This was another attempt to defy economic forces. And “[…] as a result, globalisation produces unemployment rather than gains from trade,”7 he wrote in an influential article in 2004. So a way had to be found to compensate the losers of globalisation without preventing the market from adequately determining factor prices.
Together with other economists, the German Council of Economic Experts and also the Bundesbank he therefore called for a change in the welfare state paradigm: to rely more on wage subsidies and less on wage substitutes. This made Hans-Werner Sinn one of the trailblazers of the so-called Agenda 2010 reforms that were enacted between 2003 and 2005.