Our diarist globetrots: westwards cap-in-hand, and east to help solve a Chinese riddle.

by Howard Davies, the director of the London School of Economics
Last Updated: 31 Aug 2010

It looks like a long hot winter in store for Britain's university campuses. Higher education policy struggles towards the top of the political agenda every Preston Guilds, or once in a blue moon, depending on your taste in cliches. But this time it's right up there.

Students take one view on top-up fees; vice-chancellors, beset by worries about international competition for the best faculty, take another. The academics are all too aware of the problems of under-funding (their payslips remind them every month), but worry about access.

MPs enjoy this kind of thing. It makes their lives seem real. The rest of us hope it will all be over soon, so we can return to the Common Room armchairs. There is no end in sight, however. After Iraq, the backbenchers have acquired a taste for blood and will not be easily assuaged.

A major compensation for being shoe-horned into a tiny central London site, with time-expired buildings, is that we're not short of interesting visitors. Some like revisiting old haunts: nostalgie de la boue is often in evidence.

In the run-up to Christmas, there was an American invasion - and not just of White House security goons. Larry Summers - Clinton's last Treasury Secretary, now President of Harvard - lectured at the LSE on 'Europe and America in the 21st century'.

Summers' father taught at the School, as he briefly did, and he is an engaged Atlanticist at heart. He wants to see the Europe-US alliance rebuilt, and argued that it surely would be before too long, even if Bush is re-elected to the White House next year. Paul Krugman, by contrast, argues in his recent book that the US should now be seen as a revolutionary power, like France after 1789, which positively relishes being outside the global consensus.

So why is Summers so optimistic? Because, he maintained, no US President could be happy with a situation in which 'American power is at its zenith, while American influence is at its nadir'. A memorable phrase, which he buttressed with statistics on the low regard in which the US is held around the world. For example, more continental Europeans think the US is a threat to world peace than are worried by Iran.

Does the Bush White House share this view? Do the views of ordinary Europeans count for anything in the Washington Beltway? Bush's confident performance during his state visit did not suggest as much. But who knows what the locals told him in the Dun Cow at Sedgefield?

To balance up the tourist account, I set sail, so to speak, for Toronto and New York. My mission: to explain to the School's old boys and girls how well their alma mater is doing, but also how well it could use any spare dollars they happen to have to hand.

The US philanthropic tradition in higher education is astonishing, even though tuition fees at private universities are far higher than they are here. Last year was tough in Silicon Valley, so my old school Stanford raised a derisory $486 million. Between them, Harvard and Stanford generated almost as much as top-up fees would produce in a year for all the major British universities. But don't call it fund-raising: I'm told that 'resource mobilisation' is what it's all about.

Back in London, I talked to the Euro-pean chapter of the Association of Executive Search Consultants: sleek, smooth characters with well-cut suits and Hermes ties. The sleekness is not surprising. With the average tenure of a FTSE 100 chief executive slipping below three years, there is plenty of business around.

Why the dramatic fall? The market has been tough over the past three years, but it has been tough for everyone - which shareholders ought to take into account. The answer may be linked to the separation of the chairman and CEO roles, some think, and especially to the current fashion for chairmen with no previous experience or knowledge of the business, since it is no longer PC to promote the former CEO.

When the business of a new-style, Higgs-compliant chairman runs into trouble, the boss has two choices - to get stuck into the issues alongside the CEO and see why things went wrong, or to kick him out and find another.

Plan B looks easier. Whether corporate management is better as a result I could not say.

Then it was off East, young man. I have kept only one link with the world of financial regulation - as an adviser to the Chinese government. A brief trip to a very cold Beijing reminded me why I had given it up.

The Chinese banking system has a hole in it. In the past, state-owned banks lent to state-owned companies, with little interest in credit risk, and the Peking ducks have now come home to roost. No politician likes to pour public funds into bankrupt banks and the Chinese are no exception. But it will have to be done.

When the meetings were over, I just had time for a short walk on Sunday morning before catching the plane home and turned out of the hotel in the hope of finding a souvenir or two. A paper fan, perhaps, or some decorated chopsticks? No chance. The shop nearest the hotel was a Rolls Royce showroom, complete with a new model I haven't ever seen in London. So although the banks are in trouble, there's serious money in Beijing. Nice to think some of it will find its way to Volkswagen shareholders. With Germany in the state it is in, they need it.

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