Any other business

Hurricane Harvey is bigger news than the bankers at Jackson Hole

2 September 2017

9:00 AM

2 September 2017

9:00 AM

In Houston last November I spent an evening at the city’s industrial-scale food bank, where I heard a presentation on the Houstonian tradition of offering hospitality to refugees, including 200,000 displaced from New Orleans by Hurricane Katrina. We were also given some positive spin on the strength of co-operation, in time of crisis, between the region’s major oil companies and its state and city governments. Now Houston itself is the victim of Hurricane Harvey. With the prospect of $50 billion worth of damage, the world is watching first to see whether the combined response is more humane and effective than the Katrina shambles, in which protection of property seemed to rank well ahead of the safety of the poor, and secondly whether President Trump’s visit helps or makes matters worse.

I also took a boat cruise through the Port of Houston, passing the many oil depots and refineries that have been disrupted by the storm. The afflicted region accounts for a third of US refining capacity and some 3 per cent of US gross domestic product, so the disaster constitutes far bigger economic news than the weekend’s other major event — the conclave of central bankers at Jackson Hole, Wyoming.

There, neither Janet Yellen of the US Fed nor Mario Draghi of the ECB offered any hint as to the next phase of monetary policy — though Yellen did indicate willingness to fight Trump’s plans for financial deregulation, at the risk of not being reappointed by him next year. Mark Carney didn’t even show up, sending instead his least dull deputy, Ben Broadbent, who we might assume to be his favoured successor for 2019.

Opportunity cost

This column was early to argue that higher education should be treated as an export sector in which the UK has an excellent product to exploit, and that Theresa May’s clampdown on non-EU students entering the UK, counting them like any other category of immigrant, was an exercise in pig-headed economic self-harm. Now we learn that the official estimate underpinning the policy, for the number of foreign students overstaying their visas, was a wild exaggeration. But the Prime Minister’s prejudice still holds sway, while Home Secretary Amber Rudd has commissioned a belated report on the positive economic impact of international students — a subject on which the higher-ed sector has been pleading for a hearing for the past five years.


The essence of this issue is that a 42,000 drop in international student numbers at some UK universities since 2010 represents a sacrifice of market share in a global market that has been growing at 6 per cent per annum. The opportunity cost, at £13 billion and counting, has been a direct gain to competitors such as the US, Canada and Australia. The latter, a particularly smart operator in this game, will overtake the UK in overseas student numbers by next year, despite having only 40 universities to our 140, and a much smaller population.

What cannot be counted are the high-tech start-ups that are now elsewhere rather than here, or (given that students coming from India have halved) the number of Indian-born future CEOs of global companies who speak American and think of Britain as an unwelcoming place. What can be counted are the jobs — up to 80,000 — that might have been created if our international student body had continued growing at the global rate. Those jobs have mostly been foregone in relatively depressed towns and suburbs that are home to lower-ranked universities, where international applications have dropped by 50 per cent or more: Mrs May has even added to the north-south divide. Of all the things history might hold against her, hostility to foreign students has done the most insidious damage.

Au revoir

‘How do I get a doctor to come to the house?’ I asked a French friend. ‘You phone a doctor and ask him to come to the house,’ was her answer. And so I did, several times, and when we had to go to the cottage hospital at Gourdon in the Lot, the nursing was much more solicitous than most people’s experience of the NHS, and the food good enough to be my first restaurant tip of the week (if you hold a European health insurance card that picks up the bill, by the way, that really is a value-for-money suggestion).

You can put the quality of the French health system down to public-sector spending at 56.6 per cent of GDP, which the embattled President Macron may never succeed in reducing. Or maybe you can put it down to a culture of service offered and expected that — despite my complaint last week about not being able to find a cup of coffee — puts ours to shame.

Likewise you could say France’s productivity advantage ($66 of GDP per hour worked in 2015 compared to $52 for the UK, says the OECD) is at least partly explained by the chronic high unemployment that results from socialist-driven labour laws — because the lowest-skilled, least productive segment of the population doesn’t work so isn’t in the statistics at all. Or you could observe that the French generally run efficient businesses, put their backs into it and take pride in customer satisfaction.

None more so than those archetypal hard-working restaurateur couples, husband in the kitchen, wife front-of-house. So let me end this summer’s gastronomic tour by praising a simple eaterie that captures every-thing I love about being here. The Ferme Auberge du Roc, in a hidden valley close to my village of St Pompon, is the most bucolic, bargain-priced dining experience you’ll ever find, its menu consisting almost entirely of parts of the ducks whose cousins flap contentedly outside as you eat. Proprietors Philippe and Christiane Lapeyrie are also producteurs of world-class foie gras — and you might say that their happy ducks offer a useful Brexit metaphor, since they clearly have no idea what’s about to happen to them. As negotiations recommence in Brussels this week, dear reader, neither do we.

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