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So the UK is past its best. Want to bet?

I have recently had the conversation we all have from time to time. My friend Max said suddenly: "You know, the country is finished." He had in mind the decline in church-going, the diminished role of marriage and the rise in the number of abortions. I, the perennial optimist, disagreed with Max's conclusions and wanted to frame some sort of bet - I would pay up in so many years' time if the country was truly finished, and he would reward me if it wasn't. So I have been casting about to find ways of measuring a nation's well-being.

A good starting place is the Human Development Index, calculated by the United Nations. The components are longevity, knowledge and income. Longevity is life expectancy at birth; knowledge is defined as a combination of adult literacy and years of schooling; and income is income. Professor Crafts at the London School of Economics has compiled the index for 25 countries, and carried the series back to 1870 for 16 of them. The UK was in second place in 1870 (after Australia and before the United States). It had slipped to fourth by 1913, was fifth in 1950, and seventh in 1970. In 1992 it was 10th, one behind the Netherlands and just ahead of Germany, with the first three spots occupied by Canada, Switzerland and Japan.

Taking wealth creation alone, I would adjust the standard measurement in two ways. First, account should be taken of hours worked for a given output, so that the amount of leisure time we enjoy is implicitly recognised. In the UK, the annual hours worked per person have fallen from just under 60 hours a week in 1870 to half that in 1992. In South Korea, on the other hand, the average working week went up from 45 hours in 1950 to 56 hours 40 years later. On this measure the UK is the 11th most productive economy in the world, ahead even of Japan, in 16th place.

The second adjustment concerns equality. After decades of stability, the gap between the rich and the poor in the UK began to widen during the 1980s. Between then and the middle of the 1990s, people in the top 20 per cent of incomes experienced a rise in their earnings of 45 per cent in real terms, while those in the bottom fifth saw their incomes grow by only 9 per cent.

Inequality is repugnant in itself, and it will have unpleasant consequences. That there have not been until now may be explained by the fact that people's circumstances change quite rapidly, so that some of those classified as poor at any one time will be able to improve their situation while others are sinking. Thus, more than half the people in the lowest 10 per cent of incomes own a car, three-quarters have central heating, and more than two-thirds own a video cassette recorder.

Max was right to mention the family, but not in terms of whether couples were marrying or cohabiting. The important test is the sort of settings in which children are being brought up. For it is beyond doubt that the outcomes are more likely to be favourable in two-parent families than in lone-parent households. It is simply harder to bring up children alone than with both parents. Yet one in five children in the UK lives with a single parent and a further one in 12 lives in a step-family: an enormous change since the early 1970s, when more than nine in 10 children lived with two parents.

To the four criteria I have already mentioned, I must add a further four: education, crime, pollution and freedom. Forty years ago, 40 per cent of 17-year-old boys had the equivalent of one or more GCSE grades A to C, and only 20 per cent of girls. Since then, two good things have happened: the gender gap has disappeared and the proportion has risen to 80 per cent. At the same time, there has been a substantial increase in the number of young people engaging in higher education. But look across the English Channel. The participation rates at age 18 in Germany, the Netherlands, Belgium and France are twice as high as they are here.

The number of notifiable offences recorded by the police in England and Wales has increased steadily from the early 1950s, when there were fewer than half a million a year, to more than five million nowadays. And remember that only just under half the number of crimes actually committed are reported to the police - because some may be considered too trivial, or because it was thought that the police could do nothing, or because the matter was handled without police intervention. There was a particularly sharp rise in crime during the second half of the 1980s, but since then, thankfully, there has been a slowing down.

In measuring pollution, I would concentrate on emissions of carbon dioxide, because they do the most harm to the global atmosphere. Emissions for industrial and domestic use fell between 1971 and 1993, but transport emissions rose by 63 per cent. During the same period, there was an increase of just over half in the average daily flow of vehicles on our roads. About a quarter of all households have two cars. If only one measure of damage done to the environment can be selected, then pollution caused by cars seems to me to be the key test.

How can we measure political freedom? The Heritage Foundation in Washington assesses economic freedom. The Committee to Protect Journalists in New York monitors press freedom. Amnesty's reports are an invaluable source of information. A Berlin-based organisation, Transparency International, lists countries according to their degree of corruption. At present, Denmark is ranked as the least corrupt and Nigeria as the world champions of sleaze. The UK generally comes out well on such criteria.

The preliminary result is that of the eight tests, the UK passes four - human development, wealth creation, education and freedom - but fails in terms of equality, family structure, crime and pollution. Thus I am not winning the bet as easily as I expected. But, of course, I remain optimistic.