometimes high housing costs reflect the desirability of living in certain areas. Sometimes they just reflect policy that generates high property values. With the latter case, you are absolutely correct.
Society wide possession of this property certainly doesn't indicate greater wealth because it just balances an equivalent cost - the cost to live in that city.

But this doesn't get at the real problem of the entire article and Cowen's commentary on it. Comparing wealth of whole large-medium countries is just really stupid. It's the same as people claiming that the US had realized it was poorer when the house market crashed, and that's what caused the recession. Bullshit. Individuals were poorer. That doesn't mean that the people who got laid off weren't producing economic goods we thought they were before the crash. Incomes are a vastly better way of tracking society wide wealth.

"Now that is either somewhat false, or perhaps a new and Nobel-worthy theory of exchange rate movements"
So what are you doing talking to us?

"Okay, so you have some skill" said the Merovingian to Neo. http://www.youtube.com/watch?v=wE4gTF4kpRQ

All the other economists are writing books on...ethnic dining...ah-d'oh!

Go hire some kid who can do math, dammit.

I would add a 7a: The periphery countries tend to have a lot of tiny, family companies, which can be counted as assets, even if they are not really viable. (Many companies in the German Mittelstand are family-owned, but are generally quite a bit larger.)

Wait for immigration to Germany from the other EU states raise nationalism.

I wonder if, in the EU, there is a law prohibiting discrimination in employment, for example, based on national origin. I doubt it, so perhaps there will not be as much pressure on immigration if you can legally discriminate in favor of your own national identity.

Would be interesting to know.

There is, it's the fundamental base for the freedom of movement within the EU and it is enshrined in the Eu treaties. same as the mutual recognition of study titles among member states (subject, in some cases to exams).

Of course, the fact that there is a law and that it is respected are two different things. In fact proving employment bias is already complicated between two nationals, but between a national and not national? I can see at least a half dozen defenses the employer might add in court.

But generally, within Eu employment bias is usually inherent to the system, for an Italian wanting to work in Germany, 99% of teh times German must be learned and that's a pretty hard task to accomplish, at least to levels you'd need in jobs paid enough to make moving worthwhile. Same for a Greek to work in Sweden, or a Portoguse to work in the Netherlands. also, in all those countries EU internal migrants would have to face an impossible competition from extra-Eu immigrants for all jobs not requiring higher education AND high language skills...

'if you can legally discriminate in favor of your own national identity'

Nope. And here is the sort of tale which should show just how different Germany is when dealing with such concerns.

Chimney sweeps have an assigned district, and our chimney sweep had to prove his German citizenship before he was granted his district, 3 decades ago. (Why yes, until recently, chimney sweeps could only work legally in a geographically defined area. The same applies, with different details, in trades as separate as bakers and doctors). That requirement has been removed, being against EU law. He didn't care much about it one way or the other - he was just explaining how the requirements had changed, in part to increase competition.

Münchau is since years calling for eurobonds, mutualisation of existing and future bank risks, and other instruments which will guarantee an unlimited and endless transfer of money from the core to the south. I happen to disagree with those proposals.

Besides: the fundamental questions, which neither Münchau nor most of the other economists understand, are: what standard of living can a national economy deliver to her people, sustainably so. And how much of the difference between this 'natural' level and the level the people want are other nation's taxpayers prepared to subsidize, and for how long.

I have not read the priginal study on relatove wealth, but it seemed as if it overweights/over-emphasizes the relative difference in primary residential (home) ownership net equity across the countries. Does this study truly capture the totality of households' net worth? (Ironically, would it include, say, German ownership of vacation real estate in Span, Greece, etc. as German wealth?) Even if more comprehensive than looking at mostly home ownership, would not such Net Worth measure be likely to be missing a "proper" risk-adjusted discounting of long-term assets, which ought to reflect the lower risk-adjusted value of any long-term Mediterranean financial asset such as a domestic pension plans, e.g. relative to the German portfolio. (And of course, once you start including all positive components associated with human capital, infrastructure, environment, the differential in Net Worth would really close and reverse.)

+1: All those flights from Dusserdolf to Marbella & Mallorca are not for wealthy Spainards going to Germany.

"You will note, by the way, that this differs from the usual story of these economies being whacked over the head with the deficient aggregate demand hammer "

The competitiveness story is a valuable explanation for what needs to be fixed in Europe, but it also seems perfectly consistent with the aggregate demand story. If I were Scott Sumner I might say low NGDP growth/AD is keeping inflation down in Germany, which (in combination with sticky nominal wages) is preventing the needed relative price-level adjustment.

'How does this sound: “We are not as wealthy as the ECB research department thought we were”?' Like crap. It's fine if you can think grand thoughts without data; however, there are many economists who rely on it and this goofy (and probably value-free) remark does not advance the cause. Here's a link to the HFCN survey that is being coordinated by the ECB http://www.ecb.int/home/html/researcher_hfcn.en.html It's a large scale *household* survey something like the US's Survey of Consumer Finances for Europe. I went to one of their early conferences and I've helped a bit with the SCF ... this HFCN project is a huge undertaking and clearly generating some interesting data to ponder. So this is not what the ECB research department thinks. It is what the households throughout Europe think about their wealth. I like the 'we're not as wealthy as ...' quips when they point to the key issues: 1) asset valuations may move off fundamentals 2) those fundamentals may move and 3) households may not quickly update their views to reflect 1 and 2. Maybe I missed a subtle fourth point being introduced with today's quip but I don't see it.

How is your point #3 different in substance from Tyler's point? Okay, maybe Tyler should have phrased it “We are not as wealthy as the ECB research department thought we were based on how wealthy we told it we thought we were”. Does this add the point you might (by your own admission) be missing? (Granted, I could be missing multiple points too - please educate me.)

These estimates of household wealth from the survey have caused quite a stir. And I was probably being overly sensitive to the wording here (one of my many shortcomings). Usually TC writes 'we are not as wealthy as we thought we were' and maybe the version today could have been 'Germans are not as wealthy as the Eurozone thought they were.' His phrasing gave in my opinion too much agency to the ECB research department, like this was their attempt to re-shape the debate. There is a comment below by Alan H that is pretty close to my fears of misinterpretation. Maybe I am being naive but I think there's plenty of economics to sort out and not start by highlighting the strategic stuff.

More insightful than my rant is this VOX piece: http://www.voxeu.org/article/are-germans-really-poorer-spaniards-italians-and-greeks It turns out the wealth distribution in German is less equal than in other countries so the medians discussed here may not capture total wealth of households well. Also it shows that the capital stock in Germany is quite high relative to other European countries. This raises a question about who owns that capital if not households, but does suggest the premise behind the Muenchau piece and this post may not be the final story.

#6 is based on weak analysis and logical leaps. Considering the linked post, the argument evolves from "U.S. lost 8% of median income", to "Italy and Spain and Greece have to lose 15%, but with no offsetting major gains", to "less flexible European economies will lose at least 15% of their gdps", and finally to "those locales are due to lose a permanent 15% to 20% of wealth or more" in this blog post. None of these claims is demonstrated to follow from the previous. In particular, the US didn't lose 8% of GDP while losing 8% of median income, and the timing of losses shifts from "ongoing" to "entirely located in the future".

It may also be worth noting, on the lifetime consumption point, that German households look different from Cypriot households, and Germans' expected value of future welfare state claims is a lot higher.

Well, just consider it another one of those all too factual wikipedia links which are too boring to read, this time concerning the economy of Genoa -

'Ligurian agriculture has increased its specialisation pattern in high-quality products (flowers, wine, olive oil) and has thus managed to maintain the gross value-added per worker at a level much higher than the national average (the difference was about 42% in 1999).[27] The value of flower production represents over 75% of the agriculture sector turnover, followed by animal farming (11.2%) and vegetable growing (6.4%).

Steel, once a major industry during the booming 1950s and 1960s, phased out after the late 1980s crisis, as Italy moved away from the heavy industry to pursue more technologically advanced and less polluting productions.

So the Ligurian industry has turned towards a widely diversified range of high-quality and high-tech products (food, shipbuilding (in Sestri Ponente and in metropolitan area - Sestri Levante), electrical engineering and electronics, petrochemicals, aerospace etc.). Nonetheless, the regions still maintains a flourishing shipbuilding sector (yacht construction and maintenance, cruise liner building, military shipyards).

In the services sector, the gross value-added per worker in Liguria is 4% above the national average. This is due to the increasing diffusion of modern technologies, particularly in commerce and tourism. A good motorway network (376 km in 2000) makes communications with the border regions relatively easy. The main motorway is located along the coastline, connecting the main ports of Nice (in France), Savona, Genoa and La Spezia. The number of passenger cars per 1000 inhabitants (524 in 2001) is below the national average (584). On average, about 17 million tonnes of cargo are shipped from the main ports of the region and about 57 million tonnes enter the region.[27] The Port of Genoa, with a trade volume of 58.6 million tonnes[28] it is the first port of Italy,[29] the second in terms of twenty-foot equivalent units after the port of transshipment of Gioia Tauro, with a trade volume of 1.86 million TEUs.[28] The main destinations for the cargo-passenger traffic are Sicily, Sardinia, Corsica, Barcelona, and the Canary Islands.

The Genoa metropolitan area had a GDP amounting to $30.1 billion, and $33,003 per capita.' http://en.wikipedia.org/wiki/Genoa#Economy

Yep, sounds like Genoa is a basket case, full of rent seeking younger people. If only Detroit could be so lucky.

And just for fun, let me post something that many, many of the people that live around me would vehemently disagree with - 'Stuttgart has the highest general standard of prosperity of any city in Germany.[62] Its nominal GDP per capita is €57,100 and GDP purchasing power parity (PPP) per capita is €55,400. Total GDP of Stuttgart is €33.9 billion, of which service sector contributes around 65.3%, industry 34.5%, and agriculture 0.2%.' http://en.wikipedia.org/wiki/Stuttgart#Economy

No one in Baden thinks that Stuttgart is anything but an extremely ugly city (a German wide opinion, it must be noted) surrounded by traffic jams, thus plainly demonstrating that Schwabs have no idea what a real general standard of prosperity looks like. Around here, having to work in Stuttgart is considered a terrible thing to have to put up with, and very few people do it. (Mannheim, by train? Quite popular in comparison.)

I don't know why he chose Genoa, which is in the Italian north, in many ways more similar to Germany than to Italy (and not coincidentally, with a political party seeking secession from the Italian republic), but had he said Naples, Palermo and even Rome he wouldn't had been so wrong.

In Rome, where I live, I know several cases of households that are possibly worth over 1.000.000 euros... and that's because under the same roof, inherited from the grandfather and which was worth maybe 200.000 in 1998 and is now estimated at 700/900.000 euros, live 2 generations, with perhaps 2 pensions and 2 salaries. Yes, they could sell the house and split, but besides losing the economies of the situation (economies of scale on groceries and bills, free childcare when/if kids come along, ...) they'd still wouldn't add to aggregate demand because they'd still have to buy a new house or living with prohibitively high rents (in Rome, especially thanks to international organizations employees and interns and students, you can actually have to pay a single room 500 euros a month, a 2 bedroom apartment 1.200/2.000) which would consume the wealth pretty quickly.

The situation might change in the next 20 years, when shirking demography will mean the concentration of the existing stock of real estate, but the process of single child families started in the 1970s and Italians are among the most long living persons on the planet.. and then, who will they sell the houses to, considering immigrants will not have the money to buy? So, yeah, I'm a bit puzzled about considering houses owned by the owner for his own occupancy as "wealth" at the same level of bank account deposits, stocks and the like.

'I don’t know why he chose Genoa, which is in the Italian north'

It mystified me too - but a lot of Americans don't realize just how well off part of Italy is. Or seem to think that the north/south divide is only between countries, and not within them. Though in Germany's case, it is the north that is doing poorly - with two German federal states going to the German supreme court to have the transfer payments they make to places like Bremen, Hamburg, or Berlin (in line with the idea of German federalism) declared unconstitutional.

Why is it assumed that Germany should be wealthier? In today's economic system perhaps healthy wages, strong manufacturing capabilities, and an educated population are inferior to blowing asset bubbles for creating wealth? The word "bubble" has a negative connotation but attracting capital to inflate domestic real estate may be a very effective way for creating wealth.

Isn't their current net wealth the present value of all assets - liabilities? Only accounting for the current value of their homes as a measure of citizens' net wealth doesn't make much sense. If the Germans are liable for the debts of other sovereign countries then they are less wealthy, if not they are more wealthy.

Looking at this, I wouldn't say Germany is poor and Mexico is rich. http://en.wikipedia.org/wiki/List_of_countries_by_home_ownership_rate

It seems Germans simply does not buy houses "Euro area property prices:
Germany versus the rest" http://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000290566.pdf

Also, let spainards talk about their home ownership phenomena: "HOMEOWNERSHIP AND SOCIAL INEQUALITY IN SPAIN" http://www.ced.uab.es/publicacions/PapersPDF/Text218.pdf

"In Spain, homeownership is almost universal. That is especially interesting because ownership is not a tradition in the country. Instead it is a relatively new investment strategy and a response to a world in which nothing —not employment, not marriage, not old-age pensions—is certain."

In conclusion, it may noy be a different euro. It it just that germans do no think about buying a home because they are not scared about the future and if they do, they don't pay the "fear-of-the-future" extra price in Spain.

And the question remains on how to properly value household wealth considering germans are not fond of home ownership.

Ps. Accordinto "Home ownership and social inequality in Spain" the Spain love affair with home ownership started in the 1960´s. Don't blame the euro and low interest rate of the last few years.

To what extent is this wealth disparity a temporary phenomenon that may have already changed? (given the time lag of government reports)

As I noted on the last thread on this topic, in 3 years (2007-2010) median American wealth declined from $126k to $77k -- and most of that decline probably occurred in a few months.


I have not seen anyone mention the fact that the Mediterraneans produce more outside of the taxed economy. I would think that would be one factor.

So in Germany you go out and eat in a restaurant that is heavily taxed and you have your house painted by a painter who is heavily taxed. In Italy you are made a much better meal by a wife or mother with fresh vegetables from your garden, and you pay your brother in law cash to paint your house. Then you have more money left over to buy real-estate (which BTW is the only investment that Mediterraneans trust).
Also it seems to me that in 2013 (since the real return on capital has been falling since the start of the industrial revolution) the overhead cost of borrowing money to buy a home is exorbitant. It is very inefficient and with a declining population it is not needed. Everything but real-estate and medicine is so cheap now it tales very little to live especially in a place like Italy with a warm climate (easy to grow veggies too and with better varieties and biotech it could soon be easy to grow most (by cost on calories) of your own food in a small yard).

The ECB numbers are ridiculous. They do not count German private and company pensions. At least in the Spanish area where I vacation annually I can assure you Spaniards place much more of their wealth in housing and RE than do Germans. It is as if the ECB defined the asset classes counted just to produce the numbers that make the case they desired. They wouldn't do that, would they? Laugh.

Alan H

As I read page 44 of the report the ECB figures include voluntary private pensions, but not occupational pensions or government pensions.

You can get information on public pension wealth at from OECD Pensions at a Glance:

For example this shows that net pension wealth for an average earner is more than twice as high as a per cent of average earnings in Greece as in Germany - but average earnings in Germany are not quite twice as high as in Greece even on a PPP basis, so that tends to equalises public pension wealth. Of course, as others have pointed out the credibility of pension promises in Germany are much higher than in Greece, and Greece is still in the process of winding back its promises, which seems unlikely to appear yet in the OECD publication, which is a couple of years old.

Germany has quite high occupational pension coverage relative to Southern European countries like Spain (no figures for Greece in the OECD publication), but pension funds are quite low because Germany uses a book reserve approach to funding occupational pensions.

I am not wealthy, but I am happy.

Shorter analysis: German doesn't have an asset price bubble; Southern Europe does (perhaps fueled by aid to laggard economies in the E.U. that shoot money in the economy where there is insufficient value to aborb it). When Southern European asset values collapse, they won't in Germany, even though all of the E.U. will suffer from the recession that the bubble collapse creates.

Compare the housing bubble collapse in the U.S. Only a minority of U.S. states had housing bubbles and the decline in asset prices was very closely related to the extent of the bubbles in the first place (as an aside, the bubble locations were strongly correlated with non-recourse financing in a state and a predominance of real estate investors from non-recourse financing states). But, since the financial and consumer markets that the housing bubble collapse rocks are national, even though the housing market itself is only local, the whole economy pays the price when the buble collapses.

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