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Can Germany Be Saved?
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Can Germany Be Saved?

The Malaise of the World's First Welfare State

Hans-Werner Sinn
MIT Press, 2007
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Editorial Rating

8

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  • Innovative

Recommendation

This pointed, hard-hitting and incisive analysis of Germany’s economic malaise is hardly calculated to win popular applause in Germany. Hans-Werner Sinn finds that Germany’s dearest child, the welfare state, is the cause of its economic problems. Many Germans rely on transfer payments, so it is politically unfeasible for politicians to reduce the scope of government spending and correct the distortions it causes. However, the author argues quite convincingly that the welfare state is simply unsustainable in its current form. getAbstract recommends this book to anyone interested in the future of Germany and, for that matter, in the future of the modern welfare state.

Summary

Germany’s Problems

Germany’s economy is still Europe’s largest, but recently it has also been Europe’s worst-performing. The so-called German “economic miracle” that astonished the world by bringing the country from the ashes of war to the peak of prosperity clearly seems to be over. German prosperity rests on shaky grounds. The future looks bleak for the country’s aging population. The sprawling German welfare state promises generous pensions, but given the nation’s economic performance and demographic trends, it is hard to imagine how it will keep those promises.

Politicians are aware of the economic facts. However, they seem even more aware of the political facts. Gerhard Schröder lost the chancellorship and his party’s chairmanship in large part because he tried to confront Germany’s problems head-on. He attempted to introduce market-oriented reforms and to wean Germans from the welfare state. The German people rejected him as the bearer of bad, albeit perfectly realistic, news and offered their votes to the leftist Linkspartei.

Germany faces these problems:

  • Unemployment has been rising for more than three decades. In some areas...

About the Author

Hans-Werner Sinn is professor of Economics and Public Finance at the University of Munich. He is the president of the Institute for Economic Research and director of the Center for Economic Studies at the University of Munich.

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