Germany's Growth: New Rules, Old Companies

As most developed nations stumble in the race against emerging nations, here's how Germany has succeeded in keeping skilled labor working in good jobs
Mittelstand at work: At family-owned builder Jaeger & Brommer, 19 employees make about one instrument a year Thorsten Futh

In German, die rote Laterne—the red lantern that hangs off the caboose of a train—is slang for last place. Less than a decade ago, Germans were wondering whether that was an apt description for their own dawdling nation. Germany produced top-quality technology but seemed held back by an aging, risk-averse population and a sclerotic business culture. In 2005, Germany's 10-year growth rate was half, and its unemployment rate more than double, that of the U.S. rate The Mittelstand—Germany's small and midsize manufacturers, often family-run—seemed like a relic of Europe's industrial past.

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