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German economic model – American style

The debt crisis is shaking Europe – and now Germany, too. But no Western country weathered the storm of the Great Recession as well as Germany. America can't copy the German model, but it can learn much from its small-business exporters.

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When I first entered the United States as a German exchange student in 1976, I found a nation in a deep funk. Coming from a squeaky-clean country that was socially at peace and economically successful, I discovered graffiti, learned about the widespread use of drugs in high schools, and was surprised to hear that hitchhiking in urban areas was unsafe. And any day, the US economy was going to be overtaken by Japan and, later, by Germany.

When I returned to America in the late 1990s, Germany had slumped and was called the "sick man of Europe" – burdened with high labor costs and stiff regulations and unable to unlock its potential.

The US, on the other hand, had evolved into the country of high growth rates and boundless optimism. It built the coolest gadgets, produced the coolest TV shows, and fielded the coolest sports teams. I learned about manicured lawns, the advantages of portfolio diversification, and the difference between a home, a mansion, and a McMansion.

Another 15 years on, I find the US (now my country of residence) in yet another funk, while Germany has suddenly morphed into Europe's economic "powerhouse." Nowhere in the industrialized world did gross domestic product increase as much per capita over the past decade as it did in Germany.

Yes, German economic growth has slowed in recent months. A huge debt crisis is shaking Europe – and Germany, too. But no Western country weathered the storm of the Great Recession as well. Unemployment is at a 20-year low. And if not for that big, competitive economy in its middle, Europe would be deeper in the doldrums than it already is. Little wonder that analysts and politicians are examining the secrets of Germany's success.

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