"With its Jimmy Stewart localism, Germany is running rings around America," writes Harold Meyerson — How Germany got it right on the economy. On the " economy that American and British bankers and economists derided for years as the sick man of Europe," Mr Meyerson writes:
- German banks, they insisted, were too cautious and locally focused, while the German economy needed to slim down its manufacturing sector and beef up finance.
Wisely, the Germans declined the advice. Manufacturing still accounts for nearly a quarter of the German economy; it is just 11 percent of the British and U.S. economies (one reason the United States and Britain are struggling to boost their exports). Nor have German firms been slashing wages and off-shoring - the American way of keeping competitive - to maintain profits.
One key to Germany's miracle is the mittelstand, as the family-owned small and mid-size manufacturing firms that dominate the economy are known.