Hans-Werner Sinn
Encyclopedia
Hans-Werner Sinn is a German economist
and President of the Ifo Institute for Economic Research
.
at the University of Münster
from 1967 to 1972 and receiving his doctorate from the University of Mannheim
in 1978, Sinn was awarded the venia legendi in 1993, also from the University of Mannheim.
Since 1984 Sinn has been full professor in the faculty of economics at the University of Munich (LMU), first holding the chair for economics
and insurance
, and from 1994 the chair for economics and public finance
. During leaves of absence from Mannheim and Munich he held visiting professorships (1978/79 and 1984/85) at the University of Western Ontario
in Canada
. During sabbaticals he was also visiting researcher at the London School of Economics
, as well as at Bergen
, Stanford, Princeton
and Jerusalem Universities. Since 1988 he has been honorary professor of the University of Vienna
, where he has held many lectures. Since 1 February 1999 Sinn has been president of the Ifo Institute for Economic Research. In 2006 he became president of the International Institute of Public Finance
. From 1997 to 2000 Sinn headed the Verein für Socialpolitik
, the association of German-speaking economists.
Sinn is fellow of the National Bureau of Economic Research
in Cambridge, Massachusetts
, and was the first German-speaking economist to deliver the Yrjö Jahnsson Lectures in Helsinki
(1999) and the Tinbergen Lectures in Amsterdam (2004).
In the 2006 Handelsblatt
ranking of German economists (Ökonomen-Ranking VWL), based on cross citations of SSCI
papers in SSCI journals, Sinn ranked fourth. In a study by Ursprung and Zimmer, based on SSCI citations per author of the full oeuvre, Sinn ranked second of all German economists, after Nobel laureate Reinhard Selten
. In the RePEc database he was the German economist most frequently quoted in academic works in 2006. In a survey conducted by the Financial Times Deutschland
among more than 550 German economic experts, Sinn was one of the two professors in Germany (the other was Herbert Giersch
) to attract a large following of academic pupils, and in terms of political influence he ranked only behind Bert Rürup
at the top of the list of German professors.
Sinn has published many journal articles, has written numerous newspaper articles and given many newspaper interviews. In addition he has made longer contributions for radio and television and has made many talk-show appearances. More than twenty articles on his person have been published in German and foreign newspapers. His book "" has stimulated policy discussion in Germany and influenced the Agenda 2010
reforms. With more than 100,000 copies in print, the book is one of the most popular public policy monograph in recent history. It has also been published in English as "Can Germany be Saved?" by MIT Press in 2007. As a reaction to the criticism of his book in the media, Sinn wrote a follow-up book in 2005, "Die Basarökonomie". His most recent book, "Das grüne Paradoxon", was published in October 2008.
Since 1989 Sinn has served on the Advisory Council of the German Ministry of Economics and he represents the Free State of Bavaria
on the Board of Supervisors of HypoVereinsbank.
Sinn lives with his wife near Munich. They have three adult children.
, Sinn dealt in his early years particularly with economic risk theory. He made a name for himself with his dissertation "Ökonomische Entscheidungen bei Ungewissheit" (1980), published in English as "Economic Decisions under Uncertainty" (1983), with numerous spin-off articles. Subsequent work focused on the axiomatic basis of mean-variance
analysis, on the foundation of the principle of insufficient reason, on the psychological foundation of risk preference functions and on the analysis of risk
decisions under limited liability
, which he subsequently developed into a theory of bank regulation
in his Yrjö Jahnsson Lectures, "The New Systems Competition". In 2003, in the journal Finanzarchiv
, he touched off an academic debate on banking regulation in which he was criticised by liberal economists for his favouring of stronger banking regulation to prevent excess risk-taking. With his disseration in 1977 on excess risk propensity under liability restrictions, Sinn, in the opinion of Martin Hellwig, preceded the pioneering analysis of Stiglitz and Weiss of 1981. His work in this area was published as a reprint volume in 2008. On the basis of his research on risk theory, Sinn developed his influential theory of the insurer state, in which he interpreted the redistributing activity of the state via the tax-transfer system as insurance protection, showing that this activity can have a favourable influence on people's willingness to take risks. His work on the Theory of the Welfare State in 1995 is considered an important contribution on the legitimacy of state redistribution activity.
Sinn has published numerous studies on the theory of economic cycles, environmental economics
, foreign trade issues, including ones on the so-called asset approach and on the micro foundations of a model of temporary general equilibrium.
Problems of longer-term economic growth were also on his research agenda. Sinn was the first economist to formulate the central-planning model of economic growth in the tradition of Robert Solow
as a general equilibrium
model with decentrally optimizing agents and market clearing conditions in an article published in German in 1980 and two years later in English, and before similar work by Chamley in 1981 and Abel and Blanchard in 1983.
His study on the stimulating effects of accelerated depreciation and the various components of capital income taxation on intertemporal, international and intersectoral allocation is still considered one of the standard works in this field.
Sinn contributed to the discussion on German pension reform with his article "Pension Reform and Demographic Crisis. Why a Funded System is Needed and Why it is Not Needed" published in 2000. Here, with the help of cash-value equivalents, he showed that the low returns from statutory pension insurance based on the pay-as-you-go method has only an apparent efficiency disadvantage in comparison to a capitally funded procedure. This finding was further developed in a number of subsequent studies.
Recently Sinn has turned to the problem of the global climate in an article "Public Policies against Global Warming" and in his book "Das grüne Paradoxon" (The Green Paradox). In these studies Sinn developed a supply-side theory of climate change by linking climate-theory approaches with the theory of exhaustible natural resources. The Green paradox that he has identified states that environmental policies that over time promote with increasing intensity substitute technologies and in the process lower the prices for fossil fuels will induce the resource suppliers to accelerate extraction, thus contributing to global warming.
(through CES, his university institute) and by contributing to an expertise on pensions for the Ministry of Economics, Sinn had a hand in the introduction of the "Riester-Rente", a privately financed pension scheme support by the German government in the form of grants and tax deductions.
In 2003 he saw Germany's attractiveness as an investment location endangered by too high labour costs and called for structural reforms of the labour market. These include escape clauses for collective wage agreements, the abolition of dismissal protection laws and longer working hours without wage compensation. He has also criticised the employment-restricting effects of the German wage replacement system. As an alternative he developed in 2002 the model of activating social welfare. His policy recommendations influenced the Agenda 2010 reforms.
Sinn has called the German economy a bazaar economy since the share of input from abroad in German industrial production is on the increase. At the same time he points out that this is not to be equated with a breaking off of value added in exports. Instead Germany has decimated its domestic sector via excessive wage increases and has driven excess amounts of capital and skilled labour into the labour and knowledge-intensive export sectors, where fewer less-skilled workers can be employed as have been set free in the domestic sectors. At the expense of the domestic sectors, Germany has inflated value added in exports too strongly and at the same time has placed too much emphasis on the final stages of production. As a result a pathological export boom occurred.
The world economy crisis is traced back by Sinn to an abuse of liability limitation by American investment banks. The lack of capital reserve requirements gave these banks the possibility to pursue their business with inadequate capital reserves and encouraged them to gamble. In addition the lack of personal liability for homeowners created in a similar way an exaggerated willingness to take risks and thus caused the American real-estate crisis. To correct this situation Sinn has called for considerably higher capital reserve requirements, the balancing of offshore business and a return to the accounting principle of the lower of cost of the German Commercial Code (HGB).
Against the background of the world economic crisis, Sinn advocates a return to the tradition of ordoliberalism
and of ordoliberal economists like Walter Eucken
, Alfred Müller-Armack
, Alexander Rüstow
, and Ludwig Erhard
, who argued a strong state should provide a framework or economic order inside which market forces and free market competition can develop. Markets do not regulate themselves (Selbstregulierung), but are capable of self controlled processes (Selbststeuerung) inside an institutional framework provided by the state.
Sinn accuses the Greens of pursuing environmental protection policies with unsuitable means and of ignoring the economic laws of the European emissions trading system as well as the worldwide market for fossil fuel. In his book, The Green Paradox, he argues for including all countries of the world in a post-Kyoto, joint emissions trading system. He also favours employing a withholding tax on the yields of financial investments to curb the desire of the resource providers to extract more fossil fuels.
During the 10th Munich Economic Summit, Sinn brought to public attention the fact that the ECB had been conducting what he termed a “stealth bailout” of Greece, Ireland, Portugal and Spain for the past three years, financing practically their entire current account by allowing them to accumulate massive liabilities in their TARGET2 accounts. He subsequently published his views in the press and specialized websites, followed by a working paper that analyzed the issue in detail. He also discussed Germany's capital exports since the introduction of the euro and the prospects such exports could face if the euro crisis continues and leads to the introduction of Eurobonds, which he opposes.
of 1929. During the course of the interview, Sinn characterized German business managers as scapegoats in the current crisis, whereas in 1929 the Jews were cast as scapegoats. Politicians from the Social Democratic Party of Germany
and Green Party
as well as bishop Margot Käßmann
, economist Rudolf Hickel, and the Central Council of Jews in Germany
sharply criticized Sinn's comment as equating manager criticism with the persecution of the Jews. Likewise, the German federal cabinet
asked Sinn for a clarification. On the next day, Sinn apologized in an open letter
, stating: "In no way did I mean to compare the fate of the Jews after 1933 to the current situation of German managers. Such a comparison would be absurd." The Simon Wiesenthal Center in Europe welcomed the swift apology. A number of Jewish economists and other scholars, including Nobel laureate Robert Solow, have defended Sinn and criticised the interpretation of his remark in the German press. Solow, in a letter to Sinn on 31 December 2008, remarked that this "simple statement" was "true, relevant and innocent". The Protestant theologian Richard Schröder, member of the German Ethical Council, wrote in a letter to the editor of the Tagesspiegel that he agreed absolutely with Sinn's much maligned remarks. Both letters are contained in a documentation prepared by the Ifo Institute.
Economist
An economist is a professional in the social science discipline of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy...
and President of the Ifo Institute for Economic Research
Ifo Institut für Wirtschaftsforschung
The Ifo Institute for Economic Research is a Munich-based research institution. Ifo is an acronym from Information and Forschung . As one of Germany's largest economic think-tanks, it analyses economic policy and is widely known for its monthly Ifo Business Climate Index for Germany...
.
Education and career
After studying economicsEconomics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
at the University of Münster
University of Münster
The University of Münster is a public university located in the city of Münster, North Rhine-Westphalia in Germany. The WWU is part of the Deutsche Forschungsgemeinschaft, a society of Germany's leading research universities...
from 1967 to 1972 and receiving his doctorate from the University of Mannheim
University of Mannheim
The University of Mannheim is one of the younger German universities. It offers Bachelor, Master, and PhD degrees.The University is mainly located in Mannheim’s palace the largest baroque palace in Germany. The whole city center of Mannheim is aligned symmetrically to the palace.About 800 scholars...
in 1978, Sinn was awarded the venia legendi in 1993, also from the University of Mannheim.
Since 1984 Sinn has been full professor in the faculty of economics at the University of Munich (LMU), first holding the chair for economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
and insurance
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
, and from 1994 the chair for economics and public finance
Public finance
Public finance is the revenue and expenditure of public authoritiesThe purview of public finance is considered to be threefold: governmental effects on efficient allocation of resources, distribution of income, and macroeconomic stabilization.-Overview:The proper role of government provides a...
. During leaves of absence from Mannheim and Munich he held visiting professorships (1978/79 and 1984/85) at the University of Western Ontario
University of Western Ontario
The University of Western Ontario is a public research university located in London, Ontario, Canada. The university's main campus covers of land, with the Thames River cutting through the eastern portion of the main campus. Western administers its programs through 12 different faculties and...
in Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
. During sabbaticals he was also visiting researcher at the London School of Economics
London School of Economics
The London School of Economics and Political Science is a public research university specialised in the social sciences located in London, United Kingdom, and a constituent college of the federal University of London...
, as well as at Bergen
Bergen
Bergen is the second largest city in Norway with a population of as of , . Bergen is the administrative centre of Hordaland county. Greater Bergen or Bergen Metropolitan Area as defined by Statistics Norway, has a population of as of , ....
, Stanford, Princeton
Princeton University
Princeton University is a private research university located in Princeton, New Jersey, United States. The school is one of the eight universities of the Ivy League, and is one of the nine Colonial Colleges founded before the American Revolution....
and Jerusalem Universities. Since 1988 he has been honorary professor of the University of Vienna
University of Vienna
The University of Vienna is a public university located in Vienna, Austria. It was founded by Duke Rudolph IV in 1365 and is the oldest university in the German-speaking world...
, where he has held many lectures. Since 1 February 1999 Sinn has been president of the Ifo Institute for Economic Research. In 2006 he became president of the International Institute of Public Finance
International Institute of Public Finance
The International Institute of Public Finance, or IIPF, is a global organization of economists specializing in public finance. It was founded in Paris in 1937....
. From 1997 to 2000 Sinn headed the Verein für Socialpolitik
Verein für Socialpolitik
The Verein für Socialpolitik is an important society of economists in the German-speaking area. The Society, which covers all branches of economics was founded in 1873. Among its members were eminent economists like Gustav von Schmoller and Adolph Wagner.It annually awards the Gossen Prize to...
, the association of German-speaking economists.
Sinn is fellow of the National Bureau of Economic Research
National Bureau of Economic Research
The National Bureau of Economic Research is an American private nonprofit research organization "committed to undertaking and disseminating unbiased economic research among public policymakers, business professionals, and the academic community." The NBER is well known for providing start and end...
in Cambridge, Massachusetts
Cambridge, Massachusetts
Cambridge is a city in Middlesex County, Massachusetts, United States, in the Greater Boston area. It was named in honor of the University of Cambridge in England, an important center of the Puritan theology embraced by the town's founders. Cambridge is home to two of the world's most prominent...
, and was the first German-speaking economist to deliver the Yrjö Jahnsson Lectures in Helsinki
Helsinki
Helsinki is the capital and largest city in Finland. It is in the region of Uusimaa, located in southern Finland, on the shore of the Gulf of Finland, an arm of the Baltic Sea. The population of the city of Helsinki is , making it by far the most populous municipality in Finland. Helsinki is...
(1999) and the Tinbergen Lectures in Amsterdam (2004).
In the 2006 Handelsblatt
Handelsblatt
The Handelsblatt is a leading German language business newspaper, published in Düsseldorf by the Verlagsgruppe Handelsblatt. It has a circulation of 145.437 daily copies. Its editor-in-chief is Gabor Steingart...
ranking of German economists (Ökonomen-Ranking VWL), based on cross citations of SSCI
Social Sciences Citation Index
Social Sciences Citation Index is an interdisciplinary citation index product of Thomson Reuters' Healthcare & Science division. It was developed by the Institute for Scientific Information from the Science Citation Index....
papers in SSCI journals, Sinn ranked fourth. In a study by Ursprung and Zimmer, based on SSCI citations per author of the full oeuvre, Sinn ranked second of all German economists, after Nobel laureate Reinhard Selten
Reinhard Selten
-Life and career:Selten was born in Breslau in Lower Silesia, now in Poland, to a Jewish father, Adolf Selten, and Protestant mother, Käthe Luther. For his work in game theory, Selten won the 1994 Nobel Memorial Prize in Economic Sciences...
. In the RePEc database he was the German economist most frequently quoted in academic works in 2006. In a survey conducted by the Financial Times Deutschland
Financial Times Deutschland
The Financial Times Deutschland is a German language financial newspaper based in Hamburg, Germany, and is published by Gruner + Jahr. The newspaper contains four sections: Business, Politics & Economy, Finance, and Agenda .Founded in February 2000, the circulation grew to 103,000 readers in the...
among more than 550 German economic experts, Sinn was one of the two professors in Germany (the other was Herbert Giersch
Herbert Giersch
Herbert Giersch was a German economist. He was one of the initial members of the German Council of Economic Experts in 1964, serving on the council until 1970, and also was president of the Kiel Institute for the World Economy 1969–1989...
) to attract a large following of academic pupils, and in terms of political influence he ranked only behind Bert Rürup
Bert Rürup
Hans-Adalbert Rürup is a German economist and former chairman of the German Council of Economic Experts. He was formerly a professor of economics at the Darmstadt University of Technology. , he is president of the International School of Management .-References:...
at the top of the list of German professors.
Sinn has published many journal articles, has written numerous newspaper articles and given many newspaper interviews. In addition he has made longer contributions for radio and television and has made many talk-show appearances. More than twenty articles on his person have been published in German and foreign newspapers. His book "" has stimulated policy discussion in Germany and influenced the Agenda 2010
Agenda 2010
The Agenda 2010 is a series of reforms planned and executed by the German government which are aimed at reforming the German social system and labour market. The declared aim of Agenda 2010 is to improve economic growth and thus reduce unemployment....
reforms. With more than 100,000 copies in print, the book is one of the most popular public policy monograph in recent history. It has also been published in English as "Can Germany be Saved?" by MIT Press in 2007. As a reaction to the criticism of his book in the media, Sinn wrote a follow-up book in 2005, "Die Basarökonomie". His most recent book, "Das grüne Paradoxon", was published in October 2008.
Since 1989 Sinn has served on the Advisory Council of the German Ministry of Economics and he represents the Free State of Bavaria
Bavaria
Bavaria, formally the Free State of Bavaria is a state of Germany, located in the southeast of Germany. With an area of , it is the largest state by area, forming almost 20% of the total land area of Germany...
on the Board of Supervisors of HypoVereinsbank.
Sinn lives with his wife near Munich. They have three adult children.
Research
With the exception of his diploma dissertation, also published in a journal, on the Marxian Law of the tendential decline of the rate of profitTendency of the rate of profit to fall
The tendency of the rate of profit to fall is a hypothesis in economics and political economy, most famously expounded by Karl Marx in chapter 13 of Das Kapital Vol. 3. It was generally accepted in the 19th century...
, Sinn dealt in his early years particularly with economic risk theory. He made a name for himself with his dissertation "Ökonomische Entscheidungen bei Ungewissheit" (1980), published in English as "Economic Decisions under Uncertainty" (1983), with numerous spin-off articles. Subsequent work focused on the axiomatic basis of mean-variance
Modern portfolio theory
Modern portfolio theory is a theory of investment which attempts to maximize portfolio expected return for a given amount of portfolio risk, or equivalently minimize risk for a given level of expected return, by carefully choosing the proportions of various assets...
analysis, on the foundation of the principle of insufficient reason, on the psychological foundation of risk preference functions and on the analysis of risk
Risk
Risk is the potential that a chosen action or activity will lead to a loss . The notion implies that a choice having an influence on the outcome exists . Potential losses themselves may also be called "risks"...
decisions under limited liability
Limited liability
Limited liability is a concept where by a person's financial liability is limited to a fixed sum, most commonly the value of a person's investment in a company or partnership with limited liability. If a company with limited liability is sued, then the plaintiffs are suing the company, not its...
, which he subsequently developed into a theory of bank regulation
Bank regulation
Bank regulations are a form of government regulation which subject banks to certain requirements, restrictions and guidelines. This regulatory structure creates transparency between banking institutions and the individuals and corporations with whom they conduct business, among other things...
in his Yrjö Jahnsson Lectures, "The New Systems Competition". In 2003, in the journal Finanzarchiv
Finanzarchiv
FinanzArchiv is an international academic journal of economics published quarterly by Mohr Siebeck, Tübingen, Germany....
, he touched off an academic debate on banking regulation in which he was criticised by liberal economists for his favouring of stronger banking regulation to prevent excess risk-taking. With his disseration in 1977 on excess risk propensity under liability restrictions, Sinn, in the opinion of Martin Hellwig, preceded the pioneering analysis of Stiglitz and Weiss of 1981. His work in this area was published as a reprint volume in 2008. On the basis of his research on risk theory, Sinn developed his influential theory of the insurer state, in which he interpreted the redistributing activity of the state via the tax-transfer system as insurance protection, showing that this activity can have a favourable influence on people's willingness to take risks. His work on the Theory of the Welfare State in 1995 is considered an important contribution on the legitimacy of state redistribution activity.
Sinn has published numerous studies on the theory of economic cycles, environmental economics
Environmental economics
Environmental economics is a subfield of economics concerned with environmental issues. Quoting from the National Bureau of Economic Research Environmental Economics program:...
, foreign trade issues, including ones on the so-called asset approach and on the micro foundations of a model of temporary general equilibrium.
Problems of longer-term economic growth were also on his research agenda. Sinn was the first economist to formulate the central-planning model of economic growth in the tradition of Robert Solow
Robert Solow
Robert Merton Solow is an American economist particularly known for his work on the theory of economic growth that culminated in the exogenous growth model named after him...
as a general equilibrium
General equilibrium
General equilibrium theory is a branch of theoretical economics. It seeks to explain the behavior of supply, demand and prices in a whole economy with several or many interacting markets, by seeking to prove that a set of prices exists that will result in an overall equilibrium, hence general...
model with decentrally optimizing agents and market clearing conditions in an article published in German in 1980 and two years later in English, and before similar work by Chamley in 1981 and Abel and Blanchard in 1983.
His study on the stimulating effects of accelerated depreciation and the various components of capital income taxation on intertemporal, international and intersectoral allocation is still considered one of the standard works in this field.
Sinn contributed to the discussion on German pension reform with his article "Pension Reform and Demographic Crisis. Why a Funded System is Needed and Why it is Not Needed" published in 2000. Here, with the help of cash-value equivalents, he showed that the low returns from statutory pension insurance based on the pay-as-you-go method has only an apparent efficiency disadvantage in comparison to a capitally funded procedure. This finding was further developed in a number of subsequent studies.
Recently Sinn has turned to the problem of the global climate in an article "Public Policies against Global Warming" and in his book "Das grüne Paradoxon" (The Green Paradox). In these studies Sinn developed a supply-side theory of climate change by linking climate-theory approaches with the theory of exhaustible natural resources. The Green paradox that he has identified states that environmental policies that over time promote with increasing intensity substitute technologies and in the process lower the prices for fossil fuels will induce the resource suppliers to accelerate extraction, thus contributing to global warming.
Economic-policy positions
With regard to long-term structural problems, Sinn is a proponent of supply-side positions. In 2005 he was one of the first German economists to sign the "Hamburger Appell", which argued for fundamental market-economy reforms and rejected demand-oriented concepts of economic policy. At the same time Sinn employs the instruments of Keynesian demand theory for his analyses of economic activity. With his studies on pension insurance, in which he argued for partial capital funding, as well as by providing direct advice to the Federal Ministry of Labour and Social Affairs (Germany)Federal Ministry of Labour and Social Affairs (Germany)
The Federal Ministry for Labour and Social Affairs is a top-level federal agency of the Federal Republic of Germany headed by the Federal Minister of Labour and Social Affairs as a member of the Cabinet of Germany...
(through CES, his university institute) and by contributing to an expertise on pensions for the Ministry of Economics, Sinn had a hand in the introduction of the "Riester-Rente", a privately financed pension scheme support by the German government in the form of grants and tax deductions.
In 2003 he saw Germany's attractiveness as an investment location endangered by too high labour costs and called for structural reforms of the labour market. These include escape clauses for collective wage agreements, the abolition of dismissal protection laws and longer working hours without wage compensation. He has also criticised the employment-restricting effects of the German wage replacement system. As an alternative he developed in 2002 the model of activating social welfare. His policy recommendations influenced the Agenda 2010 reforms.
Sinn has called the German economy a bazaar economy since the share of input from abroad in German industrial production is on the increase. At the same time he points out that this is not to be equated with a breaking off of value added in exports. Instead Germany has decimated its domestic sector via excessive wage increases and has driven excess amounts of capital and skilled labour into the labour and knowledge-intensive export sectors, where fewer less-skilled workers can be employed as have been set free in the domestic sectors. At the expense of the domestic sectors, Germany has inflated value added in exports too strongly and at the same time has placed too much emphasis on the final stages of production. As a result a pathological export boom occurred.
The world economy crisis is traced back by Sinn to an abuse of liability limitation by American investment banks. The lack of capital reserve requirements gave these banks the possibility to pursue their business with inadequate capital reserves and encouraged them to gamble. In addition the lack of personal liability for homeowners created in a similar way an exaggerated willingness to take risks and thus caused the American real-estate crisis. To correct this situation Sinn has called for considerably higher capital reserve requirements, the balancing of offshore business and a return to the accounting principle of the lower of cost of the German Commercial Code (HGB).
Against the background of the world economic crisis, Sinn advocates a return to the tradition of ordoliberalism
Ordoliberalism
Ordoliberalism is a school of liberalism that emphasised the need for the state to ensure that the free market produces results close to its theoretical potential . The theory was developed by German economists and legal scholars such as Walter Eucken, Franz Böhm, Hans Grossmann-Doerth and Leonhard...
and of ordoliberal economists like Walter Eucken
Walter Eucken
Walter Eucken was a German economist and father of ordoliberalism. His name is closely linked with the development of the "social market economy".-Life:...
, Alfred Müller-Armack
Alfred Müller-Armack
Alfred Müller-Armack was a German economist and politician.He was professor of economics at University of Münster and University of Cologne. Müller-Armack coined the term "social market economy" in 1946....
, Alexander Rüstow
Alexander Rüstow
Alexander Rüstow was a German sociologist and economist. He originated the term neoliberalism meant as a synonym for Ordoliberalism but the term has undergone a change of meaning. He was one of the fathers of the "Social Market Economy" that shaped the economy of West-Germany after World War II...
, and Ludwig Erhard
Ludwig Erhard
Ludwig Wilhelm Erhard was a German politician affiliated with the CDU and Chancellor of West Germany from 1963 until 1966. He is notable for his leading role in German postwar economic reform and economic recovery , particularly in his role as Minister of Economics under Chancellor Konrad Adenauer...
, who argued a strong state should provide a framework or economic order inside which market forces and free market competition can develop. Markets do not regulate themselves (Selbstregulierung), but are capable of self controlled processes (Selbststeuerung) inside an institutional framework provided by the state.
Sinn accuses the Greens of pursuing environmental protection policies with unsuitable means and of ignoring the economic laws of the European emissions trading system as well as the worldwide market for fossil fuel. In his book, The Green Paradox, he argues for including all countries of the world in a post-Kyoto, joint emissions trading system. He also favours employing a withholding tax on the yields of financial investments to curb the desire of the resource providers to extract more fossil fuels.
During the 10th Munich Economic Summit, Sinn brought to public attention the fact that the ECB had been conducting what he termed a “stealth bailout” of Greece, Ireland, Portugal and Spain for the past three years, financing practically their entire current account by allowing them to accumulate massive liabilities in their TARGET2 accounts. He subsequently published his views in the press and specialized websites, followed by a working paper that analyzed the issue in detail. He also discussed Germany's capital exports since the introduction of the euro and the prospects such exports could face if the euro crisis continues and leads to the introduction of Eurobonds, which he opposes.
Controversy
On October 26, 2008 in an interview with the Tagesspiegel about the 2008 financial crisis, Sinn drew a parallel between the current crisis and the Great DepressionGreat Depression
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...
of 1929. During the course of the interview, Sinn characterized German business managers as scapegoats in the current crisis, whereas in 1929 the Jews were cast as scapegoats. Politicians from the Social Democratic Party of Germany
Social Democratic Party of Germany
The Social Democratic Party of Germany is a social-democratic political party in Germany...
and Green Party
Alliance '90/The Greens
Alliance '90/The Greens is a green political party in Germany, formed from the merger of the German Green Party and Alliance 90 in 1993. Its leaders are Claudia Roth and Cem Özdemir...
as well as bishop Margot Käßmann
Margot Käßmann
Margot Käßmann is a Lutheran theologian and was Landesbischöfin of the Evangelical-Lutheran Church of Hanover in Germany. On 28 October 2009, she was elected to lead the Evangelical Church in Germany, a federation of Protestant church bodies in Germany...
, economist Rudolf Hickel, and the Central Council of Jews in Germany
Zentralrat der Juden in Deutschland
The Zentralrat der Juden in Deutschland is a federation of German Jews organizing many Jewish organisations in Germany. It was founded on July 19, 1950, as a response to the increasing isolation of German Jews by the international Jewish community and increasing interest in Jewish affairs by the ...
sharply criticized Sinn's comment as equating manager criticism with the persecution of the Jews. Likewise, the German federal cabinet
Cabinet of Germany
The Cabinet of Germany is the chief executive body of the Federal Republic of Germany. It consists of the Chancellor and the cabinet ministers. The fundamentals of the cabinet's organization are set down in articles 62 to 69 of the Basic Law.-Nomination:...
asked Sinn for a clarification. On the next day, Sinn apologized in an open letter
Open letter
An open letter is a letter that is intended to be read by a wide audience, or a letter intended for an individual, but that is nonetheless widely distributed intentionally....
, stating: "In no way did I mean to compare the fate of the Jews after 1933 to the current situation of German managers. Such a comparison would be absurd." The Simon Wiesenthal Center in Europe welcomed the swift apology. A number of Jewish economists and other scholars, including Nobel laureate Robert Solow, have defended Sinn and criticised the interpretation of his remark in the German press. Solow, in a letter to Sinn on 31 December 2008, remarked that this "simple statement" was "true, relevant and innocent". The Protestant theologian Richard Schröder, member of the German Ethical Council, wrote in a letter to the editor of the Tagesspiegel that he agreed absolutely with Sinn's much maligned remarks. Both letters are contained in a documentation prepared by the Ifo Institute.
Affiliations
- President of the International Institute of Public Finance (2006–2009)
- European Economic Advisory Group at CESifo (since 2001)
- North-Rhine Westphalian Academy of Sciences (since 2001)
- Bavarian Academy of Sciences, historical-philosophical division (since 1996)
- National Bureau of Economic Research (NBER), Cambridge, Massachusetts, Research Associate
- Member of the Advisory Council of the German Ministry of Economics (since 1989)
Awards
- Honorary Doctorate, University of Helsinki (2011)
- Gustav Stolper Prize of Verein für Socialpolitik (2008)
- Europe Prize of University of Maastricht (2008)
- Bavarian Maximilian Order for Science and ArtBavarian Maximilian Order for Science and ArtThe Bavarian Maximilian Order for Science and Art was first established on 28 November 1853 by King Maximilian II. von Bayern. It is awarded to acknowledge and reward excellent and outstanding achievements in the field of science and art...
(2008) - The World Economy Annual Lecture, University of Nottingham (2005)
- German Federal Cross of Merit, first class (2005)
- CORINE International Book PrizeCorine Literature PrizeThe Corine – International Book Prize, as it is officially called, is a German literature prize created by theBavarian Landesverband of the Börsenverein des Deutschen Buchhandels first awarded in 2001...
(2004) - Tinbergen Lectures, Royal Netherlands Economic Association (2004)
- Economics Book Prize of the Financial Times Deutschland and getAbstract AG (2003)
- Honorary Award of the Wirtschaftsbeirates der Union e. V. (2003)
- Stevenson Lectures on Citizenship, University of Glasgow (2000)
- Distinguished Scholar, Atlantic Economic Society (2000)
- German Federal Cross of Merit, on ribbon, (1999)
- Yrjö Jahnsson Lectures, University of Helsinki (1999)
- Honorary doctorate (Dr. rer. pol. h.c.), University of Magdeburg (1999)
- Special Prize of the Herbert Quandt Foundation (1997)
- Honorary Professorship, University of Vienna (1988)
- First Prize of the University of Mannheim for Habilitation dissertation (1984, Schitag Foundation)
- First Prize of the University of Mannheim for doctoral dissertation (1979, Rheinische Hypothekenbank Foundation)
- Top 500 Economists in the World according to IDEAS/RePEcŘepečŘepeč is a village and municipality in Tábor District in the South Bohemian Region of the Czech Republic.The municipality covers an area of , and has a population of 267 ....
External links
- Personal website
- Hans Werner-Sinn at IDEAS/RePEc
- Column archive at Project SyndicateProject SyndicateProject Syndicate is an international not-for-profit newspaper syndicate and association of newspapers. It distributes commentaries and analysis by experts, activists, Nobel laureates, statesmen, economists, political thinkers, business leaders and academics to its member publications, and...
- Google Scholar
- 'Bringing Down the House', review of Casino Capitalism in the Oxonian Review.