The stalemate in the United States has produced one winner: the voters

'A powerless president would mean the US economy could carry on unfettered by interference'

Does it really matter who becomes president of the United States? Among the many surprising features of the election, perhaps the most astounding is the way in which the world's financial markets have greeted the prospect of a president with no clear mandate. These arbiters of the world economy don't seem to be bothered. The dollar hasn't slumped, and share prices seem more troubled by poor figures from computer companies such as Dell and Hewlett Packard.

Does it really matter who becomes president of the United States? Among the many surprising features of the election, perhaps the most astounding is the way in which the world's financial markets have greeted the prospect of a president with no clear mandate. These arbiters of the world economy don't seem to be bothered. The dollar hasn't slumped, and share prices seem more troubled by poor figures from computer companies such as Dell and Hewlett Packard.

If anything, they may even like that idea: a relatively powerless president would mean that the US economy could carry on unfettered by political interference. Note that the most successful act of economic policy by our own government has been giving up the power to set interest rates, passing it to the Bank of England. Maybe in politics, as in so many other walks of life, less is more.

So while it would be ridiculously early to draw any firm conclusions from the US election result, the calm that has followed does give a taste of what voters will want and expect from governments this century. They want calm; they want continuity; and they relish the fact that power is relentless shifting away from government in general.

Before the US election it was easy to pick out distinctions between the two political platforms. For example, Vice-President Gore's rhetoric was anti-business, Governor Bush's pro; Mr Gore's fiscal plans favoured sizeable increases in public spending; Mr Bush's favoured cuts in taxation. But the differences were more of degree than substance: neither was going to be able to make any radical change to the way business is treated in America, and there were tax cuts in Mr Gore's plans as well as additional spending in Mr Bush's.

But now those distinctions will become even more blurred. With both houses of Congress almost evenly divided - the Republicans have tiny majorities in each - it will not be possible to enact controversial legislation. Gridlock? Yes, but maybe also bipartisanship and compromise. Welcome to the (relatively) powerless governments of the 21st century.

And there's the rub. The first elections of the century in a big western democracy will give us an administration that fits the new, narrower space within which governments have to operate.

The power of government has been waning for several reasons. One is the increased significance of financial markets: governments have to maintain their confidence, and that requires them, among other things, to relinquish control of interest rates. Another is the need to create a tax and regulatory environment that is attractive to the world business community. If you don't, you don't get inward investment, with all the wealth-generation that this brings.

Still another is the rising power of supranational bodies such as the European Commission. One of the more surprising features of Gordon Brown's pre-Budget statement was the need to get EC approval before he could cut VAT on repairs to churches. Churches? They are hardly an area of intense EU competition - the Lutherans aren't on a big push to increase their penetration of the rich English market. Yet the EC has to approve. This affects America as well. When AoL and TimeWarner, two US companies, sought to merge, they had to seek permission from the EC competition authorities if they were to operate in Europe.

Those are technology-driven companies, and technology provides another reason why government is becoming less powerful. We are in a period of unusually rapid technological change; more rapid than at any stage since the Second World War. The way companies operate, the way jobs are done, the way goods and services are constructed - all these are changing with astonishing speed. And this has nothing to do with government, for technology changes the world from the bottom up, not the top down. All governments can do is blink - and struggle to catch up.

Finally, the power of governments to pursue individual initiatives is falling because their citizens are increasingly mobile. More and more are free to travel to favourable tax regimes, sometimes even insisting that their companies locate their jobs in tax-friendly places. And those who don't move look across national borders to benchmark the performance of their own governments: look at the way our fuel protesters gained credibility by comparing our fuel prices with those on the Continent.

So, in all sorts of ways, government is downsizing. It is downsizing financially. The peak in the UK in terms of public spending as a share of GDP was right back in 1976, while in most Continental countries it was in the early 1990s. And, as noted above, it is downsizing in influence too. What, then, will people want of government in the next few years? The relaxed response to the Gore/Bush outcome gives a clue. I suggest that they want continuity, competence and compassion. But they don't want another word that also happens to begin with a "c": conviction.

First, continuity. This means no surprises, no sudden reforms, no sudden shifts of policy. If policy is to be changed, as Mr Bush proposes for US social security, then the ground will have to be prepared carefully, people will have to be led by persuasion, and, when change does take place, it will have to be by little steps. Radical reform will be out.

Next, competence. Voters have become much more critical of incompetence. On an obvious narrow issue: expect voting procedures in the US to be scrutinised and improved. More broadly, I expect the new administration to put competence at the top of its claims for re-election in four years' time. This is going to be a four-year election campaign, so avoiding mistakes is going to be much more important than it would normally be. The administration will be forced to play safe, but that is precisely what voters want. (Note that our government's key claim to be returned to office is that it has not mucked up the economy, while its most vulnerable flank is that it has mucked up the Dome.)

And compassion? Both US candidates sought not to offend any significant interest groups, which is standard politics; but they also sought to show themselves to be people who cared. A lack of compassion - let's call it the Margaret Thatcher approach to politics - does not play well in America nowadays, even if Americans remain among her greatest fans.

Finally, conviction politics is out. Neither candidate was long on that. Conviction has become too rigid, too brutal a trait to blend with the comfortable lifestyles of most people in the US, or indeed most of the developed world. America does not want its leaders to have strong political beliefs. Religious beliefs, yes; family beliefs, naturally. But not political ones.

Does this point to a bland four years ahead in the US? I guess so. But that is what Americans have effectively voted for, even if the mechanism of the voting itself has not turned out quite as they had expected.