We are honoured to feature Dame Minouche Shafik, the new director of LSE, as our distinguished alumni in this issue of Alumni Reflections.
Dr. Shafik holds a BSc in economics and politics from the University of Massachusetts, an MSc in economics from LSE, and a DPhil in economics from the University of Oxford.
She worked as a university professor in the United States, and then spent 15 years at the World Bank. She became the youngest vice-president in the history of the Bank at the age of 36. Dr. Shafik returned to the UK in 2004 and rose to become the permanent secretary of the department for international development where she was responsible for the UK’s development assistance efforts around the world.
Dr. Shafik joined the IMF in 2011 as deputy managing director with responsibility for many of the crisis countries in the Eurozone and the Arab countries in transition. She also oversaw the IMF’s university, which trains thousands of government officials each year.
From 2014-2017 she was deputy governor of the Bank of England, responsible for a balance sheet of almost £475 billion, and sat on all of the Bank’s major policy committees.
To read more about the director, click here.
We are pleased to share Dr. Shafik’s reflections on her time at LSE, her priorities and plans for the school, her thoughts on some major public policy issues today, and her advice to current students.
Interview edited and condensed
By Sarah Reid
Why did you choose LSE? What was it like then?
I think, like a lot of people, I chose the LSE because of its international reputation for excellence and for the excitement of living in London. When I was there (I did my MSC in economics in 1986) it certainly was intellectually challenging. I worked incredibly hard. I don’t think, up until that stage in my life, I had ever worked so hard. And it was a bit daunting because you were in a group of students who were all used to doing well wherever they had been before. And suddenly the prospect of potentially failing was a reality for many of them, including me. And that was slightly terrifying, but also highly motivating.
What did you do when you weren’t studying?
Well, I was studying a lot. Physically, the campus was very different. It was much smaller, it was much scruffier in my day. It’s much nicer now. But when I wasn’t studying, I had a group of friends. We studied together and shared notes and annotations of articles and things. But when we were done doing that we used to go do things together in London. So we would go sometimes listen to music … we were poor students so there wasn’t a lot of dining out. But that group of friends – we’re all still close friends today. Many of them came and went, but in the end, we all ended up in London.
How has the school changed since you were there?
First, it’s much bigger. When I was there it was probably about half the current size. The physical space is much nicer. When I was student, Houghton Street was really the centre of it. And now, the school’s sort of rotated in the direction of Lincoln’s Inn Fields. When I was a student, Lincoln’s Inn Fields was the distant place, whereas now that’s become a much more central part of the school. I think the other thing that’s changed is: the school was always global, I mean my MSc class was from all over the world. But that is even more the case now. The student body is even more diverse and the faculty are even more diverse. And the other thing is, the school has stayed focused on the social sciences, but the social sciences have broadened. So there are some new departments now that weren’t there when I was a student. Things like health policy, or behavioural psychology. So the school has grown in many ways; physically, intellectually, and has become even more global.
How did LSE shape your career?
In many ways, my career was a very typical one for the LSE. There were two common threads: one, always having a global perspective, and so I worked in many international organizations; and two, caring a lot about rigour and evidence. And that is such an LSE thing. The LSE was created to introduce rigour and data into policy and decision making. Beatrice Webb, one of the founders of the school, said, “the world’s problems will not be solved by shouting.” It’s the hard grunt of collecting the data, analyzing the data, figuring out what’s really going on, and making recommendations based on that. That was a common theme throughout my career; when I was at the World Bank, when I was at the IMF, and the Bank of England, it was all about evidence-based policy making. And for me, trying to stay connected to the academic world while trying to do things in the real world was a really important thing. And that’s a very LSE value. The founders of the school didn’t stick it in the middle of a green field. They stuck it bang in the middle of London, in the most central location you could possibly find. And that was very deliberate. Because this was a place that was going to be engaged with the world. And I think that really did shape my career.
What do you think is the greatest development challenge today?
If you look at the absolute number of people living in poverty today, it’s come down dramatically, and that’s something we should all be thrilled about. But it means that the nature of the development challenge has changed, and so more of the acute poverty is in fragile states where governments don’t function, and so there’s a huge development challenge around that. And there’s also a huge challenge around conflict and climate and people moving across borders because of conflict and climate. And we see that every day. Every country is seeing the consequences of refugees, of people who have been made desperate by the circumstances in their own countries. So fragile states and issues around cross-border conflict and climate are really where the new frontier is for development.
We seem to be in this environment of slow growth and low interest rates in many developed countries. Is this the new normal?
When I was at the Bank of England we spent a lot of time thinking about this. If you look back in history, interest rates have been about 5 per cent on average for most of history. In fact, someone dug up some research on ancient Babylon, and incredibly, interest rates there were about 5 per cent. So that’s been the norm throughout human history. The last decade has been very different and I do think there are some deep structural forces at play as to why interest rates are so low. They have to do with demographics, and aging, and the fact that people are saving more because they’re living longer, and that’s driving down interest rates. So the global balance between savings and investment has shifted. And also investment levels have been pretty low by historical standards. And that combination at the global level means we’re in a very low interest rate environment. I think those forces, those big structural changes, will not change very much in the near future. So I do think we’re going to be in a ‘low for long’ world, for the foreseeable future. I don’t see us going back to that 5 per cent world that we all thought was the norm.
What are your priorities as the new director of LSE?
The first thing I’d say is: I think of the LSE as a public intellectual. At this point in history, when so many of the values that the LSE stands for – evidence-based policy, open and rigorous debate, having a global perspective – are being challenged in many parts of the world, I think the LSE needs to re-assert its role as a public intellectual and be out there, engaged in big public debates and providing serious analysis, not just in the UK, but globally. And so I really want to think about how to enable the school to play that role.
The second thing is around teaching, and there are two areas that I’m focused on. One is: the school has got a very good track record of getting people from all sorts of backgrounds, and from not very privileged backgrounds, into the school. And I think doing even more of that would be fantastic. To be able say that the best and the brightest from anywhere in the world can come to LSE would be a huge achievement. And the other thing on the teaching side is thinking about how the digital revolution is going to change education. And there are a couple of dimensions to that. In terms of the research, because of big data and data sciences, there’s a lot of socially generated data, which is changing the way we think about politics, the way we think about sociology and social policy. And doing research that is informed by that socially generated data will be incredibly important for the future. And similarly, the digital revolution is going to change classrooms and how people learn. Today’s generation grew up in the digital age. LSE has made some progress: something like 85 per cent of lectures now are captured online, so students can see them afterwards. But there’s much more to it than that. There’s going to be interactive ways of working and learning digitally, there’ll be using learning analytics to see how students use digital information, to see whether they’re learning and how they’re learning and how we can help them learn better. So I want to think a little more about that.
And I guess the third big area is we do need to think about the long term for the school, and a long-term strategy for the school, and getting the school on a more sustainable financial footing. And I think alumni can play a big role there, in helping think through what the future of the school should be, and how we can make sure that it will always be able to attract the most talented faculty and students from around the world.
What advice do you have for alumni, those that have just finished at the school, and those that have maybe been out for twenty, thirty or more years?
Carry the ethos of the school with you. LSE alumni are different than alumni from other places. And they engage with the school differently and I think the school needs to engage with them differently. I would like to engage with the alumni as members of an intellectual community. So you join the LSE and you’re part of this intellectual community for life. And that means sharing interesting LSE research with them, it means participating in events where big issues are being discussed and debated. So I think it’s a different kind of relationship from many other universities. And I would like to sustain that through people’s lives. One of the things we’re doing in our careers office is that we’re going to be offering career support to LSE alumni throughout their careers, not just when they graduate. And I think that’s also part of that lifelong engagement and commitment to the school. And when we complete the new Centre Buildings, which are in the middle of the campus, and will be completed in 2019, we’re going to have a space for alumni, so that whenever they come to London they’ll have a place where they can hang out and visit the school, which will be wonderful. So I would encourage everyone to do that. And for those alumni who can afford it, who have an ability to give back to the school, that’s also a wonderful thing to do. Maybe not straight away, as soon as you graduate, but I think many alumni do very well and many of them regularly say to me, “the LSE changed my life and put me on a different path.” And to be able to give that opportunity to others is a wonderful thing.