Government is a difficult business. You are the secretary of state for health, for education, the chancellor; the prime minister, for goodness’ sake. You have spent your whole life looking to achieve real power, to do real good, to make a difference. You want patients to be treated better, children to be better educated, workers to be more productive and better paid, the country to be a better place. And who could be better placed than you to make those things happen at last?

Gradually, though, the realisation dawns. You might have nominal control of the health service or the education system, you might have a very clear idea of what change you want to bring about. But getting the doctors and nurses and teachers and managers to make it happen is really, really hard. Shifting the direction of the economy, raising productivity, is even harder. All your enthusiasm, all your good intentions seem to founder on a mass of bureaucracy and entrenched interests and complexity and inertia and sheer reality.

So soon you start to complain about the “blob” (the educational establishment according to Michael Gove) or the “scars on your back” (Tony Blair’s words) from dealing with a recalcitrant civil service.

Of course, you take credit for anything that goes well. Employment numbers are up, national income is growing faster than France’s, exam passes increase, cancer survival rates improve. So you feed the myth that you can change things quickly and predictably. Of course, in doing so you also feed the myth that when things go wrong it’s your fault.

David Cameron and George Osborne may have had a small helping hand in raising employment rates to record levels, but this was not their achievement. They no doubt could have done more to increase earnings and productivity, but neither was the dismal performance of each of these during their time in office largely their fault. Greater forces drive these things.

While they, and we, routinely overestimate their power to change things in the short term, though, the long-term effects of political decisions can be profound. Decades of misguided economic policies cumulated to make the UK “the sick man of Europe” in the 1970s. In the subsequent three decades, our economic performance improved markedly as policy on competition, trade, education and the labour market got better. It improved because successive governments made better decisions.

All of which brings us to two immediate issues. The first, inevitably, is Brexit. Here a set of policy choices present themselves that may look technocratic, but which will have profound effects on our long-term economic welfare. The nature of the trade deal we come to with the EU could matter more to our economic future than any other policy decision made by this government. Yet to most people these will be distant and arcane negotiations over incomprehensible details. The political payoff from making a good deal — one with maximum openness — may be nil or even negative in the short run. Yet the long-run economic payoff could be immense, the cost of failing to achieve it equally big.

Step one is for the prime minister to understand that, to believe it, to know it. These economic laws work at least as surely as laws passed by parliament; they just take longer and reflect little immediate credit on those who harness them.

Step two is to prioritise the long-term economic benefits over the short-term political exigencies. That is always hard, but it is ministers and prime ministers who find a way to do that who really do manage to make the world a better place.

The second set of issues relates to the benefit and minimum wage changes coming in this week. Here the effects are much more obvious and immediate. Over the next few years, hundreds of thousands of new tax credit claimants will be thousands of pounds a year worse off than they would have been. That is a policy choice with immediate, real effects on real people. Another change with immediate effect is the increase in the national living wage, which rose to £7.50 an hour at the start of this month. If it continues to rise as planned, it will soon affect three million people, more than three times the number on the minimum wage in 2010.

These sorts of policies look easier, their effects more obvious and immediate. The last Labour government made a conscious decision to increase the living standards of the poor by, quite dramatically, increasing the generosity of benefits. The present government is, partially, undoing that, but by raising the national living wage it will raise the take-home pay of millions of the lowest paid.

In that apparent ease, though, lies my concern. In the end, the only sure way to raise living standards is to go through the hard slog of increasing training, investment, productivity, free trade. Neither higher benefits nor a higher minimum wage is a free lunch. Higher benefits have consequences for work incentives. Higher minimum wages also have consequences. We don’t know what will be the eventual effect of trebling the numbers whose wages are set by Whitehall diktat.

A rising minimum wage carefully set as part of a long-term economic strategy, that’s fine. One imposed out of pure frustration at the real long-term slog, that’s more of a worry.

This article was first published in The Times and is reproduced here in full with permission. Paul Johnson is director of the Institute for Fiscal Studies. Follow him on @PJTheEconomist