The Economics of Enough_ How to Run the Economy as if the Future Matters - Diane Coyle [4]
In sum, the developed economies, which are the focus of this book, face a series of enormous challenges without any response so far in the institutional framework. The policymaking process no longer functions adequately. The standard economic policies have been directed toward fending off the moment when the unsustainable can’t be sustained any longer. This has been possible only by borrowing from the future on a massive scale, whether through the accumulation of debt in order to finance continuing spending now, or through the depletion of natural resources or social capital. The limits to the continuing scope for maintaining our own well-being at the expense of people in the future are becoming all too apparent. What to do about it is less obvious. It requires both solving the economic challenges and building a process that will allow solutions to be implemented. Finding a process is all the more important given that social trust has been corroded by the conditions that paved the way for the economic crisis.
The economic crisis is therefore also fundamentally a political crisis. It cannot be addressed without reform of the policy-making process so as to make the necessary difficult choices widely acceptable—to give them legitimacy. It is quite striking that there is a sense of near-despair about politics in every country—there is apathy, cynicism, distrust, contempt. These public attitudes are corroding the willingness of the many talented and public-spirited people who do go into politics—yes, there really are some—to stay there. It’s hard to build political institutions and policymaking processes that command a consensus, as required in democracies, and therefore hard to change them. Attempts at reform tend to add complexity on top of existing structures. Looking at the political institutions and policy processes of any of the leading democracies always reminds me of the gothic realm of Gormenghast in the novels by Mervyn Peake, a place fossilized to the point of paralysis by its old traditions piling up on each other like a mass of stalagmites. This institutional sclerosis gets in the way of effective policies.
The severity of the crisis and subsequent recession was expected in some quarters to pave the way for a definitive political shift, a crisis of capitalism bringing about a left-wing moment. That hasn’t happened, not least because left-wing politicians have lacked a clear alternative. However, there has been a system failure. As Benjamin Barber put it: “There are epic moments in history, often catalyzed by catastrophe, that permit fundamental political change. . . . Today we find ourselves in another such seminal moment. Will we use it to rethink the meaning of capitalism?”5
HAPPINESS, SOCIAL WELFARE, AND ECONOMIC GROWTH
One reaction to the crisis has been the argument that we should turn our backs on economic growth. It’s growth that puts pressure on the climate and natural resources, it’s growth that lures people into debt. What’s more, many people have been persuaded by evidence apparently showing that in the rich countries at any rate, economic growth doesn’t make people happier. If this were true, it would offer a way out of at least some of our problems. Only wean people off the idea that economic growth is needed for their well-being, this line of argument goes, and the environmental pressures or the social and cultural pressures arising from the drive for economic efficiency would abate.
One might have thought that seeing the impact of a recession (when there is no growth, by definition) on people’s well-being would have given “happiness” advocates pause for thought. The absence of growth seems to make many people unhappy, so perhaps we should be a bit cautious about the reverse proposition that growth doesn’t make people happy. There is a growing body of research about what does make for happiness. The “positive psychology