Werner Sinn: “The welfare state is not a gift”

Interview, west-info.eu, 15.11.2010

A prolific author and fine polemicist, Hans-Werner Sinn is one the most influential German economists on the planet. The theories put forward in his bestseller “Can Germany be saved?” are considered to have strongly influenced the “Agenda 2010”: A vast reform of the national labour market and social system brought about by the previous Social-Democratic government of Gerhard Schroeder. A proponent of neoclassical approach, Sinn is now at the helm of the Ifo, the German Institute for Economic Research, a pulpit from which in most circumstances he threw meditations that, albeit controversial, had the advantage to disavow the common sense on issues like environment and immigration. In 2004, for instance, in a fiery confrontation with Tito Boeri in view of the EU membership of former Soviet bloc countries, he voiced a gloomy prediction on the likelihood that the flow of workers from Eastern Europe would put under strain older member states’ welfares. What is his opinion six years later?

Two weeks ago, the European Commission opened an infringement procedure against UK over a national provision forbidding EU Eastern migrants from accessing welfare benefits before completing a year of work on British soil. UK’s contested provision seems consistent with the opinions you voiced seven years ago in a vivid debate with Mr Tito Boeri on LaVoce.info. Looking back to that debate and with the so-called transitional provisions limiting the free movement of new member states citizens due to expire, what is your opinion today?

It is a misuse of the European idea if we encourage welfare migration. Of course it makes sense to require that an immigrant has worked before he can receive welfare benefits. If we give up this sequence there will be lot of misuse and useless migration in Europe that makes no sense in economic terms. If the current EU law allows such type of migration it needs to be changed very quickly.

These days the European Commission seems very critical toward more stringent policies on immigration implemented by member states (e.g. Vivian Readings lashing out at Sarkozy over Roma repatriations). Do you believe the European Commission does not seize the real problems member states are facing as regard immigration, including that from new EU countries? Is it losing touch with the reality?

The Commission is in touch with reality, and it follows the EU laws. The problem is not the Commission, but the laws that are bad. The social systems of Europe cannot persist with the social inclusion idea for welfare benefits. We need a home country rather than host country rule. If someone is entitled to receive welfare from his home country, he should be free to consume it wherever he wants. It makes no sense to force the country where he prefers to consume his welfare income to provide this welfare income.

Nowadays, we are witnessing a clear emergence of anti-immigration consensus especially in those EU countries with stronger welfares. In your opinion, what might be the solutions to prevent this phenomenon from escalating?

We have to make sure that the migration incentives stem from labour income rather than from gifts.

In the face of the current situation, where EU immigration policies are heading? And what path, in your opinion, should they take?

Again. We need the home country principle for welfare benefits, when the immigrant comes from another EU country. For refugees from third countries we of course need the host country principle, as they will not get the money from abroad. EU countries do not belong to the set of countries from which one has to flee for political reasons. They are all well maintained and prosperous, able to take care of their own poor.