How Germany Got It Right on the Economy

Fascinating article on Germany, long derided as the sick man of Europe for its economy, got a lot of things right and is now the strongest economy in the world (well, second only to China, but hey, the DE only has 82M people vs. China’s 1B).

I do find it interesting as it brings together a couple of themes that I’ve seen recurring lately, the idea of the small, good businesses (mittelstand) which create real economic value even when they’re not trying to do billion dollar IPOs (most vehemently pushed by 37Signal’s DHH and JF) and a lot of what Umair Haque has been saying about America’s toxic economy full of value destroying, rather than creating, businesses being its problem. Too many people speculating, and shifting inflated value around rather than creating it themselves. And the focus on long term strategy for success, rather than short term tactics.

Fundamentally, it’s about smart investment, rather than cannibalistic cost cutting that is penny-wise but pound foolish.

What we have here is stakeholder capitalism, not shareholder capitalism…

It’s also very interesting how that has been reflected in the banking sector which was heavily criticized as being too locally oriented and short-sighted in investing in these industries.

Additionally, German firms have not been slash and burning their core competencies, quite often highly skilled labour, by dropping wages and offshoring jobs wherever they could save costs. Key in retaining organizational value (not to mention staff loyalty and productivity IMHO).

via Daring Fireball.