Every German politician I have spoken to this week watches the chaos in David Cameron's government over Europe with something close to horror. This is a very dangerous game, says one. It's like the US Republicans with the Tea Party, says another. There will be a terrible awakening, says a third. The three, all members of the Bundestag, will be opponents in September's German general election, but they see the Conservative implosion over Europe through the same lens.

"The current situation in the UK is not positive at all," Michael Fuchs of the CDU – Chancellor Angela Merkel's centre right party – told me this week. "You have a very large deficit. Your industry is almost nothing. Your economy is too dependent on the City of London. You need to realise it won't get better if you leave Europe. It will get worse."

And that, mark you, is the verdict from a German MP who likes Britain and sits for what is still supposedly the Conservatives' sister party. But you hear the same verdict from a German Liberal, or from a German Social Democrat, or from a German Green. That convergence in Berlin doesn't mean, of itself, that all these German politicians are always right – the German political class can and does deceive itself, just like ours. But German distress at Britain's psychodrama over Europe is palpable. On this, maybe the Germans can see us as we are – better than, in our current hysteria, we can see ourselves.

Political visitors can deceive themselves too, of course. Eighty years ago some went to Soviet Russia and returned saying they had seen the future and it worked. I've lost count of the British politicians of all parties who have crossed the Atlantic and left their critical faculties behind at Heathrow. Even so, it is hard to spend time in Germany and not feel that this is still, for all its faults, a better, more balanced place than Britain. Particularly in a week like this, to travel from London to Berlin feels like leaving the madhouse and arriving in a world inhabited by rational beings once more.

This is not – repeat, not – to embrace every German government policy or everything about the German way. Germany is changing, not always for the better. Inequality is rising there too, especially since the financial crisis. In particular, it is not to endorse Merkel's rigid austerity policies for the eurozone – though one understands why she will not bend with only four months to polling day. If she is re-elected, as even opponents expect, Merkel may have to loosen the bonds. Being a consummate pragmatist, she may do so. A lot depends on the coalition she eventually forms.

But it is to say, without donning rose-tinted glasses, that Germany continues to get a lot of big things right that Britain continues to get very wrong indeed. Germany has a balanced economy. Britain, still hooked on the financial services drug, does not. Germany has a strong manufacturing sector. Ours is less than half the size. German economic strength is based on the middle-sized company. Ours is constantly undermined by merger mania. German companies prosper on industrial co-determination. Ours pigheadedly regard any limit on management autonomy as regulation and red tape. Germany's housing market is under strain, expecially in Berlin and Hamburg. But Britain's is broken. Germany's current account is in the black and they have a balanced budget. Britain's is deep in the red, and now we are borrowing more.

A fugitive from British populist politics immediately notices a less fevered and more widely cast public debate too, particularly in response to the financial crisis. Less dependent on the financial sector, Germany can contemplate regulatory actions from which Britain, still deep in the shadow of Thatcherism, shies away. Germany's finance minister Wolfgang Schäuble, a free-market conservative, told British Tories in London last week they should embrace a financial transaction tax. But his counterpart George Osborne remains the City's frightened prisoner.

This better balance makes other things possible. In recent weeks, both the SPD social democrats and the Greens have proposed new taxes on incomes, assets (including houses) and inheritance. The amounts involved are not massive, a few points on the top rate of tax, currently 42%. Perhaps the SPD and the Greens have caught the mood, or perhaps – as they even admit themselves – Merkel will see them off. The CDU and FDP are certainly delighted by the turn to the left. But at least the debate is out there, between alternatives, rationally argued, not distorted by a frenzied and malicious press, as it would be in Britain. Compare and contrast, too, the issue that most voters think is the biggest facing the country. In Britain, the economy aside, that issue is immigration. In Germany, also full of migrants, it is education. Germans are worried that their schools are falling short in reading, maths and science. Yet German schools actually compare better on the OECD's international tables than Britain's. We too should be worrying about schools, but instead we fixate on immigration.

There's more. Germany is a greener society. It has a fairer voting system. A cautious, though toughening, approach to military action. Respect for — no, love of — the arts. An often serious press. A readiness to speak other languages than their own. And – glory be – it is a society that doesn't live in the imperial past and has managed to get over the war. Oh, and football clubs – two of them contesting the Champions League final in London next week – built on youth policy, supporter ownership and long-term strategy, not mercenary millionaires, foreign oligarchs and instant gratification. A rich metaphor for much larger contrasts.

Germany is not perfect, absolutely not, any more than Britain is wholly dire. Germany is not a social democratic paradise, and many of its most attractive features are under genuine threat. It is sometimes as blind to the faults of Europe as we are to Europe's benefits. But Germany still puts post-Thatcher Britain to shame on so many really important fronts on which we repeatedly fail. It is still a nation trying to come together rather than one which is trying to drive itself apart. With all its limitations and contradictions, Germany retains a largely shared conception of a solidarity-based nation state far better attuned to the modern world than our increasingly broken one.

All our parties and interest groups can learn from this. Germany rightly looks at us with concern and disbelief. Britain should urgently look back at them, this week in particular, with no little humility and with a much greater readiness to discuss, to learn and, like it or not, to work together.