The budget deficit is an important issue, but it’s hardly the only economic issue facing the nation. Yet during the election campaign it felt as if the policy debate had been collapsed into a single set of figures: the speed at which each party planned to reduce the deficit.

Of course, it was convenient to have such a straightforward comparison – especially when deficit reduction serves as a quantifiable proxy for the politically-potent issue of economic responsibility. However, when what happens to productivity is more important than any deficit target, a wider-ranging debate would have been helpful.

The left could have done more to move the conversation on to other economic issues, but instead it made a fetish out of delayed deficit reduction – as if all our economic ills could be cured by prolonged indebtedness. It also made an idol out of the economist Paul Krugman whose absurd attack on British fiscal policy got a well-deserved monstering from his fellow American, Jeffrey Sachs.

The notion that our economy can be fundamentally fixed or broken by a simple policy lever pulled in Downing Street is one with obvious appeal to statist left-wingers. However, we on the right also need to get real – by facing-up to the smallness of the policy debate compared to the immensity of the economic changes we’re living through.

It’s a point brilliantly explored by Tyler Cowen in the New York Times:

“It is hard to avoid the feeling that our current economic problems are more than just a cyclical downturn. We know that the economy has gone through some bad times. But what exactly are we experiencing?

“One relatively optimistic view is that observed deficiencies — like slow growth in real wages and the overall economy, persistently low interest rates and low levels of labor participation — are merely temporary. In this view, these problems will dwindle after manageable problems like high levels of public or household debt have been reduced.”

By way of contrast, there’s the pessimistic view, which is that…

“…the radical and sudden changes of the financial crisis were early indicators of deep fragility and dysfunctionality.”

Some economists believe we are experiencing a “Great Reset” in which higher paying jobs are being systematically replaced by lower paying alternatives. Cowen cites the US higher education sector as an example:

“Well before the recent recession, many colleges and universities realized that they could not afford so many full-time tenured and tenure-track faculty members, and they began to increase their reliance on lower-paid adjuncts. Few institutions fired large numbers of full-timers suddenly, because that could have left them understaffed if trends reversed. Longstanding protections of tenure were also a constraint. Instead, many administrators added modestly to the number of adjunct faculty members, sometimes over decades, relying on retirement and attrition to manage the shift in a relatively smooth manner.”

Equivalent patterns of job replacement can be seen in sectors across the economy – not as a temporary adaptation to the recent downturn, but as an ongoing transformation.

Cowen points out that this phenomenon isn’t just one of Anglo-Saxon capitalism, but can also be seen in corporatist, consensual Germany:

“Early in the previous decade, Germany realized its economic model wasn’t working, and it accepted lower real wages for many workers.

“Even though growth in living standards has been slow, the German economy has been flexible and has appeared to be on a sustainable track. Maybe that was the best Germany could do.”

If we are indeed living through a Great Reset, does that mean that governments are powerless to do anything about it? Not necessarily, but at the very least we need get some perspective.