Norman Macrae Youth Foundation NMYF -net of The Economist's pro-youth economist
Consider Japan is the seminal article about the New Japan and was originally published in The Economist in two parts on the 1st and 8th of September 1962. It has been credited by many Japanese as being the first account of how Japan was changing after the Second World War, and how the Japanese themselves were thriving now they had control of their own economy. When Norman Macrae retired, he was honoured by the Emperor of Japan with the Order of the Rising Sun, due in part to this survey.
The Most Exciting Example
At the end of 1951 Mr Joseph M. Dodge, the Detroit banker who had tried (without consistent success) to impose stern policies of demand restraint upon the Japanese government during the dynasty of General MacArthur, shook the dust of a once more independent Tokyo off his feet. His parting message was not designed further to endear him to the Japanese people. “At present,” declared Mr Dodge severely, “Japan is suffering from a plague of false legends, which include some dangerous delusions.” He then listed fifteen of these delusions, in language which will strike familiar chords for connoisseurs of recent British cabinet ministers’ speeches. The delusions included:
That increased production without a parallel increase in exports represents sound progress.... That inflation can easily be offset by increased production. ... That a nation that must export to live can afford to price itself out of its export markets with a domestic inflation. ... That granting progressively larger amounts of commercial bank credit for capital purposes can be substituted for the normal processes of capital accumulation....
“The progress and present favourable status of Japan,” concluded Mr Dodge, “has been the result of extremely favourable external circumstances, which cannot be expected to be repeated and continued indefinitely.” He then returned to the United States (average growth rate since then about 2½ per cent per annum), and sat down in his Detroit bank awaiting Japan’s inevitable crash.
In the decade since then Japan, continuing and following almost precisely the policies which Mr Dodge had castigated and opposed, has seen its real national product increase at an average pace of over 9 per cent a year, its industrial production and rate of manufacturing exports more than quadruple, its urban population make the great breakthrough into the first modern consumer oriented economy in Asia. In the process it has seen the average Japanese’s expectation of life (now just over 65 for a man, just over 70 for a woman) rise to ages that are now actually ten years longer than they were only twelve years ago. There are some who will regard this last achievement alone as one of the most exciting and extraordinary sudden forward leaps in the entire economic history of the world.
Moreover, we are talking here not only of a trailblazing pioneer for Asia; we are dealing with a story that has by now deep implications and parallels for Europe as well. From the welter of remarkable sets of figures about modern Japan, British readers should perhaps first pick out two. First, of the babies who were born in the year after General Doolittle’s bombs first fell on Tokyo, so far as one can see from the available educational statistics, only just over 40 per cent left school at the minimum leaving age of 15 in 1958; another 45 per cent or so stayed on at high school until 18; and more than another 10 per cent are currently passing through college or university. The equivalent figures in Britain were over 60 per cent leaving school at 15, around 30 per cent at 16 to 18, and only about 7 per cent going on to college or university. Moreover, the bias of later education in Japan is much more heavily technical, and their big firms train skilled workers more assiduously and deliberately than most of their rivals in Britain. Those Englishmen who think of Japan as a backward country of adaptable but unskilled labour are talking nowadays through their hats as far as Japan’s new and younger workers are concerned; this is, in point of fact, a more lengthily educated and technologically skilled generation of young Japanese who are now moving into their modern factories than their contemporaries among young people in Britain.
Secondly, investment in productive capital equipment in Japanese industry in recent years, on a straight yen-sterling exchange rate basis, seems to have been about one-third larger than equivalent investment in industry in Britain. Admittedly, Japan has a labour force nearly twice as large as Britain; but in the competitive, non-agricultural, big-company, modern sector of industry – into which the majority of both the new Japanese investments and new young Japanese workers are moving – Japan’s total labour force is actually still rather smaller than ours. This new generation of more skilled Japanese is moving into factories where entrepreneurs are currently putting behind each one of them in the larger factories a greater force of new and modern capital equipment per head than is being put behind their rather less educated and less well trained contemporaries in Britain; in a few years’ time, on present trends, logic would suggest that they could beat us competitively in a much wider field of industry than most people in Britain at present begin to imagine – even if their wage rates in this modern section of industry do at last go up towards our standards too.
All this has been achieved in a country which seventeen years ago lay in ruins, which even ten years ago had only just re-attained its prewar level of production, and which has suffered far greater disabilities in its traditional export markets (because of the nature of its exports, and the closing of China) than postwar Britain has done. If all this is the result of internal policies which wise men thought would bring about a crash, then, in the name of simple economic common sense, government economists and apostles of conventional economic wisdom from the entire world should be coming to Japan to study just how to emulate it.
The trouble is that one is fearful that conventional wisdom may be going to stop the advance instead. One of the done things to say in Japan in early 1962 – it was said to your correspondent on more than one occasion was that the Japanese must now learn respectable economics from the British and slow down their rate of growth (perhaps permanently) in order to push the pressure on their resources down. This seems a very curious view. For consider the contrast between Japan and Britain, two countries with very similar import structures and an astonishingly similar tendency to run into import deficit at one particular stage of the internal trade cycle. Consider it even in terms of the export figures which British spokesmen themselves generally think should be the main criteria. Japan in the last eight years has marked up the biggest rate of growth in both production and exports in the world (217 per cent increase in industrial production from 1953 to 1961, 232 per cent increase in exports). Britain, by following an almost diametrically opposite policy, has marked up one of the slowest rates of increase in both (28 per cent increase in production, 42 per cent increase in exports). Obviously in these circumstances the British economy has lessons to learn from the Japanese, not the other way round. This will set out your correspondents’ view – both for western and eastern ears – on what those lessons are.
Valuing Peace In 1963, it was almost as great an eyeopener to see how and why Russia was progressing so poorly as it had been the previous year to see how extraordinarily well Japan was sustaining growth
20 years later, Norman and Chris Macrae's book on how wonderfullty productive youth of the net generation could be, fully understanding USSR was vital. Macraes argued the whole system would collapse before the end of the 80s and the west should prepare to welcome the peoples of Eastern Europe into vibrant open societies - ending the distrust and fear that made 1945-1984 the most depressing period of government-led arms races ( through taxes costing about 20% of most people's lifetimes in USA and European allies). The failure to be passing on this peace dividend to all our youth today is one of the folly grandeurs of macroeconomics and geopolitics - did we humans really learn nothing peaceworthy from the collapsing systems that engulfed the start of the 20th century? related Valuing Peace
Breaking News 2014 - Mandela Student Essay Competition- Thanks To Taddy Blecher- South Africa's Joburg Number 1 Twin City of Job Creating Education curriculum; South Africa's Cape Town Oct 2014 (will Soros join in 36 years after his transformation as world leading philanthropic youth economist began with cape Town Youth Jobs programs). Cape Town is last stop on way to Atlantastaging greatest event ever for future of youth -more searches for youth good news and action networks round Africa
Future of South Africa 1968
Surveys On Intrapreneur
Survey on Healthcare
Survey on Education
Summary of 1984 Book by Norman and Chris Macrae
Net Futures - The 2024 Report
Back in 1984 , Norman Macrae wrote "The 2024 Report: a future history of the next 40 years". It was the first book to:
The great technological event of the next 40 years will be the steady rise in importance of the Telecommunications-Computer terminal (TC for short)... Eventually books, files, television programmes, computer information and telecommunications will merge. We'll have this portable object which is a television screen with first a typewriter, later a voice activator attached. Afterwards it will be minaturised so that your personal access instrument can be carried in your buttonhole, but there will be these cheap terminals around everywhere, more widely than telephones of 1984. The terminals will be used to access databases anywhere in the globe, and will become the brainworker's mobile place of work. Brainworkers, which will increasingly mean all workers, will be able to live in Tahiti if they want to and telecommute daily to the New York or Tokyo or Hamburg office through which they work. In the satellite age costs of transmission will not depend mainly on distance. And knowledge once digitalised can be replicated for use anywhere almost instantly.
Over the last decade, I have written many articles in The Economist and delivered lectures in nearly 30 countries across the world saying the future should be much more rosy. This book explores the lovely future people could have if only all democrats made the right decisions.
Norman Macrae, 1984.
Telecommunications are now recognised as the third of the three great transport revolutions that have, in swift succession, transformed society in the past two hundred years. First, were the railways; second the automobile; and third, telecommunications-attached-to-the-computer, which was bound to be the most far-reaching because in telecommunications, once the infrastructure is installed, the cost of use does not depend greatly on distance. So by the early years of the twenty-first century brainworkers - which in rich countries already meant most workers - no longer need to live near their work.
All three revolutions were opposed by the ruling establishments of their time, and therefore emerged fastest where government was weak. All three brought great new freedoms to the common man, but the railway and motor-car ages temporarily made access to capital the most important source of economic power. As most men and women did not like being bossed about by capitalists who could become more powerful because they were born stinking rich, they voted to give greater economic power to governments during the railway and motor-car ages. This was economically inefficient, and also made tyrannies more likely and more terrible. The information revolution was fortunately the exact opposite of the steam engine's industrial revolution and of Henry Ford's mass production automobile revolution in this respect. The steam engine and mass production has made start-up costs for the individual entrepreneur larger and larger, so that in both the steam and automobile ages to quote Bell Canada's Gordon Thompson in the early 1970s, there was 'no way an ordinary citizen could walk into a modern complex factory and use its facilities to construct something useful for himself'. But, as Thompson forecast, the databases of the next decades were places into which every part-time enthusiast could tele-commute. In all jobs connected with the use of information, start-up costs for the individual entrepreneur in 1984-2024 have grown smaller and smaller. It was 'never thus', said Thompson, 'with power shovels and punch presses'.
In consequence, in the TC age, the most important economic resource is no longer ownership of or access to capital, but has become the ability to use readily available knowledge intelligently and entrepreneurially.
For a region's people to succeed in the Telecommuting Age there are four main requirements - satisfied in places as far apart ad Guam and Queensland and Cape Province and California and Penang and Scotland. First , as the prophet John Naisbitt said in 1982, 'the languages needed for the immediate future are computer and English'. Second, the area has to be a nice one in which to live. Third, it is important that all income earners should adapt happily to a 'cafeteria of compensation' schemes. These allow the individual employee to decide what mix (s)he wants of salary, job objectives, career aims, flexitime, job sharing, long or short holidays, fringe benefits or fringe nuisances. Fourth, there needs to be a competitive and quickly changing telecommunications system. The TC age is making understanding of these requirements increasingly transparent among human beings worldwide.
Governments at first tried to impede or regulate much of this, but an early discovery of the Telecommutung age was that we could change the way we chose our governments. Until the 1990s we had pretended to ourselves that we could alter our lifestyles by choosing on each Tuesday or Thursday every four years whether Mr Reagan or Mr Carter , Mrs Thatcher or Mr Kinnock, was putting on the tribal demonstration which at that particular moment annoyed us less. After the advent of the TC we found that the more sensible and direct way in which a free man or woman could choose government was by voting with his or her feet. The individual could go to live in any area where the government - which could from then on be a very local government - permitted the lifestyle, rules and customs which suited that human being.
The introduction of the international Centrobank was the last great act of government before government grew much less important. It was not a conception of policy-making governments at all, but emerged from the first computerised town meeting of the world.
By 2005 the gap in income and expectations between the rich and poor nations was recognised to be man's most dangerous problem. Internet linked television channels in sixty-eight countries invited their viewers to participate in a computerised conference about it, in the form of a series of weekly programmes. Recommendations tapped in by viewers were tried out on a computer model of the world economy. If recommendations were shown by the model to be likely to make the world economic situation worse, they were to be discarded. If recommendations were reported by the model to make the economic situation in poor countries better, they were retained for 'ongoing computer analysis' in the next programme.
In 2024 it is easy to see this as a forerunner of the TC conferences which play so large a part in our lives today, both as pastime and principal innovative device in business. But the truth of this 2005 breakthrough tends to irk the highbrow. It succeeded because it was initially a rather downmarket network television programme. About 400 million people watched the first programme, and 3 million individuals or groups tapped in suggestions. Around 99 per cent of these were rejected by the computer as likely to increase the unhappiness of mankind. It became known that the rejects included suggestions submitted by the World Council of Churches and by many other pressure groups. This still left 31,000 suggestions that were accepted by the computer as worthy of ongoing analysis. As these were honed, and details were added to the most interesting, an exciting consensus began to emerge. Later programmes were watched by nearly a billion people as it became recognised that something important was being born.
These audiences were swollen by successful telegimmicks. The presenter of the first part of the first programme was a roly-poly professor who was that year's Nobel laureate in economics, and who proved a natural television personality. He explained that economists now agreed that aid programmes could sometimes help poor countries, but sometimes most definitely made their circumstances worse. When Mexico was inflating at over 80 per cent a year in the early 1980s , the inflow to it of huge loanable funds made its inflation even faster and its crash more certain. The professor set Mexico's 1979-1981 economy on the model, pumped in the loaned funds and showed how all the indicators ( higher inflation, lower real gross domestic product and so on) then flashed red, signaling an economy getting worse, rather than green, signaling an economy getting better. ..The professor then put the model back to mirror the contemporary world of 2005, and played into it various nostrums that had been recommended by politicians of left, right and centre, but mostly left. The dials generally flashed red. Then the professor provided another set of recommendations , and asked viewers who wished to play to tap in their own guesses on the consequent movement of key economics variables in the model. Those who got their guesses right to within a set error were told they had qualified for a second round of a knock-out economic guesstimators' world championship. Knockout competitions of this sort continued for viewers throughout the series of programmes.
In the second part of that first programme, the presenters dared to introduce two political decisions into the game. They said that government-to-government aid programmes had been particularly popular among politicians during the age of over-government, but there was growing agreement that government-to-government aid was the worst method of hand-out. The excessive role played by governments in poor countries was one of the barriers to their economic advance, and a main destroyer of their people's freedom. Could anyone have thought it would be wise to give aid to President Mbogo?
In consequence, the most successful economic aid programmes had been those operated through the International Monetary Fund, which imposed conditions on how borrowing governments should operate. The professor showed that IMF-monitored operations in most years had brought more green flashes from the model than red. But this involved IMF officials - often from the rich countries - in telling governments of poor countries what to do; and one of the objectives of this town meeting of the world was to diminish such embarrassments.
The first questions to be asked in the next few programmes, said the compilers, were 1) which countries should qualify for aid? ; and having decided that, 2) up to what limits and conditions? ; and 3) through what mechanisms? They promised that later programmes after the first half-dozen would examine how any scheme could be used to diminish the power of governments and increase the power of free markets and free people.
In a typical 21st C scene, obedience to consumer needs is shown by every car plant in the world because of better and more customised information available on all our TCs. Most people buying a car in 2024 will key into their special requirements into their TCs.
The TC will reply: "You can get a customised car which meets all of your specifications by putting personalised instructions on the software of the assembly line's robots in one of these factories (choice of nine) requesting that the next car on the line be modified as you dictate. But that would cost up to $40,000 (Click to factories for quotations and credit facilities). For a fifth of that price, you can meet most of your requirements by the following standard computer programme at present scheduled for production in June at Nissan Kanpur; or July at Ford Manila (and so on). Click to factories for precise specifications and prices.
All of this has become commonplace after 2000. How has it affected employment?
For a new industry of 2019-2024 let us cite the intendedly short-lived example of the Clark-Schmidt Robot Gardener. Matthew Clark was a 53-year old on his third university course (he had started the other two at the ages of nineteen and thirty-seven respectively) telecommuted through the University of Southern California, although he took it while living in his native Australia , when, together with two other student's telecommuting through USC's database, he devised a system for a robot-driven lawnmower which could also scan soil and assess the possibilities for reseeding. It signaled the videos to be called up on your TC to show alternative uses for the soil in your garden. If you picked one video display that particularly suited your taste, you keyed in its number into the Robot Gardener and it signaled back, 'put such-and-such chemical into my tank and seeds 1234, 3456 (et cetera), plus software program 29387 - both orderable through your TC - into my reseeder.'
Clark and his two colleagues put their tentative ideas for this device on the researchers' database monitored by the University of Southern California. The entry numbers to the USC database were held by people who had promised to accept the computer's judgement of the value of any ideas they might contribute to projects entered on it. In all, 1213 people - domiciled from Hanoi through Penang and Capri and Bermuda back to Queensland in Australia itself - tapped in suggestions for improvements, of which 176 were accepted nby the computer as worthwhile. The payments recommended by the computer ranged from $42 ( for a cosmetic improvement recommended by an eleven-year-old schoolboy) to one tenth of the equity (eventually worth several million dollars) for a proposal by a research team from another telecommuting university which proved important enough for Clark to feel slightly guilty about calling the Robot Gardener after himself.
When the improvements suggested by these 176 contributors had been incorporated by Clark into the appropriate software program for making the Robot Gardener , it was advertised on USC's entrepreneur-browsing program available on any TC. Entry numbers for the lowest echelons of this can be bought for a very few dollars, but the Robot Gardener was put on a higher echelon because USC's computer had signaled this was a potential quick winner.
One of those who had paid for an expensive entry number into browsing among good 'proffered opportunity products' (POPs) was a Dutchman called Carl Schmidt. He had become a successful 'arranging producer' in an earlier venture, and now occupied himself browsing through his TC looking for a second bonanza. He made an offer to Clark to tale an option for launch in return for a fairly complicates programme of profit sharing, which in practice (because arranging is nowadays a more skilled job than inventing) eventually gave Schmidt more money than Clark. Clark accepted this and Schmidt produced a prototype within three days by reprogramming robots in an experimental plant. A video of the prototype was put on consumers' TC channels worldwide the next week, and most of the 400 odd gardeners' TC channels round the world picked it out within days as a 'best buy'.
Schmidt's video advertisement said 'If you key in your order now with your credit number, you can get a Robot Gardener for a bargain price (applies to the first 10,000 orders only). Tenders are also invited for part of the equity.' The advance orders and bids for equity made it possible to finance assembly of the Robot Gardener for early-bid customers within a few weeks...
Note that there was never any intention that Robot Gardeners Inc should grow into a huge and long-lasting company. Clark and Schmidt are already researching and browsing into other possibilities, on separate courses. About fifty of those who succeeded by early participation in this venture hope to become the equivalent of Clark and Schmidt in other things.
At no stage has this enormously successful manufacturing venture employed more than 1000 people. It is therefore true that the loss of nine-tenths of manufacturing jobs , which we saw has been highest in car-making in rich countries, has also been true there in manufacturing jobs as a whole. Where these countries had 20-40 per cent of their workforces in manufacturing in 1974, they typically have 2-4 per cent now.
This is not an unprecedented rundown. In the 1890s around half of the workforce in countries like the United States were in three occupations: agriculture, domestic service and jobs to do with horse transport. By the 1970s these three were down to 4 per cent of the workforce. If this had been foretold in the 1890s, there would have been a wail. It would have been said that half the population was fit only to be farmworkers, parlourmaids and sweepers-up of horse manure. Where would this half find jobs? The answer was by the 1970s the majority of them were much more fully employed ( because more married women joined the workforce) doing jobs that would have sounded double-Dutch in the 1890s: extracting oil instead of fish out of the North Sea; working as computer programmers, or as television engineers, or as package-holiday tour operators chartering jet aircraft.
The move in jobs in the past fifty years in the rich countries has been out of manufacturing and into telecommuting.
There has been a sea-change in the traditional ages on man. Compared with 1974 our children in 2024 generally go out to paid work (especially computer programming work) much earlier, maybe starting at nine, maybe at twelve, and we do not exploit them. But young adults of twenty-three to forty-five stay at home to play much more than in 1974; it is quite usual today for one parent (probably now generally the father, although sometimes the mother) to stay at home during the period when young children are growing up. And today adults of forty-three to ninety-three go back to school - via computerised learning - much more than they did in 1974.
In most of the rich countries in 2024 children are not allowed to leave school until they pass their Preliminary Exam. About 5 per cent of American children passed their exam last year before their eight birthday, but the median age for passing it in 2024 is ten-and-a-half, and remedial education is generally needed if a child has not passed it by the age of fifteen.
A child who passes his Prelim can decide whether to tale a job at once, and take up the remainder of his twelve years of free schooling later; or he can pass on to secondary schooling forthwith, and start to study for his Higher Diploma.
The mode of learning for the under-twelves is nowadays generally computer-generated. The child sits at home or with a group of friends or (more rarely) in an actual, traditional school building. She or he will be in touch with a computer program that has discovered , during a preliminary assessment, her or his individual learning pattern. The computer will decide what next questions to ask or task to set after each response from each child.
A school teacher assessor, who may live half a world away, will generally have been hired, via the voucher system by the family for each individual child. A good assessor will probably have vouchers to monitor the progress of twenty-five individual children, although some parents prefer to employ groups of assessors - one following the child's progress in emotional balance, one in mathematics, one in civilized living, and so on - and these groups band together in telecommuting schools.
Many communities and districts also have on-the-spot 'uncles' and 'aunts'. They monitor childrens' educational performance by browsing through the TC and also run play groups where they meet and get to know the children personally...
Some of the parents who have temporarily opted out of employment to be a family educator also put up material on the TC s for other parents to consult. Sometimes the advice is given for free, sometimes as a business. It is a business for Joshua Ginsberg. He puts a parents advice newsletter on the TC , usually monthly. Over 300,000 people subscribe to it, nowadays at a 25-cent fee per person, or less if you accept attached advertisements. Here's an entry from the current newsletter:
"Now that TCs are universal and can access libraries of books, 3-d video, computer programs, you name it, it is clear that the tasks of both the Educator and the Communicator are far more stimulating that ten years ago.
One of my recent lessons with my ten-year-old daughter Julie was in art appreciation. In the standard art appreciation course the TC shows replicas of famous artists' pictures, and a computer asks the pupil to match the artist to the picture. Julie said to the computer that it would be fun to see Constable's Haywain as Picasso might have drawn it. The computer obliged with its interpretation , and then ten more stylised haywains appeared together with the question 'who might have drawn these?'. I believe we are the first to have prompted the TC along this road, but it may now become a standard question when the computer recognises a child with similar learning patterns to Julie's.
It is sometimes said that today's isolated sort of teaching has robbed children of the capacity to play and interact with other children. This is nonsense. We ensure that Julie and her four year old brother Pharon have lots of time to play with children in our neighbourhood . But in work we do prefer to interact with children who are of mutual advantage to Julie and to each other. The computer is an ace teacher, but so are people. You really learn things if you can teach them to someone else. Our computer has helped us to find a group of four including Julie with common interests, who each have expertise in some particular areas to teach the others.
The TC also makes it easier to play games within the family. My parents used to play draughts, halma, then chess with me. They used to try to be nice to me and let me win. This condescending kindness humiliated me, and I always worked frenetically to beat my younger brother (who therefore always lost and dissolved into tears.) Today Julie, Pharon and I play halma together against the graded computer, and Julie and I play it at chess. The computer knows Pharon's standard of play at halma and Julie's and mine at chess. Its default setting is at that level where each of us can win but only if we play at our best. Thus Pharon sometimes wins his halma game while Julie and I are simultaneously losing our chess game, and this rightly gives Pharon a feeling of achievement. When Julie and I have lost at chess, we usually ask the computer to re-rerun the game, stopping at out nmistakes and giving a commentary. As it is a friendly computer it does a marvelous job of consoling us. Last week it told Julie that the world champion actually once made the same mistake as she had done - would she like to see that game?
I intend to devote the next two letters to the subjects I have discussed here , but retailing the best of your suggestions instead of droning on with mine."
While the computer's role in children's education is mainly that of instructor (discovering a child's learning pattern and responding to it) and learning group matcher, its main role in higher education is as a store of knowledge. Although a computer can only know what Man has taught it, it has this huge advantage. No individual man lives or studies long enough to imbibe within himself all the skills and resources that are the product of the millennia of man's quest for knowledge, all the riches and details from man's inheritance of learning passed on from generation to generation. But any computer today can inherit and call up instantly any skill which exists anywhere in the form of a program.
This is why automatically updated databases are today the principal instruments of higher education and academic research. It is difficult for our generation to conceive that only forty years ago our scientists acted as tortoise-like discoverers of knowledge, confined to small and jealous cliques with random and restricted methods of communicating ideas. Down until the 1980s the world has several hundred sepaate cancer research organisations with no central co-ordinating database.
24 December 1988 Survey on The Next Ages of Man
The Next Ages of Man
The Next Ages of Man was the final survey written by Macrae as deputy editor of The Economist, though of course he went on to write a number of further articles by invitation. The original was published in the Christmas & New Year edition of The Economist in 1988 and is here presented in five parts.
The 65-year-old Norman Macrae retires this week as deputy editor of The Economist. He will still be writing for the paper, but ends nearly 40 years of what has hitherto been his main job being partly responsible for what other people write, inside The Economist's college of opinion. His last survey as deputy editor contains his personal guesses about the main changes ahead, in ways that will be controversial. The first article discusses where the rich countries have got to, without most of them recognising it
Within a hundred years, guessed Maynard Keynes in 1928, the standard of living in Western Europe and America "will be between four and eight times as high as it is today". Since nobody could sensibly wish to consume four or eight times as much as he did in 1928, people would come to recognise the pursuit of money for “what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease”. “For the first time since his creation”, enthused the Arts-Theatre-founding Keynes, “man will be faced with his real, his permanent problem - how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won for him, to live agreeably and wisely and well”.
From his observation of the very rich, who already had four-to-eight times the normal person’s income in 1928, Keynes did not think man would be very good at this, and he went on to one of his homosexual-chauvinist diatribes that women in the well-to-do classes looked to him like being even worse.
Sixty years on, in 1988, the real GNPs of the United States, the EEC and Japan are between 31/2 and 18 times what they were in 1928, although with awkwardly more people to eat those GNPs up. The United States, like Britain, is a relative slowcoach. See chart.
America's real GNP in 1988 is six times its 1928 level, but its population has doubled. The average American’s real personal disposable income has multiplied 2.9 times since 1928, and his consump-tion has increased slightly more. There is no sign of bored affluent people deciding not to spend too heavily, as Keynes had expected. Instead, all the rich countries’ peoples are borrowing like crazy to make the purchases they could most easily postpone. Americans now buy annually over ten times as many consumer durables as they did in 1928.
Where Japan differed
However, as in Western Europe, the most voracious rise since 1928 is that real annual expenditure by America’s central government has multiplied more than 19 times over. One might therefore suppose there has been an especial rise in the satisfactions that are traditionally the aim of government: less fear that America’s sons might be killed in foreign wars, more effective crime prevention, greater social cohesion. Things have moved exactly the other way round.
In Japan the rise in real GNP has been over three times as huge as in America (having multiplied nearly 18 times since 1930), but central-government expenditure has gone much less (multiplied under six times). Despite this image as “an appallingly low public spender”, the satisfaction in things provided by government in Japan has gone up much more than in America or Europe.
The average Japanese has much less fear than in 1928 that her or his son might be killed in foreign wars. The poorest three-quarters of Japanese 17-year-olds are startlingly better educated than their equivalents in 1928 Japan or in 1988 America or Britain, at a lower taxpayers’ cost per head. Japan has moved from a high Asian infant-mortality rate into the lowest infant mortality ever attained by woman anywhere. It has carried through the first industrial revolution in world history during which crime rates initially went down. It does still have a sense of community and social cohesion (low rates of divorce, juvenile delinquency and drug abuse, the unvarying re-election of a rather boring conservative government all through the past 40 years). Although left-of-centre people will find this appalling, it is more than conceivable that Japan shows the way that successfully governed countries will go.
In Western Europe there has been one strange similarity to Japan, because the areas most knocked about during the 1939-45 war surged most quickly above their 1920s income levels during the 30 years immediately after it. But in Western Europe (and especially Britain) there has been a clear drop in the quality of life for one group: among the sort of European women who in 1928 were cosseted domestic servants not just the leisured ladies against whom Keynes railed, but most upper-middle-class mothers of small children. There has therefore been a drop in upper-middle-class small children.
In Europe the rise in standards has been fast lowest down, among the sorts of ordinary working Englishman or Frenchman who in 1928 owned only one pair of trousers. As in America, it has been fastest of all for working-class married women. It is therefore a pity that married women are virtually disappearing among the groups that have most need of a lot of them.
When granny sends bastards her bill
Last year three-quarters of the black babies born in the big inner cities of America were births to unwed mothers; of these, half were to teenagers. The fig-ures for some other poor ethnic communities, al-ways excluding the close-knit Asians, are not much better. Because America’s WASPS (white Anglo-Saxon Protestants) stopped having so many babies 24 years ago, and because that makes for fewer WASP mothers now, the present estimate is that 30-40% of young adults entering America’s workforce in 2007-27 will he black or Hispanics.
This will be happening just when the huge 75m-80m lump of nearly nine-tenths-white baby-boomers born in 1946-64 will be retiring to Florida, and expecting to live for an expanding 20-25 years on ever more fabulously expensive Medicare services financed by the payroll taxes which these new black and Hispanic workers and voters pay.
Europe is not facing a bind quite so fraught, but its import in the 1950s and 1960s of unskilled work-ers from its poorer south and east, to do the dirty jobs in its now dwindling factories and then over-manned public services, has created prospects some-thing like it. Japan did not import cheap labour for its fully employed industries from its even more
teeming poor south and west; it wisely automated its factories and kept its public services slim.
Meanwhile, in the WASP and European and some other white cultures, the working women who do stay married are rapidly deproletarianising their husbands and themselves. Because of the automation in the kitchen, the television in the living-room, the gain that more husbands do rather more household chores and fewer spend all evening in the pub, the astonishing sameness of Sainsbury’s sales per household as between income groups, the spread of house-ownership and of the motor car to go shopping in, the fact that it is three times as easy as in 1928 for a work-seeking mum to get a job, the living standard of many a British working man’s wife has risen above what Keynes thought in 1928 that Britons would very much wish to have.
A lot of the working women concerned cheerily recognise this, and thus act and vote slightly mean-spirited conservative. Progressive people a bit richer than they are very cross to be told it. The way to regard oneself as a socially caring person is to advocate that more of other taxpayers’ money be spent to build up public services (education, health care, housing, etc) for the poor. Unfortunately, as soon as something is turned into a public service instead of a market enterprise, it is nowadays produced with more bias against the poor.
From some London council estates today parents can be forced, by sanctions of the criminal law, to send their son to a state school which has a 20 times greater chance of making him a juvenile delinquent than another state school in the same catchment area. It is a peculiarity of the non-market system that these dreadful schools are not closed. If a candyfloss shop poisons 20 times as many children as that next door, truant officers do not whip children into it.
In some slumdoms of Britain and America, police protection has virtually broken down; old ladies do not go out at night. The whole British system of crime prevention lacks an enterprise culture, so British prisons have an actually negative gross production they create more recidivists than they cure criminals. Britain will eventually have to move to some profit incentive in prisons: rewarding those who run prisons with more money and kudos when and only when fewer of their inmates re-offend, thus concentrating their efforts on job-placing on release or whatever works.
Life expectancy in the British middle classes has-expanded faster than in the poorer ever since the foundation of the National Health Service in 1948; things were expected to happen the other way round. England’s poor north-east has seen some of the country’s best shopping centres and small businesses grow in the past decade, but the social workers in one poor part of it misread from a MORI poll that one in ten British fathers raped their small daughters (which they don’t, MORI had suggested nothing like it). When these sincere people thought they should be arresting one in ten of the dads they met, the case for not having local-authority monopoly organisations to run social services did seem rather strengthened.
In housing, the story has been worst. If graduate James bought a suburban London house in 1948 which a supposedly wicked “speculative builder” had erected for £200 in 1898 or for £2,000 in 1938, James grizzled furiously that council-house Jimmy was getting, for much lower weekly outgoings, a fine high-rise-view apartment “attractively” closer to the centre of the city which had cost the taxpayer much more to build. James was half-placated by getting tax dodges like mortgage-interest relief. Today James’s house is worth a fortune of up to £250,000 which he can pass on to his children. Because of the terrible inefficiency of council-estate management, Jimmy still lives amid graffiti and drugs and a smell of urine, without proper police protection in that same high-rise apartment, where his life has deteriorated into an old person’s hell.
Public ownership was a simple mistake
There are at least three reasons why state monopoly production fails, and they can now be seen to be endemic: i.e., if you care about helping the poorest, state production can’t work. First, as soon as nil price or subsidised price ensures that there is a standing excess of demand over supply, the best services (e.g., brightest teachers, most competent doctors, politest policemen) go to Surrey instead of Slaggers End. In the private sector, by contrast, a supermarket complex does open in Gateshead if there is demand there; the supermarket entrepreneur does not say he prefers to live in Guildford.
Second, only a competitive system will bring the quickly changing technology and methods most suitable for meeting each individual’s needs in a changing modern market like education or crime prevention or social services. It is fatal to leave them in protected producers’ hands. Third, a state-spending culture brings the pressure “such and such is doing badly, let’s pour money into it”. A market-enterprise culture says, “that’s doing badly, we’ll make money by throwing in competition and closing it down”.
These three points explain why state provision is now failing, not only in the free capitalist world, but also out in socialist Russia and China and all points east and south. This has at last brought the right nomenclature there. A conservative in communist countries is now somebody who believes in state ownership of the means of production, distribution and exchange. A progressive is an Adam Smithian.
In rich countries the sensible course for caring left-wing parties would also be to get on the free-market side of the conservatives. Unfortunately, they are getting on the protectionist side instead. Also, if a government calls itself lefter wing, it starts by saying it will spend more to cut unemployment, but its own name for itself then forces it to cut public spending even if at Spain’s unemployment of 19%. This is because frightened money markets unfairly allow a bigger budget deficit to a Reagan than a Rocard. During 1989 this will again hit Mr Mitterrands franc. For the next decade or so, the intellectual and political trend therefore seems likely to he generally to the right. The next article will discuss if it may go too far.
A Future History of privatisation, 1992 - 2022
The Economist 21st December 1991
Norman Macrae looks forward to the end of politicians.
IT is possible that the word "privatisation" first appeared in print in The Economist, just over 30 years ago, It was suggested by somebody now dead, who may have subconsciously pinched it from some-thing published earlier somewhere else. For those who used it in these columns, the word then seemed part of a hopeless crusade. In the 1960s it was hard to persuade even sensible people how wrong were those like J.K. Galbraith, who told eager politicians that the interests of the poor could be served best by spending much more of GDP through politician-dictated monopolies in-stead of market-leading common sense.
Actually, in the 1960s rich countries were achieving marvellously greater equalisation in almost everything provided by private enterprise, but the underclass became further downtrodden in America's and Europe's inner cities whenever services were instead provided from the public purse. For the first time in history, millionaires and welfare mothers were spending their leisure hours in the same way: watching the same television programmes, from armchairs of the same comfort in similarly heated rooms, while other consumer durables spread to the living rooms, kitchens, bathrooms and (in some countries) parking spaces even of the few unemployed. So did opportunities for holidays in the sun and purchases of clothes; remember that in 1945 the average Englishman had owned only one pair of trousers. Supermarkets spread from the suburbs to the slums, and found similar expenditure per consumer there.
There was no such equalisation between suburb and inner city in things where public servants spent increasingly more of the taxpayers' money. This was especially true on the worst public-housing estates, from which 90% of an area's crime might emanate; where it became unsafe to walk down graffiti-desecrated corridors, because anything that belonged to the community was deemed to belong to nobody; where life deteriorated into drugs, hopelessness, squalor.
The great divide
The luckiest young Londoners returning from the war in 1945 were those whose applications for flats in these great new tower blocks overlooking the Thames were, to their fury, turned down. They had to buy, for perhaps £1,500 in 1950, supposedly shoddier homes built by "speculative" builders several decades before, with weekly mortgage payments at about thrice a favoured council tenant's rent. Forty years later they had a capital asset worth perhaps £150,000, while the "favoured" tenant had something worth nothing, except a vicious circle of hell. In the inner cities, police protection, state education, safeguarding of poorer people's life environment grew steadily and - for both taxpayer and customer - ever more expensively worse.
After vast inpouring of public money, people in poor areas had to send their children to more modernly-built but much nastier and less parent-selected schools, where their kids had a growing prospect of being turned into drug-addicted delinquents. After quadrupled spending police protection in the Bronx, the prospect of a mugger being apprehended there fell to under 2%, so mugging became an attractive way of teenage life. In Lyndon Johnson's presidency, 1963-69, America created a huge welfare state, which proceeded to cripple instead of aid its clients. All of the forward indices of misery (illegitimacy, welfare dependency, lack of neighbourliness, crime, drugs, riot so as to loot) grew worse.
In Britain the "commanding heights of the economy" had been nationalised originally on the argument that it would be too easy to make vast profits in these great monopoly industries (like coal, rail, steel, ship-building, public utilities). As soon as the state took over these industries, they plunged into vast losses instead. They were operated in the interest of their unions, instead of their customers, and without any innovative spark. If a middle manager in a private company thinks his boss is making a horlicks of his job, he can set up another firm in competition. If he is in a state firm, he writes a memorandum which says the boss is making a horlicks; and loses all chance of promotion. In Russia he got shot. The inefficiency of state spending in rich countries was shown further when the mighty United States began to lose a war to slightly ridiculous North Vietnam, despite spending 1,000 times more money on its arms and soldiers than did Hanoi.
Nobody listened, then everybody did. At the time I was doing some moonlighting work with an American management consultant. Together we tried to invent new Greek-derived words, distinguishing between activities which were wholly driven by customers' demand (and were generally succeeding), and those driven by expenditure of taxpayers' or sometimes private money (whose productivity declined with each extra zillion pumped in). None of these Greek words caught on. In The Economist we tried terms like recompetitioning and privatisation. Privatisation was meant to signify the return to profitable private motivation of anything that had declined through unprofitable state intervention, in Europe usually through state ownership, in America usually through excessive regulation (including what Herman Kahn called "health and safety fascism").
The clear advantage of privatisation was that everybody working in private businesses, from the entrepreneurs to the often non-unionised workforce, got more money if their new ways of doing things succeeded (a success they sometimes overhyped). If they did not attract more customers, they went bust. People in public activities soon learnt that they got more money if their settled ways of doing things failed, because then they could wail that governments must pump still more money to them.
One school in south London produced 80% of the juvenile delinquents in its area; the educational authorities directed ever more money to its often absentee and strike-ridden staff; because so many of their pupils were truant (sometimes after a hard night mugging), they clearly faced "special problems". Today's Soviet Disunion produces far more wheat, rye, potatoes, barley than the United States; yet Moscow faces bread riots because most of it fails to reach the shops. This is because the distribution system is socialist, so nobody has an incentive to move the stuff (as distinct from either staying away or turning up just to fill forms).
That is also true in many town halls across the free world. Morale has naturally deteriorated in all the activities run in the failure-welcoming socialist way. Economic decline has correlated closely with the proportion of the workforce in public-sector jobs, from Merseyside (way above the British average) to Brezhnev's Omsk(100%). But during the 1970s those of us who appealed for reform via privatisation were still generally regarded as nuts. The word barely appeared in Margaret Thatcher's 1979 election campaign.
Then it took off. In the past dozen years, 1979-91, privatisation has become a real policy in more than 70 countries. Although the lead was given by Thatcherdom, some of the most extensive privatisers have been Labour governments in Australia, Scandinavia and Spain. Privatisation is seen in all the ex-communist countries as a means through which industries and services long buried under dead socialism can bring some springtime to the frozen earth above. The policy has taken wing in Japan (telecoms and railways) and the Asian dragons. It stumbles forward in the third world. Less than a decade after the Falklands war, British merchant banks are drawing fees from a Peronist government for advising on privatisations to stop Argentine industries being mismanaged by Peronist colonels. No-body could have imagined this 12 years ago.
Unfortunately, much of it is being done the wrong way. Fortunately, the scope for further privatisation is everywhere huge. The rest of this article sketches a plausible future history for privatisation. The suggested timetable will be wrong, but things will move this way. Parochially, in a viewspaper published in London, this future history will most often be told as it may develop in Britain. Other countries may move at a faster pace, but this blinkering will protect the article from being diffused. It will also help emphasise that party political changes will not slow the caravan.
Kinnock privatises coal and rail
Start with the two industries which the British Tories have promised to privatise if returned to office: coal and the railways. In our scenario these would be privatised even by a Kinnock Labour government in the 1990s, although for opposite reasons.
The fudged three-year agreement, whereby privatised British electricity firms have to buy some uneconomic British coal, runs out in 1993-94. The European Commission will be bound to forbid continuance of this clearly anti-competitive arrangement. The number of viable deep British pits will then fall from today's 68 to about three. The Kinnock government would not want a nationalised coal company to fight the long strike with Arthur Scargill about this. It will therefore say that wicked Brussels has ordered coal privatisation (which it virtually will have done), and that the pits to remain open must be decided by the market.
Some of the abandoned pits may have coal drawn from them by any teams of miners that find this economic, rather like anybody can go blackberrying. At first the attempted safety regulations will be tougher than potholing, but will then decay. In America the safety people were pilloried when they demanded the installation of a stretcher by the owner of a one-man mine. In the 1990s opencast mining, at present environmentally unpopular, will become environment-loved. The opencast machines rip off the topsoil, but are then required to replace it in the form that local people want which is no longer for agriculture, but as golf courses and pony-trekking land. This helps mitigate one of the worst drains on enterprise, which is that planning restrictions tend to forbid any land to be turned to alternative use.
The railways will gain from the prejudice against changing land use. In the 1990s and 2000s crowded countries like Britain will sensibly turn to charging for occupying the roads. An electronic attachment on each vehicle, especially each lorry, will be activated whenever it enters an area where it adds to delay-causing traffic jams. The bill will be sent to the vehicle's owner, and be-come quite high. Coupled with technology that makes it much faster to load and unload containers at railhead, railways will be ripe for privatisation.
As argued by Oliver Letwin (the Tory candidate standing against Glenda Jackson in Hampstead), a privatised railway system will become rather like an airport. A centralised body (which may not be privatised until the 2010s) will run the safety and signalling system. If anybody in the early 1950s had said how many thousandfold would rise the passenger miles flown on the airlines, and yet with a large drop in accidents, he would not have been believed. His surprise would be greater when told that efficiency would increase fastest when Ronald Reagan sacked all America's public-sector air-traffic controllers for going on strike. Today, incoming and take-off aircraft rarely run into each other, even though landing slots are being "chaotically" sold through private agents, even though all sizes and speeds of aircraft are taking off from and homing into the same narrow and some-times foggy runways. Thus it will become with the privatised railways.
The opening of the Channel tunnel will allow new railway locomotives into Britain, which are half as expensive as British locomotives now and of much more varied design. Light railways (often driven by computers, sometimes by volunteer commuters) will run from exurbia to connect with rush-hour commuter trains, suddenly making profits again. Lush cruise trains will take rich Americans and Japanese through the cultural centres of Europe. The end of duty-free drinks at European airports in 1993 will be mitigated for international trains, the one form of transport where booze does no damage. Slightly more important, the railways will make money from the fibre-optic and other cables or the new-technology pipelines laid beside their tracks.
Most important, property development will boom at stations and on other parts of the railways' ridiculously underused land. The world's richest billionaire in 1991 is a 55-year-old Japanese who spotted the money to be made from railway land in Japan. By the early 2000s the successful privatisation of British Rail will be followed by privatisation of the Bundesbahn, the trans-Siberian railway and every other railway on the Eurasian land mass.
Other utilities will follow
The success of railway privatisation will set the tone for the proper competitioning of other utilities. In electricity the grid should usually belong to a separate organisation, and entrepreneurs make money by feeding competitively into it. By the late 1990s the partial success of British electricity's privatisation will mean there is some sort of commodity price per kilowatt hour of electricity on the European grid. Suddenly scientists will manage, eg, to isolate hydrogen from something in which it abounds, like seawater, and feed it as a power source much more cheaply into that grid than electricity from coal or gas. This will be followed by the discovery of ever cheaper ways of releasing energy from storage in matter. All will come competitively into the grid.
In the gas industry, British Gas will have lost its monopoly, because cheaper gas from Siberia will have to be allowed into its pipelines, after the 1996 free-trade agreement with the post-Gorbachev Soviet Union. During the brief 1991 Gulf War the Japanese invested in ways of bringing frozen natural gas from all round the Pacific. These will succeed. The near-bankrupt oil wells of the Middle East will have to follow, by exporting similarly cheap gas by all means to Europe and America. As energy prices fall, food prices will dramatically accompany them. After free trade with Russia, the EC's common agricultural cartel will collapse. Cheap food will pour in by rail from the black earth of Ukraine, as cruise trains to Samarkand pass them the other way.
Telecommunications (whose grid is anyway disintegrating with mobile telephones) and television (recompetitioned by satellite) will also leave the public sector entirely. In tones similar to today's lessons about 19th-century child labour, sociologists will tell with horror of the exploiting classes' device named the BBC. A poll tax (called the licence fee) was levied on every family, even poor widows and pensioners in Hackney, in order to impose on them toffee-nosed programmes which only the upper middle classes (in the name of "culture") thought they wanted. Actually, as we will soon learn, the BBC's brief 74 years from 1922 to 1996 were when British culture rotted worst, because it was brought under duopoly control.
Then everything, including the policy
During the late 1990s the privatisation of the social services will gather worldwide pace. The first privatisations will take some disguised form of the "voucher" system discussed for decades. Everybody except the teachers' unions will see that schools should get money only if they attract pupils. Dreadful schools, which parents shun, should be closed. Each child will carry a voucher, paid for by the state, to the school of his choice. "Choice units" in each area will take parents round available schools, to show what is on offer. Many people will rightly say that children from disadvantaged backgrounds should have specially topped-up vouchers, so that schools should compete most keenly to attract them. At juvenile courts, orders will be made to increase the vouchers for offenders; some-times the parent will be ordered to pay the topping-up.
Both the American and British health systems will gravitate towards a system of health maintenance organisations (HMOs, or bodies that compete to get your capitation fee, and then seek to provide all your health-care needs as economically as possible). In America the present fee-for-service system has proven quite uneconomic. Doctors make more money if they treat patients as expensively as possible after they become ill. The patients do not mind this money being spent, because it comes from insurance cover paid for under tax incentives by their employers. In its umpteenth attempt to stem the federal budget deficit, sometime in the 1990s, the American Congress will see that it can save tens of billions spent on hypochondriacs a year if it grants tax relief on employers' health insurance only up to the point where everybody can pay a basic HMO capitation fee. If anybody wants more expensive fee-for-service medicine, he must pay for it out of taxed income.
Britain's NHS has always had something like an HMO system for its family doctors or general practitioners (GP's). But nearly 90% of British government NHS spending has gone to hospitals with hierarchies of state-salaried doctors, nurses and far too many trade-unionised workers (three times as many as in some of the better Japanese hospitals). The GP system, whereby Britons choose their family doctors and the government pays those doctors a capitation fee, has been reasonably successful. By any criterion of cost effectiveness, the NHS hospital system has not. In 1991, amid loud and sometimes mendacious political controversy, some seeds of reform have already been sown.
Under the 1991 NHS reforms, budget-holding family doctors will compete to get patients into hospitals without waiting lists, and hospitals will get more money only if they thus attract patients. There are only minor and gradual steps from this reformed NHS system to a proper HMO system. Under any governments in Britain, those steps will occur. They will probably occur rather faster under a Labour government.
Labour 1992-96 will have less public money to spend on the NHS than the Tories, because it has promised to spend so much more on other things, and (partly thereby) is bound to scare more money out of the country. Labour will have to try to spend the annual £30 billion or so on the NHS more effectively. The row about Tory reforms is that Tory "trust hospitals" then proceed to sack workers. Since British hospitals have long been overstaffed, that is what any reforms (including Labour's) will have to aim for.
British prisons have long been a ridiculous public service, with negative gross production. They create recidivists, instead of cure criminals. A 20-year-old who is sent to prison is more likely to become a habitual criminal than one who narrowly escapes being sent there. America has moved towards some private-enterprise prisons, whose entrepreneurs will be paid more if their inmates do not recommit offences. In the decade 2000-10, governments will recognise that the same "recompetitioning" is also highly desirable for the police.
Modern police forces have huge computer files of genetic fingerprints, ordinary fingerprints, case histories and behaviour patterns of particular villains and for particular crimes. These files are secret to everybody except the police, who (being a public-sector body) are PC Plods who are not innovative at using them. In the early 2000s the increased efficiency of hackers at breaking into secret files will bring scandal about the police into the media in many countries. There will be accusations that the police are deliberately not tracking down some big gangs of criminals, ostensibly because those criminals are paying them with information about other criminals, but really because they are paying them money. In Britain police will be found still concocting cases against black people, Irish people, long-haired youths, short-haired youths, other folk they dislike. The interesting question will explode: why should police files be kept secret?
Some civil libertarians will say "the police have to keep secret the record of petty offender Joe Bloggs, because it would be wicked if all his neighbours know it." A compromise will be effected whereby each computer file, though thrown open to investigation by many competitors to the police, will have a number instead of proper name attached. After a certain stage in a criminal career, even that anonymity will be removed e.g., for the under 1% of people who commit over 50% of some crimes because, on release, they go straight back to offending and soon to prison again. Even in the early 1990s, each year spent by anybody in prison in Britain costs the state £25,000. Gradually, the whole unsuccessful police and justice system in most countries will be transformed, by recognising that it should be a modern open-to-everybody information industry.
By 2000 the cost of lawyers will be falling fast. People will recognise that most of the work of lawyers can be done more quickly by telecommuting into programmes that interpret the statute law of England. Those programmes will answer the specific question you have posed via your personal computer. Cases in non-criminal law will then increasingly be settled by each side putting its case to the computer, and agreeing to accept its verdict.
When a suspected criminal is arraigned before a court, the first question will at last rightly become "did he do it?" Until after about 2010, suspects will still be able, if they wish, to insist on submitting themselves to the present lottery system of adversarial lawyers, widely differing juries and erratic Lords Justice. But more and more criminals will agree to plea-bargain after seeing on computer file all the evidence against them, and the computer's judgment of how little chance they have of getting away with their defence.
The courts will then usually go on to the next and civilised question, though preferably with the lightest punishment: "how best can we discourage you from doing this again?" There should be lots of competing organisations offering "if the state will pay us the £25,000 a year that it would otherwise cost to put this man in prison, we will try to reform him within the community in the following way. If he recommits an offence within a certain time, we lose our fee." Sometimes that will require electronic tagging of the man concerned. If so, he should have some choice of which regime he prefers. There will be an increase of "bobbies on the beat" (i.e., policemen within the community), but various competitive bodies will start submitting tenders for this job saying they will seek to simplify their tasks by, e.g., better street lighting near notorious trouble spots.
Then, around 2010, local authorities will begin to change their way of providing municipal services. It is absurd that you should have to vote either Conservative or Labour when choosing who best can man-age your drains. Multinational corporations will appear On the ballot for local elections. They will say: "We will charge only this level of poll tax or property tax. We will promise by contract to reach the following targets for reduction in the crime rate, for environmental cleanliness, etc. If by the judgement of independent auditors we fail, we will have to remit some of your property tax to you. But we are confident we can fulfil this contract, and make a profit for our-selves at this level of property tax. Liverpool and New York city will be-come two of the first areas to elect commercial firms instead of politicians as their municipal authorities.
The poor and the military
By 2015 there will be only two main "public goods" left in the sense economists use the term (things best provided by government rather than markets). These two remaining public goods will be redistribution and military protection. These will then become competitivised.
Some part of redistribution can be handled by insurance. "I want to make sure my income never falls below half the average income": for some people, that could be an insurable risk. Others, such as the handicapped, some elderly and a few children, need special help. This can best be provided competitively. Children in the care of local-authority homes in Britain have an appallingly higher delinquency rate than other children, including those from equally troubled families but foster-parented or in charitable institutions like Barnardos. "Public sector" means there is a trade-union row if employees are sacked for mere inadequacy, or for monstrous incompetence. In institutions on performance contracts, there can be a continuous search for methods that succeed.
These performance contracts will eventually spread to tackle poverty. In the early 1990s the United States has 13% of its population below the officially defined poverty line, but an American has less than a 1% chance of staying long in poverty provided he or she does three things: completes high school, gets and stays married (not necessarily to the same person), stays a year in his first job even if at the minimum wage. People will start to bid for contracts to try to help "endangered people" thus to avoid being long in poverty, and some of the con-tracts will work.
The future of defence can be seen from what happened in the Gulf war. Long-distance rockets can already be pinpointed down the bedroom ventilator of any dictator, or on to any of his lorries and tanks. More sophisticated weapons than that are not going to be needed any more. Idealists say that military operations should be put under the control of the United Nations. Since many of the nastiest dictators have votes in the UN, that would not work. But in the next two decades NATO will more or less join with the old Warsaw Pact, in what will become a rich man's club.
NATO-Warsaw will keep a register of arms sent to any poorer countries, and will start to forbid any such sales. It will gradually assume a world policeman's role. It will equip itself at lowest price with stuff that actually works and will therefore probably buy much of its electronic hardware from the Japanese. It will recruit its soldiers in the cheapest high-quality markets: Gurkhas, Britain's SAS, Sons of old soldiers from various villages round the world with fighting in their blood.
By the 2020s it will be recognised as absurd that only the Republican and Democratic parties should field serious candidates for (say) the 2024 election for president of the United States. A competing "contractual" candidacy will be emerging a cabinet team who say they will never raise income tax above 10% (watch their lips), but will contract to provide government of the following quality...