Can Germany Be Saved?
The Malaise of the World's First Welfare State
- Winner of the 2003 Financial Times Deutschland Award for the best economics book dealing with reforms.
- Winner of the 2003 getAbstract/Financial Times Germany Business Book Award.
360 pp., 6 x 9 in, 50 illus.4/color
- Published: February 13, 2009
- Published: June 22, 2007
A prominent economist argues in this German bestseller that Germany can rescue its sluggish economy by transforming its social welfare system and reforming its labor market and tax structure, offering insights into economic dilemmas experienced by all advanced economies in a time of globalization.
What has happened to the German economic miracle? Rebuilding from the rubble and ruin of two world wars, Germany in the second half of the twentieth century recaptured its economic strength. High-quality German-made products ranging from precision tools to automobiles again conquered world markets, and the country experienced stratospheric growth and virtually full employment. Germany (or West Germany, until 1989) returned to its position as the economic powerhouse of Europe and became the world's third-largest economy after the United States and Japan. But in recent years growth has slowed, unemployment has soared, and the economic unification of eastern and western Germany has been mishandled. Europe's largest economy is now outperformed by many of its European neighbors in per capita terms. In Can Germany Be Saved?, Hans-Werner Sinn, one of Germany's leading economists, takes a frank look at his country's economic problems and proposes welfare- and tax-reform measures aimed at returning Germany to its former vigor and vitality.
Germany invented the welfare state in the 1880s when Bismarck introduced government-funded health insurance, disability insurance, and pensions; the German system became a model for other industrialized countries. But, Sinn argues, today's German welfare state has incurred immense fiscal costs and destroyed economic incentives. Unemployment has become so lucrative that the private sector, already under pressure from international low-wage competitors, has increasing difficulties in paying sufficiently attractive wages.
Sinn traces many of his country's economic problems to an increasingly intractable conflict between Germany's welfare state and the forces of globalization. Can Germany Be Saved? (an updated English-language version of a German bestseller) asks the hard questions—about unions, welfare payments, tax rates, the aging population, and immigration—that all advanced economies need to ask. Its answers, and its call for a radical rethinking of the welfare state, should stir debate and discussion everywhere.
Although Germany is having a good run at the moment, the general experience on the Continent over the past dozen years (and the dozen before that) has been limping, catch-up growth without indigenous innovations, low labor force participation, and low job satisfaction. Hans-Werner Sinn's book is essential for those who recognize the seriousness of the problem.
Edmund S. Phelps, McVickar Professor of Political Economy and Director, Center on Capitalism and Society, Columbia University, and Nobel Laureate in Economic Sciences (2006)
For two decades, [Hans-Werner Sinn] has been one of the loudest voices preaching the urgency of structural reform.
Finally, an economist who tells it like it is. This book belongs on the desks of every member of the German cabinet and every member of the German parliament.
Hans-Olaf Henkel, Bank of America (former President of the Leibniz Association and former President of the Federation of German Industries)
Germany needs a new attitude. In a time when the ifs and hows of reforms are greatly argued over, Professor Sinn and his book are dead right. With his knife-sharp analysis of the dire findings and clear instructions for action, he provides the way. Required reading.
Henrich von Pierer, former Chairman of the Supervisory Board, Siemens AG
What Germany needs: unconventional ideas, creativity, openness, and the courage to address uncomfortable themes quickly and aggressively? Hans-Werner Sinn delivers all of this. Worth reading.
Dieter Rampl, Chairman of the Board of Directors, UniCredit Group
Slemrod and Bakija provide a comprehensive—and comprehensible—analysis of the U.S. tax system, its effects, and its defects. Their evenhanded presentation offers the reader a broad perspective on how the income tax arrived at its current state and what the options are for reform. This book should interest tax specialists, students, and frustrated citizens alike.
Alan J. Auerbach, Director, Robert D. Burch Center for Tax Policy and Public Finance, University of California, Berkeley