Controversial Economist

Politics by the Numbers

Hans-Werner Sinn Picture compilation
For decades, Hans-Werner Sinn has shaped German economic policy as the country's most respected analyst. But a series of seemingly wrong calls have some questioning his accuracy.
  • Why it matters

    Why it matters

    Hans-Werner Sinn, president of the IFO Institute in Munich, is one of Germany’s most respected economists.

  • Facts


    • Mr. Sinn has been criticized of late for labeling immigrants as an economic drain on the country.
    • A prolific writer, he carved his reputation on a sober assessment of the challenges facing post-reunification Germany.
    • Mr. Sinn and the German finance minister, Wolfgang Schäuble, have clashed repeatedly on the euro.
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It was a festive evening last May when the Quandt Foundation, a trust run by the major shareholders of German automaker BMW, held a dinner at the Munich Residenz, once the home of Bavaria’s last king, Ludwig II. Where dukes, electors and fiscally irresponsible royals once held court, Stefan Quandt, a BMW shareholder, honored the region’s future leaders.

A string quartet played Mozart. Hushed attendants served filet medallions with seasonal vegetables in the “Kaisersaal.”

More than a hundred guests soaked in the baroque ambience – among them world leaders from the fields of science, economics and diplomacy. The glittering gala was a part of Munich’s ”Economic Summit,” which was organized by the Institute for Economic Research in Munich, the country’s leading economic research group known by its German acronym, IFO, and the BMW Foundation.

And then came the keynote by Hans-Werner Sinn, the IFO president and Germany’s best-known economist. But instead of addressing the topic of the conference — the crisis of global trade and opportunities in a trans-Atlantic free trade zone — Mr. Sinn talked about the Russian crisis.

Fit, glib and unwaveringly conservative in his characteristic old Dutch-style gray beard, Mr. Sinn grew contemplative, speaking softly, slowly and pausing frequently. He described the dangers of the conflict in Ukraine, criticized western policy towards Russia as being too dominated by the United States, and lambasted NATO’s eastward expansion.


Target 2 Two Capital Imbalances-01


He appealed to listeners to acknowledge the “historic responsibility of the Germans in their dealings with the Russians.”

The hall grew quieter and quieter. Everyone knew there were many influential Americans among the guests.

The public relations staff of the Quandt Foundation began to fidget in their seats. The seasonal vegetables nearly got stuck in the throats of some U.S. guests. And yet, Mr. Sinn kept going. He talked and talked – until he said everything that seemed to move him. The guests were torn between confusion, bewilderment and amazement at the unexpected lecture.

The performance was vintage Hans-Werner Sinn, an economist who never shies from confrontation and seems to feed off friction. He hates nothing more than “political correctness,” and is a ubiquitous presence in German media, a finger-wagging fiscal hawk railing against fiscal innovations such as deficit spending, quantitative easing or “Anglo-Saxon” style monetary policy.

Mr. Sinn published an economic analysis that argued that immigration was a net negative for Germany, specifically a minus of €1,800 per immigrant.

But his pronouncements aren’t limited to his field of expertise.

Immigration, rescuing the euro, state pensions, nuclear power, Germany’s export economy – the 66-year-old economist inserts himself into everything and gets media coverage. He is a prolific book writer, and some of his weighty tomes have become bestsellers. He is by far the most-quoted economist in Germany, a permanent presence in Germany’s leading talk shows.

And yet, as influential and eloquent as he is, Mr. Sinn is coming under attack as a reliable bellwether. Some of his prophecies simply have not come true. For example, his prediction of a “bazaar-economy” that will lead Germany’s export-heavy industry to shrink. So far, the opposite is taking place.

Mr. Sinn’s tendency toward hyperbole and the melodramatic is also starting to wear thin.

Like when he repeatedly warns that the European Central Bank’s internal bank payment system, called “Target 2,” will leave Germany holding the bag in a euro zone collapse. Most economists dismiss his analysis as fear-mongering.


Hans-Werner Sinn at a German discussion program Source action press
Trying to make his point: Mr. Sinn at a discussion program on German television. Source: action press



He was criticized for attempting to influence Germany’s political debate over immigration when he published an analysis that assigned a fiscal minus to each immigrant.

In the halls of power in the German capital, many are asking the same question: How good, really, is Mr. Sinn?

A year before retirement, his faux pas threaten to tarnish his image. Among some government leaders in Berlin, including some critics, Mr. Sinn is known as a master showman – but increasingly, one with a distorted view of the future, in essence a false prophet.

Mr. Sinn does not belong to the ranks of academics who devote themselves to pure research. And not to those who strive for knowledge for knowledge’s sake. No, Mr. Sinn aims for impact, timing his economic prescriptions to coincide with critical points in Germany’s political debate.

Increasingly, Mr. Sinn appears to be on the wrong side of history.

He himself says he aims to influence government decision-making by applying pressure through economic analysis. He does more than simply seek the truth; he wants to shape it by pushing the right political buttons, with the help of an accommodating media.

Mr. Sinn is more than a seeker of the truth; he has been an active shaper of it in Germany for decades. An adamant critic of ivory tower academics, Mr. Sinn is at home in the rough-and-tumble world of modern media. He views himself as “an alerter,” an early warning system for prudent German taxpayers.

But increasingly, he appears to be on the wrong side of history.

His mistakes are all the more explosive as he tackles politically touchy topics, such as immigration or the euro, with audacity.

That secures attention, but raises pressure on him to top his last pronouncements by being even more audacious. For his part, Mr. Sinn said he wants to bring “rationality into the public debate.”

His recent contributions in Germany’s immigration debate have been only marginally successful and have led to confusion.


Euro zone crisis liabilities ESM bailouts current account Germany Fertility birth rate East West Sinn3-01


Mr. Sinn published an economic analysis that argued immigration was a net negative for Germany, specifically a minus of €1,800 per immigrant. Naturally, the Munich economist knew his figures would be provocative at a time when an anti-immigrant movement in Dresden called Pegida, Patriotic Europeans against Islamization of the Occident, was gaining strength.

And he knew that his statistics depicted only half the truth on immigration, which provides the labor force needed to expand Europe’s largest economy.

But he published his politically insensitive argument anyway, timed as usual for maxium impact.

The figures were siezed upon by supporters of Pegida, a group criticized by German Chancellor Angela Merkel for trying to market a form of politically repackaged xenophobia.

“The purpose was to present advantages and disadvantages in the boiling hot immigration debate in a weighed manner,” Mr. Sinn said, referring to his immigration calculations.


Hans-Werner Sinn Source argum
Mr. Sinn leads the Center for Economic Studies (CES) and the Leibniz Institute for Economic Research (ifO), based in Munich. Source: argum



At the beginning of the 1990s, the unconventional thinker dashed unification-euphoria and earned praise for his book “Jumpstart.” In 2003, he provoked again with his bestseller “Can Germany be Saved?” which sold 115,000 copies. In it, he said Europe’s largest economy was in need of rehab.

Two years later, he questioned Germany’s shifting economy as a “Bazaar-Economy.” In 2008, he lambasted European energy politics in the fight against climate change in “The Green Paradox.”

But the bestselling economist reached top form in the euro crisis.

Since 2010, Mr. Sinn has lost no opportunity to polemicize against the euro’s top managers – whether it be the European Commission, the German federal government or the European Central Bank.

To be sure, Mr. Sinn has a solid record of economic crystal-ball gazing and a legion of loyal followers.

In his 2012 book “Die Target-Falle,” which translates as “The Target Trap,” Mr. Sinn claims that triple-digit billions worth of euros in risk have been built into the euro system by its managers, which will ultimately threaten German taxpayers. In his most recent book, “The Euro Trap,” Mr. Sinn warns that German taxpayers will be liable for investment risks in southern Europe.

To be sure, Mr. Sinn has a solid record of economic crystal-ball gazing and a legion of loyal followers.

Wolfgang Wiegard, the former chairman of Germany’s council of economic experts, an advisory panel to the government, calls Mr. Sinn’s post-reunification book “Jumpstart” “the best substantiated analysis of the economic problems of the German unification.”

Some think Mr. Sinn’s view of a coming euro crisis is indeed prophetic.

“The euro crisis has already begun,” said Ursula Kasper, a German retiree and fan of Mr. Sinn. She cited the Swiss National Bank’s decision last week to decouple the Swiss franc from the euro as a first step in coming troubles.

“What is happening at the moment in ‘Merkel Land?’ Nothing good, that’s what,” said Ms. Kasper, who believes Mr. Sinn has become a target of Germany’s political establishment for openly questioning its policies. “We are witnessing a planned shift away from democracy and towards socialism!”

At the same time, many economists think Mr. Sinn got it wrong in “Bazaar Economy,” which failed to foresee the German economy’s current economic juggernaut.

Mr. Sinn stands by his book, yet is contemplative: “I admit that the term (Bazaar Economy) is provocative.” He “evoked associations that were no longer to be controlled” and let loose a “meme” in the world that mutated beyond his words, according to his own analysis.

But often, he has simply seemed to get it wrong.


Government bond yields Greece Spain Ireland Germany euro zone Signs of Crisis-01


His argument, widely panned, was that Germany’s export success is no indication of overall economic performance because some exports are assembled but not produced in the country.

“The bazaar economy has proven to be a will o’ wisp,” said Michael Hüther, the director of the Cologne Institute for Economic Research. “Germany is continually experiencing new records in export. Although the percentage of imported materials in export goods has increased, this is but a reflection of the internationalization of value creation. In this way, the exports create even more income and jobs in Germany than before.”

His theories behind the “Green Paradox” are also problematic.

Mr. Sinn is correct that the climate problem cannot be solved without a global emissions trading system and Europe can’t save the day by going it alone because oil, natural gas, and coal are practically unlimited. But Mr. Sinn goes too far when he asserts that efforts to promote renewable energy do nothing to stop global warming. He overlooks the simple fact that an ambitious global climate protection agreement without renewable energy is inconceivable.

But his biggest, most controversial, arguments have come to the surface in his favorite hobbyhorse: the politics of saving the euro.

Mr. Sinn acts out of conviction. Since hardly anyone in German officialdom listens to him, he seeks out allies elsewhere. He doesn’t want to create a new political party, like the anti-euro Alternative for Germany party. He seems to reject conventional politics. It is the people of Germany whom he sees as allies. Perhaps that is why he is always pushing his arguments to the extreme. Perhaps that is the reason Mr. Sinn, who has a razor-sharp intellect, often paints in black and white.

His volume, his bold, some would say crude, theories, and his near religious fervor keep him in the public eye – and alienate him from political leaders.

The drumbeat of alarmist warnings from his Munich institute even prompted German Finance Minister Wolfgang Schäuble to remind IFO that their work was made possible by “a scientific institution subsidized with a lot of German taxpayers’ money.”

Mr. Schäuble admonished IFO to acknowledge its “special responsibility.”

At the German Economics Ministry, where he sits on an advisory council, Mr. Sinn also has his skeptics.

To be sure, Mr. Sinn regularly takes the floor to speak in ministry deliberations. It is said he does make “intelligent contribution” and is respected by the members. However, it is also pointed out that he does benefit from the fact that membership in the council is lifelong and the panel is dominated by aging “conservatives.”

“Although the directness of his arguments are impressive, they don’t at all reflect political interrelationships, side effects and necessities,” said one critic, who declined to be named.


Many government and opposition politicians think that on saving the euro, Mr. Sinn “is on the wrong track.” It is said in government circles that he “goes at it with the missionary zeal of an American TV evangelist.”

Mr. Sinn’s relationship to politics was different before Germany’s economic comeback.

For years, he was a welcome guest of the ruling center-right Christian Democratic Union party. When Ms. Merkel, the CDU boss, handed out invitations to the CDU headquarters at the Konrad Adenauer Haus in Berlin, it was often to listen to the IFO president explain the weakness of Germany as a business center.

The friendship held when Ms. Merkel became chancellor in 2005. Her first finance minister, Peer Steinbrück, a Social Democrat, however, didn’t appreciate Mr. Sinn. For him, the outspoken economist was one of those professors who create a world out of theoretical models but gave politicians little practical advice.

During Mr. Steinbrück’s time at the ministry, the invective “Professor Unsinn” was uttered more than a few times. In German, unsinn means nonsense.

When the European Union put together the first Greek aid package in 2010 and Mr. Steinbrück’s successor, Mr. Schäuble, was making an effort to organize the chancellor’s majority behind the plan in the Bundestag, the quick-witted economist launched a campaign to block the package from IFO’s headquarters in Munich’s posh Herzog Park area.

The rescue action an “incalculable adventure,” he said at a Federal Ministry of Finance event. The German government had been “hoodwinked” in Brussels into agreeing to the plan because Mr. Schäuble had been sick and was unable to oppose the “long-prepared plan” of southern Europeans in favor of the bailout.

It is said that Mr. Schäuble still is angry about Mr. Sinn’s “hoodwinked” remark. The two men had a loud argument in a hall outside Germany’s Constitutional Court in 2012, where the two men testified on opposite sides of the bailout plan, whose constitutionality was eventually upheld.

He has drawn criticism for his incessant warnings about the emergency lever created for the euro zone -- which would divide up and dictate how the zones debts are retired in the event of a collapse.

Mr. Sinn has resisted the CDU’s efforts to embrace him as a conservative standard bearer. Even before the euro crisis, Mr.Sinn said, “I see myself as an independent voice that cannot be taken in by one party nor the other, also not by unions or companies.”

Even today, Mr. Schäuble is cool towards Germany’s most well-known economist.

Whenever he needs a majority in the Bundestag or support from the CDU for the euro rescue policy, Mr. Sinn is sure to get in the way.

He has drawn criticism for his incessant warnings about the emergency lever created for the euro zone — which would divide up and dictate how the zone’s internal financial liabilities are settled in the event of a collapse.

In ECB parlance, the fall-back system is called “Target2,” an electronic clearing system between ECB and the central banks of the 19 euro zone countries.

Mr. Sinn believes he uncovered risks to German taxpayers totaling €750 billion in the balance sheet of the German Central Bank at the height of the euro crisis. He considers that to be a scandal and has accused the German government of concealing this. In the meantime, however, the Target obligations of the Bundesbank to the euro system have sunk to €460 billion.

Mr. Sinn has been accused of overexaggerating the risks.

In spite of all his criticism, Mr. Sinn, in principle, is not an opponent of the euro and is not anti-European. He repeatedly professes to believe in a “United States of Europe.”

The claims would only become a problem if a country left the euro zone and refused to pay.

And even then, the Bundesbank would only be liable to the extent of its 27-percent capital share in the ECB. Even the president of the German central bank, Jens Weidemann, himself an occasional ECB critic, has called Mr. Sinn on his claims: “The criticism of the obligations does not conform to the facts,” Mr. Weidemann said. The central banker added he sees “no independent risk” in the Target obligations.

Marcel Fratzscher, the head of the German Institute for Economic Research, agrees: “The Target system has proven to be, not a trap, but a form of emergency assistance for German investors,” Mr. Fratzscher said.

Risks to German taxpayers would only multiply if the currency union collapsed. But even then, the obligations to repay posed by Target 2 would be a minor problem.

In spite of all his criticism, Mr. Sinn, in principle, is not an opponent of the euro and is not anti-European. He repeatedly professes to believe in a “United States of Europe.” As do many economists, he sees no hope for Greece without a drastic debt haircut. And he is firmly convinced that the country would have better opportunities in the future without the euro.

On Greece, he is also at odds with other economists.

Mr. Fratzscher, for example, said countries such as Greece must be kept in the euro zone — simply because the costs of a departure would be too high for everyone involved. Mr. Sinn, on the other hand, argues that wage adjustments which countries such as Greece are required to make within the monetary union are not achievable nor justifiable.

As Greece nears a key national vote later this month, one that could see the nation elect a left-wing party that opposes further austerity measures, events will again tell the tale. Will Greece and its European lenders avoid the abyss with another last-minute deal?

Or will the country basically thumb its nose at its euro zone neighbors, daring a response and inciting an existential crisis? If that happens, the euro could gyrate wildly but one man may be unmoved — Hans-Werner Sinn.

Jens Münchrath, based in Düsseldorf, leads Handelsblatt’s coverage of economics and monetary policy. Donata Riedel has worked for Handelsblatt for 20 years and writes about economic policy. Klaus Stratmann moved from Handelsblatt in Düsseldorf to the Berlin office in 2005, and focuses on energy policy. Hans-Jürgen Jakobs has been editor in chief of the Handelsblatt newspaper since February 2013 after stints with many of Germany’s top publications, including the Spiegel magazine and the Munich-based Süddeutsche Zeitung.,, and


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