Europe's advantage over the United States in social matters is important, although it is not something to brag about too much.
In both territories, inequality and its serious consequences for the poorest have grown, but in the European Union the increase in social division has been less pronounced.
A recent study by researchers Thomas Blanchet, Lucas Chancel and Armory Gethin of the World Inequality Lab,
Why is Europe More Equal than the United States?,
provides valuable information on this social scourge, which contrasts with conventional explanations about the roots of inequality. .
The work has analyzed the evolution of inequality in both territories during the last four decades. The first result is that inequality has grown in almost all European countries but much less than in the United States. The second conclusion is more surprising: "The main reason for Europe's relative resilience to rising inequality has little to do with the direct impact of taxes and transfers." The key is in the concentration of wealth.
The study emphasizes the intense increase in inequality before taxes due to the strong concentration of wealth in the hands of the wealthiest. Between 1980 and 2017, the pre-tax income of the richest 1% of Europeans increased from 8% to 11% of the total. Income after taxes and transfers went from 7% to 9% of the total. On the other hand, in the United States, the concentration of wealth has been much more absurd. The pre-tax income of the wealthiest 1% of Americans rose from 11% to 21% of the total in the same period, and after-tax income increased from 9% to 16%.
Contrary to popular belief, the authors point out that it is “predistribution” and not “redistribution” through taxes and transfers that explains why Europe is less unequal than the United States. His conclusion is that "Europe has been much more successful than the United States in ensuring that its low-income groups benefit from relatively well-paid jobs." In other words, they highlight “the importance of pre-distribution policies such as access to education, health and labor market regulation” to explain the international differences in the increase in income before taxes.
The complex case of Spain is significant, where the richest 10% has hardly experienced an increase in wealth during the period considered and that in 2017 it was among the countries in which the poorest 50% received fewer transfers.
For the reduction of inequalities, it is just as important to have sufficient taxes to ensure adequate transfers to the most needy as it is to have decent wages so that they do not need them.
Spain is the second European country with the most poor workers (12.7% of the total).
Our priorities continue to go through fair wages.