Towards a sustainable economic policy – why?

In practice, economic policy is short-sighted, being focused on economic growth and the state budget. This is not good enough; we need to adopt a long-term planning horizon and a wide-ranging approach to economic issues.

People tend to be myopic, laying greater emphasis on the here and now than on the distant future. Young people worry little about their pensions. Future generations are absent when decisions are made, even though the impacts of such decisions will be felt in various ways during their lifetimes. Politicians seek quick victories, with the next general election in mind. Lobbying practised by interest groups emphasises the present at the expense of the future.

Economic and social policy often involves long time-lags. Various cumulative processes are not given the attention they deserve. In many cases, policy is more effective the sooner problems are addressed (cf. the Stern report). Due to path dependencies, many decisions restrict future development paths (cf. nuclear power).

A long-term approach, on the other hand, would force policy-makers to take account of multiple problems (the economy, the environment, well-being, etc.) and the interconnections between them. This would promote dialogue between various sectors, promote joined-up thinking and generate more innovations, with whose help the challenges of our time could be better addressed.

So, the answer to the question posed in the headline is as follows: we need to counter myopia, particularly since policy impacts are far-reaching and because taking a long-term approach makes public policy more effective.