Monday, October 31, 2011

Income inequality increases in Spain... and will likely keep increasing in the future!

According to El Pais, Spain is the fourth most unequal country in the European Union after Lithuania, Romania and Latvia. The Gini coefficient was in 2010 at the highest level since 1995 and as a result of the crisis more than one person in five is in below the poverty line. One would think that this would lead to social mobilization beyond the "Indigandos" and inequality playing a large role in the next elections. Instead, the conservative Partido Popular (likely winner in November) has promised to further liberalize the labour market AND reduce income taxes on capital gains. How is this possible? What will be the Gini coefficient in a few years? And how can Spaniards accept all these reforms? There is little doubt that some countries are more conservative than others and, implicitly or explicitly, are willing to accept market reforms without much opposition...