Professor Hans-Werner Sinn, Ifo Institute and University of Munich, gave the Van Lanschot Lecture at the University of Tilburg yesterday in a ceremonial setting. As Prof Sylvester Eijffinger mentioned in his laudatory address, this was the first time that a German had the honour of being invited to give the lecture.
Mr Sinn was awarded the Koopmans medal for “outstanding services in the field of economics, politics and science” by the university’s rector, Prof Philip Eijlander. This medal is the most important distinction awarded by the university.
In his address, entitled “The European Balance-of-payments Crisis”, Prof Sinn stressed that Europe should look to the USA as an example in its pursuit of further integration. It should not attempt to reinvent history’s wheel, but should instead copy the federal structures of the US monetary system. Above all, this means forsaking any socialisation of the debts of individual states and settling the outstanding Target balances. The USA tried debt socialisation in its early days, but this created major perverse incentives that led to federal-state insolvencies and caused major political upheaval in the 1830s and 1840s, increasing the tensions that led to the American Civil War in 1861. Initially the USA had a system whereby the balances between the district central banks, the equivalent of which have surpassed 900 billion euros in the Eurozone, were settled with gold. A switch to repayment with gold-backed securities was made later on, and today repayment must at least be made with safe securities. By this rule the Bundesbank would be entitled to receive 644 billion euros in marketable securities from other Eurozone states, while the Dutch central bank would be entitled to securities worth 157 billion euros.
Prof Eijffinger pointed out that Prof Sinn’s bestseller “Ist Deutschland noch zu retten?”, published by MIT Press in English as “Can Germany be saved?”, was one of the most influential political economy monographs in recent times. Prof Sinn, according to the laudator, contributed substantially with his writings to the reforms carried out in Germany by the Schröder government. Now, his exposure of the ballooning Target balances in the ECB system has once again made a significant contribution to political economy research. This prompted the UK newspaper The Independent to include him amongst the ten most important people who changed the world in 2011.
This is the fourth time that Prof Sinn is honoured in the Netherlands. In 2004 he held the Tinbergen Lecture of the Royal Netherlands Economics Association, and in 2006 he gave the Jelle Zijlstra Lecture, followed in 2008 by the Europa Price awarded by the University of Maastricht.
"Land moet in en uit euro kunnen stappen", De Financiele Telegraaf, 24. May 2012, p. T29