The moderate left is aware that it's fiscal tools to tackle the immediate crisis are horribly limited. The idealist left is uncomfortably aware they don't actually have a plan to offer, other than disbelief at the way things are now. As a result, the right tells the electorate that pain is the only way forward.
But this needn’t be a defeatist stance. Remember John Stuart Mill:
I cannot…regard the stationary state of capital and wealth with the unaffected aversion so generally manifested towards it by political economists of the old school…
[It] implies no stationary state of human improvement. There would be as much scope as ever for all kinds of mental culture, and moral and social progress; as much room for improving the Art of Living, and much more likelihood of its being improved, when minds ceased to be engrossed by the art of getting on.
Rather than think about growth policies, where politicians have little to offer, we should instead think about policies for “mental culture” - for promoting happiness, if you like. Here are some general principles:
1. Autonomy creates happiness, as well as being a virtue in itself; this is why the self-employed (pdf) and people in direct democracies (pdf) tend to be happier than others. This represents a case for giving people greater control over their working lives - through direct democracy. But it might also suggest that there is a case for some kinds of deregulation, to the extent that this increases autonomy by getting the state off people’s backs.
2. Unemployment is a big cause of unhappiness (pdf). This suggests that whilst there might not be much politicians can do to reduce aggregate unemployment, there is a case for proper active labour market policies, to ensure that the unemployed are as quickly matched to vacancies as possible. This does not, however, entail stigmatizing the unemployed as workshy. Quite the opposite. Given that unemployment is here to stay, it’s a good thing that some don’t want to work.
3. Social capital - trust and friendship (pdf) - also promote happiness. Although it’s not obvious that government policies can help people make friends, they might be able to promote trust, insofar as they demonstrate that we really are “all in this together.” Such policies might include a crackdown upon perceived rip-offs such as bankers’ bonuses and utility pricing.
So much for “big think” principles. But there might be a different way of coming at this, by using the Dave Brailsford principle of the aggregation of marginal gains. Maybe policies to improve the “art of living” don’t consist merely of top-down grand ideas, but also of many small things. Richard Layard has proposed (pdf) putting a higher priority upon mental health on the grounds that lifting the minority of people with acute depression out of their misery makes a good difference to aggregate well-being. I’d add that more should be done to encourage the growth of allotments, on the grounds that this would give people the chance of getting the “flow” happiness that comes from self-directed productive work.
Hopefully, more imaginative folk than I can think of other apparently tiny things that, together, add up to something big. And maybe these initiatives don’t require central government at all, but can be undertaken by local authorities, voluntary groups or just groups of individuals. In which case we should wonder what use national politicians are.