Word of the day: Mittelstand
I’ve spent the last couple of evenings catching up on recordings of two television programmes made by the BBC’s economic correspondent Robert Peston (I used to know his father when I worked in Whitehall in the 1970s). The programmes were called “The Party’s Over: How The West Went Bust” and sought to explain the origins of the current global economic crisis.
Peston has always been a good analyst and now his delivery is much better than it was, so it was a fascinating set of programmes. In a word, the explanation is: debt. Individuals, companies, banks and governments borrowed far too much. At least in the West. By contrast, China is a major lender to the West and its citizens consume less and save more.
When Peston came to looking at how Britain could rebalance its economy so that it is less dependent on the financial sector which got us into this mess, he praised the German concept of Mittelstand. There is no formal definition of this economic system, but essentially it is about supporting small and medium sized firms, many of them family-owned, focused on manufacturing vital components, investing for the long term, enjoying good labour relations, supporting training and apprencticeships, and integrated with the local community. Sounds good to me.
More information here.