Article by John Blundell in The Scotsman

It has been called the eighth wonder of the world or, in Einstein’s case, the greatest invention in all of mathematics. More prosaically, we call it the power of compound and it and other trends are about to change our way of life. In school, third form I recall, Mrs Schofield told us about the rule of 70. It’s very easy: if something grows at 1 per cent a year, it will double in 70 years. But at 2 per cent it takes only half that time and at 3 per cent only a third that time, or 23.3 years.

Why is this important for public policy? First, at 3 per cent growth, we double our wealth every 23.3 years, yes 23.3 years. Given such growth, our wealth will double by 2026 and quadruple by 2050.

Second, the deregulated competitive skies of the past two-plus decades and the virtually unregulated internet have done three things: they have opened our eyes to what is possible in terms of standards and service; dispelled many statist myths and have left no place to hide for those who would assure us that only governments can perform certain functions.

Third, we are all living a lot longer. Life expectancy doubled in the past 100 years. In the next 100 years it might double again. Certainly, reaching 100 will be the norm for those born today. Over a 50-year period, the Queen sent out 100,000 birthday telegrams to centenarians. That quaint custom will cease as too many of us will hit 100.

Just this past year, we reached a milestone when there were inexorably more of us over 60 than under 16 for the first time in our history. The implications for work and pensions are just enormous. No more firemen retiring at 50 on a pension equal to 100 per cent of salary.

Fourth, just as we all know in our hearts that public sector standards are going to the dogs, so the private sector just gets better; continuous improvement is a must or you die in global competitive markets.

Fifth, the locus of political decision-making is moving quickly. Devolution is a sham, smoke and mirrors. The real trend is away from Westminster, Whitehall and our political parties and toward, rushing toward, Brussels, the NGOs and the pressure groups.

Fifty years ago, the Tory Party had 2.5 million members, the RSPB had 60,000 members and voter turnout was in the 80 percents. Today the Tory Party is one-tenth of its former size while the RSPB is 20 times bigger and voter turnout has dropped from the 80s to the 50s. Less than one in four of us voted for Tony Blair, the lowest mandate any Prime Minister has ever had.

So what do these trends add up to? I find myself agreeing with Blair far too often than is good for his future. He was spot on, for example, to describe the 2001 General Election so simply and directly as “an instruction to deliver”. Our wealth, the growing inability of politicians to hoodwink us, and our growing life expectancy all add up to the death of ideology.

New Labour is more than happy to contract with the private sector to produce what the voters want. New Labour, in particular, recognises that results, not ideology, count increasingly. We are moving beyond ideology to an era of consumer-driven politics, where pressure groups, not political parties will achieve their goals, from education and the environment to health and crime prevention.

And given the inability of the state to do anything pretty much except tax and fight wars, this heralds a huge growth in the private provision of public services, albeit tax-financed, for the moment.

The politician who survives in the coming decades will be the one who learns from the US, where it has long been known that the best way to get re-elected is to deliver, regardless of party ideology. If the streets are thought to be cleaner and safer than the day you got elected, then you will be re-elected. It’s that simple.

So contracting out, privatisation, PPP and PFI will continue and will grow and will move into areas still thought to be sacrosanct. One day cities will have three employees: a chief executive/manager; a lawyer to oversee contracts and a shared secretary.

The ghastly redistributive competition they call politics will change from promising subsidies to ensuring that services are delivered in the best way. Voter turnout and party membership will continue to plummet as pressure groups grow.

Pensions and work will be changed out of all recognition. Saving will be compulsory for a period until we are all firmly in the habit. The FSB will squeal like a skewered piglet, but all employers will be forced to put 10 per cent of all salaries into individual retirement accounts owned by everyone over 16. Even casual workers aged, say, 18 at McDonalds will see 10 per cent go that way. They will also own it, watch it grow and become vested in capitalism.

And faced with life expectancies of 100, 110, 120, watch for people to have many careers. Perhaps a dashing business career to age 55; a period teaching to 75; then something part-time to 95, and finally the golden years on a pension 79 years in the making before your large number of descendants see you on your way.

Where the state continues to fail us, we will see the growth of opting out. As with the growth of private health, so look for the home-schooling movement to explode, particularly in inner cities where groups of parents will say goodbye to mediocrity and hello to excellence.

Finally, we will wake up to the utter depravity of our foster care system – foster damage is more accurate. Every night 65,000 kids go to sleep looked after by the state, which is about as good as looking after kids as it was at running an airline. Fostered children are hundreds of times more likely to be on the streets, in jail, on drugs and on welfare.

Using a new breed of emerging, non-profit groups that act more like for-profit companies, we will privatise the whole of foster care. The results of raising children in private, loving homes will be a more than halving of the population of our prisons.

Massively rising expectations, greater knowledge, growing life expectancy, failing public enterprises, continuous improvement in the private sector, falling voter turnout, failing parties, growing pressure groups: these are all powerful trends, but together they add up to a sea-change.

The politicians who embrace these changes and work with them will be the ones my great-grandchildren will read about in Modern History, say 50 years from now.

John Blundell is director general of the Institute of Economic Affairs.