The Second Finding

Hans-Werner Sinn has spoken again, this time in a long podcast conversation. The diagnosis is the same. But one figure in it leads further than he takes it himself.

I. The same conversation, for the fifth time

In “Heart Disease. And Nobody Operates.” we discussed Sinn’s speech in Giessen: the car industry as the heart, the green paradox, wage subsidies instead of wage replacement, and the question of why nobody has operated since 2003. On 26 October 2026 he repeated almost all of it on the podcast “Ronzheimer.” in conversation with Paul Ronzheimer. He calls Trump and Brussels the two jaws of a pair of pliers driving the German car industry out of the country. He calls the government’s reforms “management of scarcity”. And about the future he says that the standard of living in Germany will fall “very, very significantly”. “You can’t eat armaments.”

We have already acknowledged and criticised most of this. What is new is one figure, and it matters more than anything else in the conversation.

II. The figure

The federal government is pleased about 1.3 per cent growth. Sinn explains why that is no upswing. An economy grows in two ways: by making better use of the factories it has, or by building new ones. The 1.3 per cent, he says, is entirely better utilisation. New capacity only comes from net investment, that is, investment that does more than replace wear and tear. And that, says Sinn, is currently negative in Germany. Not even enough is being invested to keep the existing stock intact.

Imagine a farmer who harvests a little more each year because he works his fields more intensively, while his barn decays and no new equipment arrives. His harvest keeps rising for a while. Then it falls, and for good.

III. What Sinn does not make of the figure

For Sinn the figure leads where everything leads for him: less state, fewer rules from Brussels, a country that once again pleases “the investors of the world”. He adds a sensible proposal: allow investment to be written off against tax immediately, instead of cutting tax rates. A tax cut also rewards money that moves abroad. Immediate write-off rewards only what is built here. Ronald Reagan did this in 1981.

But the figure tells more. Negative net investment has two halves. One is the state, which for thirty years let bridges, schools and railways decay under the black zero. What that looks like on the A 45 is described in “The Reminder Has Arrived”. How the head of the state grew at the same time while its body shrank is described in “The New Nomenklatura and the Party Cartel”. Less state would not help here. It would hit the body, as it did before.

The other half is private money. It has not disappeared. According to the Bundesbank, the financial assets of private households reach new highs year after year. Only they flow into shares, property and bonds, that is, into things that already exist, and not into new factories. Whoever earns at a toll gate does not need to build anything new. This is the subject of “The Other Side of the Coin” and “How Do You Become a Billionaire?”. Sinn’s basic law of capitalism, by which wages follow investment, presupposes that investment takes place. If money prefers assets, it no longer holds.

IV. Three inaccuracies

An economist who accuses others of arguing morally instead of with figures must be measured against his own statements.

Sinn defends the Audi chief who invests in the United States while cutting jobs in Germany by citing company law: a public limited company must increase its shareholders’ wealth, otherwise the management board could be “held liable”. That is not what German company law says. It states that the management board runs the company “under its own responsibility”, and according to the prevailing view the interest of the company also includes its employees. At Volkswagen, moreover, the state of Lower Saxony holds a blocking minority. The decision may be right. There is no law that forces it.

Sinn calls the socialisation of large housing stocks under discussion in Berlin “unbelievable” because it invokes the Basic Law. But it is in the Basic Law, in Article 15, and in 2021, 59 per cent of Berliners voted for it in a referendum. One can argue that it deters investors. Presenting it as an abuse of the constitution is wrong.

And his history of the pension begins with Bismarck, who is supposed to have been troubled by the “poorly fed old people without children”. We know of no evidence for this motive. Bismarck’s social laws were above all meant to cut the ground from under the Social Democrats. Sinn’s actual thesis, that a pension system which does not reward children rewards childlessness, is strong and does not need this legend. The proposal to include children in the pension formula, incidentally, comes from the Schreiber Plan of 1955. Adenauer rejected it in 1957 with the words: “People will always have children.”

V. The finding stands

In the conversation Sinn himself recounts what happened to the report of the pension commission. CDU, CSU and SPD were in agreement, and the commission had all the relevant forces at one table. Then state elections came up, and the minister-presidents feared for their voters. Sinn calls this “moral arguments”. It is what we called the construction of the hospital in “Heart Disease”: a reform whose costs fall immediately and whose benefits only arrive after the next election finds no surgeon.

Sinn sees it and draws no conclusion from it. After twenty-three years he makes the same diagnosis, demands the same operation and wonders why it does not take place. His second finding, negative net investment, is the more important one. It shows that the patient is not only ill but has stopped feeding himself. Whoever concludes nothing from this but “less state” is prescribing a diet to the starving.

Back to the essay: Heart Disease. And Nobody Operates. · Further reading: The Reminder Has Arrived · The New Nomenklatura and the Party Cartel · The Other Side of the Coin · Expropriation or the Next Raid?