Professor Propaganda: Is German Economist Exacerbating Euro Crisis?
Germany's Hans-Werner Sinn is fighting desperately against the euro rescue. His controversial theories fill the pages of newspapers for days at a time, but his answers are often simplistic. A growing number of his colleagues are distancing themselves from the influential Munich economist.
Critic of German economist Hans-Werner Sinn: "If this is the contribution of German economics to the euro crisis, I'm seriously concerned about our profession."
Shortly after 5 p.m. last Tuesday, fatigue began to take hold in the courtroom at the Federal Constitutional Court in the southwestern German city of Karlsruhe. The judges sank back into their cream-colored armchairs, and the audience began to thin out.
The lawyers and judges had already spent about seven hours addressing the question of whether the European Stability Mechanism (ESM), the permanent euro bailout fund, is compatible with Germany's constitution. Constitutional law expert Karl Schachtschneider, one of the plaintiffs, made an impassioned plea for a a national referendum on the issue, while German Finance Minister Wolfgang Schäuble warned against the "immeasurable consequences" of a Karlsruhe veto.
It seemed as if everything had already been said by the time Munich economist Hans-Werner Sinn stepped up to the microphone. The professor gave a technical lecture on the economy, but what made his listeners perk up were his bold assessments.
Sinn was sharply critical of what he called a "bottomless pit," and he spoke of "false therapy" and a "machinery of asset destruction" and accused the European community of nations of employing instruments that are doing precisely the opposite of what they are intended to achieve. "They are getting in the way of a cure," Sinn said. When he was finished, the judges no longer had any questions.
It was a performance entirely to Sinn's liking. Before the gates of Germany's highest court, the 64-year-old professor with a Captain Ahab beard was given an opportunity to present himself, once again, in what is currently his favorite role: as a vehement opponent of the prevailing euro policy.
With his tirades against what he characterizes as Europe's bailout monstrosities, from the European Financial Stability Facility (EFSF) to the ESM, Sinn isn't just trying to show that it is possible, contrary to the prevailing view, to express the complicated issues facing the European monetary union in simple terms. He is also demonstrating to the nation that he has added a new type of individual to the German academic community, the economist campaigner.
A History of Bold Theories
Like no other professor, Sinn has long shaped the economic debate in Germany with his bold theories. Around the turn of the millennium, when the German economy was in the doldrums and the country was often referred to as the "Sick Man of Europe," he alarmed Germans with his assessment that labor market reforms would have to be much more severe to bring the country's job slump to an end.
A few years later, he warned that Germany, the world's top exporting economy at the time, had deteriorated into a "bazaar economy," because it had so many foreign suppliers. Now he even promotes the theory that the rescue policies coming from Brussels are not solving problems but are in fact making them worse. "Our children will be forced to go to southern Europe and get our money back," he warns.
Sinn is clearly a successful man. With his varying predictions of doom, the professor has managed to become Germany's most popular and strident economic expert. Some admire him, praising him as what the tabloid Bild called the country's "cleverest economics professor." Others fear him, deriding him as a stubborn nuisance. Finance Minister Schäuble acerbically characterized Sinn as an academic "who takes the task of making his opinion known very seriously indeed."
The Sinn spectacle reached a new high last week. After Chancellor Angela Merkel had agreed to a European banking union at the most recent European Union summit, the professor, in a joint letter signed by more than 200 economists, cautioned against the incalculable risks of such a move. An only slightly smaller group of German economists signed a petition opposing the Sinn letter. The dispute dominated the headlines for days.
Sinn must have been pleased, given that he was the focus of attention once again, because that's his main goal in all of his campaigns. And yet he hasn't always been the agitator he portrays himself as today.
At the beginning of his career, Sinn was more of a silent representative of a group of economists who were making a name for themselves, in Germany and abroad, with their scholarly essays. Even in the United States, economists spoke admiringly of the man they called "Häns-Wörnör."
Banking on Sensation
But at some point every reasonably prestigious German economist faces the question of whether he would rather spend the rest of his career impressing doctoral students in Boston or politicians in Berlin. Sinn chose the latter and, in 1999, took over as president of the Munich-based Ifo Institute for Economic Research, one of Germany's most influential think tanks.
Everything looked as if Sinn were embarking on a typical path in German political consulting, which included his membership on ministerial advisory councils and his candidacy for a spot on the venerable, five-member German Council of Economic Experts, which advises the government in Berlin. In the ensuing years, however, Sinn has discovered a much more direct way of influencing the economic debate.
In 2003, he wrote a book called "Can Germany be Saved?" which combined an analysis of Germany's weaknesses as an industrial center with a call for brutal reforms. His collection of radical theses became a bestseller.
By banking on sensation instead of ivory towers, Sinn has since become Germany's leading economic propagandist, a man whose impact is partly based on the fact that he pursues his theories more doggedly and sells them more stridently than any other professor in the country.
The head of the Ifo Institute spends more time than any other economist giving interviews, writing columns and appearing on talk shows, and he has a unique knack for applying the tools of agitprop.
When he wants to make it clear to the Germans how many risks they have already taken to rescue the euro, he develops an "exposure level" flood watch, which is regularly updated on the Ifo Institute's website. Just to make sure that everyone understands what the gauge means, it also depicts an eagle, the German national symbol, drowning in the rising floodwaters.
- Part 1: Is German Economist Exacerbating Euro Crisis?
- Part 2: 'Intellectual Despotism'
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