Slothful school holidays are upon us, but it's never too late for a geography test. So let me begin: which country has the fastest-growing inequality and poverty of any developed economy, according to the heavyweight OECD thinktank?

Let me guess – you're thinking Broken Britain, or post-Dubya America. Wrong: it's in the euro. And – one final clue – workers here are paid some of the lowest wages in western Europe.

Ah: Greece, Portugal or another of those eurozone basket cases in dire straits? Nope. Try: Germany.

I know it sounds wrong. Germany is meant to be the land of industrial miracle and social equality, where factory workers drive Mercs and top politicians think nothing of attacking "locust" financiers. If anything, Deutschland's stock has risen even further since the great crash, as the country has powered out of recession (while Britain, America and the rest just limp along) and chancellor Angela Merkel has gained the whiphand in sorting out the continent's debt crisis.

The result is that to many of the questions raised by the great financial crisis – about how to manage an economy and how to retain a healthy manufacturing industry, among others – the answer from both right and left in the UK tends to be: whatever Germany does.

For George Osborne and David Cameron, Germany is a shining example of what riches await if you keep a hawkeye on public finances, and a diverse, localised economy.

As for lefties, let me quote an op-ed in the Financial Times last week from Maurice Glasman and Duncan Weldon; the first of whom it is apparently my statutory journalistic duty to call "Ed Miliband's guru", the other a former Bank of England economist. Headlined "German lessons for Miliband's growth agenda" (never let the FT stand accused of being catchy), it urges Labour to "re-examine the lessons to be learned from the German social market economy". By which Glasman and Weldon mean a healthy wariness about globalisation and deregulation, and a willingness to protect workers. This is the famed German model or, as tourists might know it, the way that all the shops are shut on a Sunday.

There's just one problem with that picture: it's out of date. What was true in the 80s and even the early 90s largely rings false now (although, admittedly, weekend shopping is still hit and miss). As versions of Germany's economy go, what Glasman and Weldon and countless others on the left are peddling is a vinyl LP in the age of the mp3: it sounds better, to be sure, but it's pretty obsolete.

The German way of doing business has vastly changed in the past 15 years. First reunification, then the privatisation of state-owned utilities (and thus the erosion of terms and conditions for employees at Deutsche Telekom and all the rest) and finally out-and-out deregulation of labour markets have left workers worse and worse off.

In an irony that will appeal to anyone who remembers New Labour, many of these changes have been pushed through by Social Democrats.

The result is a country that does not have a national minimum wage, and where 2 million workers are now paid around €5 (£4.35) an hour. Most other comparable European countries have a minimum wage – from France to the Netherlands to Greece – and in the UK the hourly rate is about to go up to £6.08. As Germany's leading expert on pay and inequality, Gerhard Bosch, observes, workers in manufacturing (BMW and VW, say) still get good wages and conditions, thanks to their strong trade unions. And there are lessons to be learned from how to use banks to foster decent small-business growth and maintain a manufacturing supply chain. As for the rest, he says: "The German social model is really like a Swiss cheese where the holes are getting larger and larger."

Put in big-picture terms, this means that Germany is really the No 1 problem economy in Europe. Again, that sounds plain wrong: surely the bad cases are on the southern periphery of the eurozone?

But consider: German workers saw their wages (after inflation) actually fall by 4% in the 2000s, so they were hardly in a position to consume a growing proportion of those products turned out by German businesses. Which means that the country exported more to the go-go economies of the south of Europe, and lent Spain, Greece and the rest the cash to buy their goods. Put in simple terms, it's a bit like buying a kitchen and the showroom arranging a loan so you can make the purchase. And German banks were only too happy to shovel credit to the countries that couldn't really afford to buy all this stuff. In effect, Germany blew the bubbles that popped up in the rest of Europe.

When a borrowing crisis comes along, it's better to be the bank than the debtor, which is why Germany (like China, which has played a similar game) is so lauded now. But if the eurozone crisis is to be sorted out, continental governments need to recognise that Germany's business model can't continue to rely so heavily on lending and selling abroad. As Engelbert Stockhammer of Kingston University points out, it would make more sense for German workers to be taken off their strictly rationed wages, than for Greece, Spain and Portugal to be consigned to their own regional great depression.

Two conclusions flow: first, the problems of the eurozone are way bigger than a few small countries that spent too much. And second, Germany isn't a cut-out-and-keep model of how to manage a sound, socially just economy. We need to think a bit harder.