Minouche Shafik greets me with the kind of upbeat disposition that most Londoners lost months ago. She waves, she smiles, she seems delighted. Aha, I think, the director of the London School of Economics is one of these overachievers who thrive in lockdown — the type who advertise unfathomable morning regimes on LinkedIn. We’ll probably be having a lunch of vitamin powders. 

Shafik puts my mind at ease. Yes, this is a golden moment for policy thinkers like her: she has spent the past year finalising her vision for a new social contract, full of ideas that society could emerge stronger from the coronavirus morass. But her other virtuous lockdown intentions — bread-baking, exercise-taking — have collapsed. Her family has tired of her Ottolenghi recipes: “They say, no more!” Worse still, despite living by London Bridge for years, she hasn’t adjusted to the railway noise. “My husband and I have sought out the world’s best ear plugs.” (Beeswax, apparently.)

So Shafik is not a pandemic Pangloss; her optimism is more deep-seated. It’s a belief in progress, in education, and in wise collective action. When she was four, her family moved from Egypt to the US after much of their property was nationalised by General Nasser. Her father told her that education was the one thing that they could never take from you, so she made sure she got a good one — culminating in a doctorate in economics.

“Sometimes when things go terribly wrong, it might take you on a different path which might in the end be better,” she says. “I think I would have had a very conventional life if I had stayed in Egypt, I’ve had a more interesting one as a result.” 

She became the youngest ever vice-president of the World Bank, the top official at the UK’s Department for International Development, deputy managing director of the IMF, and deputy governor of the Bank of England. It was the technocrat’s version of a full house. 

But the Brexit vote and the rise of populism shook her. “I’d seen so much progress myself . . . The paradox for me was, why are people so frustrated and yet we’ve made all this progress?”

It’s almost a cliché in Britain to want to emulate William Beveridge’s 1942 report, which led to the creation of the NHS. Yet Brexit and coronavirus provide a sense of historic opportunity to rethink the state.  

Shafik’s conclusion, strengthened by the pandemic, is that society needs to share the risks that today fall on individuals. Our social contracts — the norms around the roles played by the state, individuals and employers — have “broken under the weight of technological and demographic changes”, she writes in her book, What We Owe Each Other.

Citizens should be given an allowance for life-long retraining, and guaranteed a minimum income (though not a universal basic income). Those who care for elderly relatives should be paid. 

Her bet is simple: after the Brexit vote, technocrats have fewer friends, but they still have a lot of answers. 

Noise aside, there are advantages to living by London Bridge. Shafik guides me from the main entrance of the 19th century Borough Market, past the queues, to the pick of the food stalls. We buy falafel wraps, and search for a scrap of concrete to sit on. 

It’s early spring in London, so the sun fills the sky and delicate birdsong fills our ears. Only kidding, it’s 10°C, the smell is distinctly urban, and a steward soon appears with a loudspeaker. “IN ORDER TO KEEP CONGESTION DOWN, WE ARE ASKING THAT YOU DO NOT EAT OR DRINK IN THIS LOCATION TODAY. PLEASE LEAVE THIS LOCATION.” 

I try to ignore her, but when she insists, I realise my interview could soon be with the police. Shafik and I gather our wraps, and cross London Bridge to the north bank of the Thames and a cluster of deserted benches. 

In her book, Shafik argues that: “We are increasingly living in ‘you’re on your own’ societies, a situation which gets translated into the politics of anger, an epidemic of mental health issues and both young and old fearing for their futures.”

Shafik argues a social safety net is the efficient option. The alternative is wasted talent, “lost Einsteins”. Britain’s welfare state is also less divisive than assumed: it is only one-quarter Robin Hood, transferring wealth from rich to poor. Around three-quarters is Piggy Bank, shifting money over the course of people’s lives.

“In the UK, most people put in roughly as much as they take out. The typical middle-class person may pay more tax but they also tend to live longer, so they benefit more from the NHS and pensions,” she says.

Shafik, 58, tells two stories from her childhood. The first is watching girls playing when she visited her mother’s village in Egypt. “They looked exactly like me: the same kind of hair, the same skin colour. I could easily have been them.” It was a real-life version of John Rawls’ veil of ignorance, and it made her focus on “the architecture of opportunity”.

The second story is from the US, after her arrival from Egypt. “We weren’t poor but it was humble.” She was bussed to school in Georgia, North Carolina and Florida, as districts dealt with desegregation. “I honestly can’t remember how many schools I went to. I think it was 10. You’d just get notified by the school district. It taught me to be very self-sufficient in my learning.”

(This was the late Sixties, so teachers were experimenting too. When her class in Miami studied Inuits, “they turned up the air conditioning so we could experience what it was like to be really cold. It was completely mad!”) 

At school, Shafik was asked if she was black or white, and she replied: “I’m brown.” She refused to tick a box. Ideologically, she’s the same. She led DfID under both Labour and Conservative ministers. On universal basic income, she is nuanced. Automation will change work, not eliminate it. 


Arabica Bar & Kitchen
Borough Market, 3 Rochester Walk, London

Beiruti falafel wrap x2 £13
Aubergine kibbeh £3
Water £1.50 
Polara Chinotto soft drink £1.80
Total: £19.30 

“In very low-income countries, delivering cash to everyone — especially when most people are poor so what’s the point of targeting — is a good thing. But in a country that has a welfare state and is able to target, you either end up giving people small amounts that don’t make any difference, or you have to raise the tax rate by 20 per cent to cycle all this money through the state, and give it to people who don’t need it.” 

Overall her proposed social contract would require the tax take in the UK to increase by a few percentage points of GDP. That puts her on the left, doesn’t it? “You want to put me in a box, I can feel it!” she objects, with a sharp laugh. 

Countries don’t just pick left or right — they make sets of choices, Shafik argues. “Take Singapore. Everyone holds up Singapore as this free-market nirvana. Eighty per cent of the population lives in public housing! And you get assigned so that each building has an ethnic mix!”

The UK could fund social care through insurance, like Germany and Japan, or state funding, preferred by the left. “But at the moment, we haven’t made any choice and we’re in this horrible position where a lot of elderly people are not being cared for adequately.”

Where does she depart from consensus? “On corporate social responsibility, I think the voluntary approach isn’t good enough . . . We need a carbon tax! It’s so much simpler, it’s so much more efficient.” 

I have romped through my wrap: falafel tastes so healthy when you haven’t seen it being fried. Shafik is mid-mouthful when I see a stream of the “velvety” tahini roll down her black coat. I promise that the FT’s hospitality extends to dry cleaning, with the same confidence that Boris Johnson promises that he has a social care plan. 

I ask how Shafik views the prime minister’s plans for “levelling up” the UK. Infrastructure projects are good, she says, but “if you really care about levelling up, you would also look at things like early years. The first 1,000 days for a child — if they don’t get good nutrition and good mental stimulation, they’ll never catch up.” Decentralising spending powers, as Germany does, would also help more than relocating central government offices. “Local people will know where their comparative advantage is.”  

Good policy is not necessarily good politics. “Particularly in advanced economies, old people are a problem because they block reforms to things like pension ages,” Shafik says. 

Her first response is to use grand bargains — for example, raise the pension age at the same time you fix social care. But she also wants changes to democracy. “There is a need for renewal. I’d start by looking at digital voting, so you get more participation by young people. Estonia has done it now for years, and it seems to work . . . We have to do something to redress the gerontocracy of our political system . . . I say this because I consider myself an old person!”

Another idea is citizens’ assemblies, as used in Ireland before its abortion referendum. “Before having a Scottish referendum, wouldn’t you want to have a citizens’ assembly where all the evidence was brought forward?” 

This goes against Dominic Cummings’ view that the real problems are the civil servants, who aren’t accountable or specialised. “I was bloody specialised! . . . I had to go through many, many parliamentary committees. I was being held to account all the time.” She would encourage the “permeability” of the civil service — “people going in and out” — but keep its promotion by merit: “I don’t believe we need more political appointees.” 

Shafik tidies her rubbish into the bin. Those who have worked with her praise her ability to keep people onside. One compares her to “a really good conjurer — you can’t see how she does it.” How would she describe her management style? “I don’t have to be the smartest person in the room. And I do make a big effort to listen.” Later she emails a favourite quote attributed to Taoist thinker Lao Tzu: “A leader is best when people barely know he exists . . . [O]f a good leader, who talks little, when his work is done, his aim fulfilled, they will say: we did it ourselves.” 

Shafik’s book laments the child penalty: in Germany, 10 years after having her first child, a woman’s income will be 61 per cent lower on average than it was before; a man’s will be virtually unaffected. Even in progressive Denmark, the drop in women’s income is 21 per cent. “Isn’t it amazing?” 

How did she avoid paying this child penalty, after having twins while working at the World Bank? “I don’t know if I didn’t pay one, because I don’t know what my male colleagues were paid.” When she looked to move jobs, she was told she “could just work part-time because of your husband”.

Line chart showing the effect of childbirth on earnings as a percentage change for mothers and fathers in Germany, US, UK and Denmark from five years before to 10 years after the birth of the first child

Her husband, Raffael, is a scientist, pioneering algae as food. (The taste is like sushi wrappers, she says.) Did they agree whose career mattered more? “No . . . Part of the social contract is within the family . . . I do the cooking, he does the laundry, because he’s better at the laundry than I am. He followed me to Washington, I came back to London partly for him.” 

Her preferred metaphor is not the glass ceiling, which suggests you only need to smash it once, but a sticky door. “I found the doors were stickier when I was younger. I had more sexist comments, being talked over . . . The more power you have, the less of a problem it is.” 

Economics remains very male. “The IMF, the Bank of England: mainly economists, very male. When I was at the IMF, it helped that Christine [Lagarde] was there.” The FT reported that Shafik had a difficult time with her boss at the Bank, then governor Mark Carney. Is that why she left after just half her five-year term? “No, no. I got a fantastic offer from the LSE.” She didn’t get this far without diplomacy.  

She was tipped to be the Bank’s first female governor last year, but either her politics or her perceived lack of monetary policy experience ruled her out. She insists she didn’t apply. 

The cold is biting, and we walk back over London Bridge. Shafik is also a trustee of the British Museum. Last year’s Black Lives Matter protests raised the issue of returning artefacts taken in the colonial era. Will the Benin Bronzes go back to Nigeria? “I think there are active discussions about how to support the exhibition of Benin’s history in [Nigeria].” But she insists: “The British Museum is a museum of the world for the world. It also lends more than any other museum in the world.” 

Does she query why so many Egyptian works are housed in Bloomsbury? She dead-bats. “Egypt is very blessed to have a lot of treasures. I actually think that people who see the Egyptian collection at the British Museum — it makes them want to go to Egypt.”

At LSE, the problem is donations. Her predecessor-but-one, Howard Davies, resigned after accepting money from a Gaddafi family foundation. Does Shafik say no to shady donors? “Sure.” States or rich individuals? “It can be both.” How easy is it? “It’s very easy . . . You deal with it early, before conversations get advanced. So you don’t ever have to say ‘no’, you don’t pursue.” Even so, in 2019 the university suspended a China programme backed by a pro-Beijing investor, after staff complaints.  

Meanwhile students are accused of not supporting free speech. “We’ve had controversial speakers and it’s been fine.” Could Jordan Peterson speak at LSE? “Remind me who he is?” she replies. It’s a long story, I say. 

A few politicians argue too many people are going to university; one 2010 study said that “overproduction” of graduates might produce political unrest in the west. “I don’t buy that . . . The rate of return to education is still incredibly high.” The demand is too: LSE’s admissions for next year are up, despite coronavirus. 

What hope is there for young people like her children, whose mental health has been hit hardest by lockdown, and who, if past experience of crashes holds true, face a life-long hit to their earnings? Education, of course. “They’re going to pay our pensions and healthcare bills, and unless they’re super-educated and super-productive, we’re all going to be worse off. We also need to sort out the environment.”

Like all Shafik’s opinions, it comes firmly, but calmly. Is she the last person left who doesn’t do outrage? How does she stay so measured? 

“Policy matters so much,” she laughs. “One of my first jobs, we were working on how could Egypt ever export fresh fruit and vegetables to Europe. It seemed an impossible problem, because Europeans want their fruit and veg in a certain way, and you needed a cold chain, and you had to deliver in these very specific seasonal windows. 

“Before I came here to meet you, I opened up my fridge, because I was checking if I needed anything from the market. The mangetout and the broccoli had come from Egypt. They did it!” 

She disappears into the crowd, smiling. On my bike ride home, I run into a protest against lockdown. A man wears a T-shirt inviting doctors to stick his vaccine up his backside. And I remember that sometimes it doesn’t matter how good your policies are: politics gets in the way. 

Henry Mance is the FT’s chief features writer

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