A MOMENT OF TRANSITION. Dame Minouche Shafik is Director of LSE (The London School of Economics and Political Science). LSE just won the Queen’s Anniversary Prize for training, research and policy formation for cities of the future. LSE Cities researches how to make cities more livable and environmentally sustainable, and trains hundreds of mayors from all over the world on how to run their cities better.
Minouche Shafik was the youngest vice-president in the history of the World Bank where she worked for 15 years, returning to the UK in 2004 as the UK Permanent Secretary of the Department for International Development. In 2011 she became Deputy Managing Director of the IMF and from 2014-2017 was Deputy Governor of the Bank of England.
What are the big differences from your former role as Deputy Governor of the Bank of England to running LSE, The London School of Economics and Political Science?
Culturally they are very different places. At the Bank of England there was a focus on ‘message discipline’; having a clear institutional line and being careful communicating about the future path of interest rates and the economy. At a university academic freedom prevails, and people can say whatever they like. Encouraging vigorous debate and different points of view is the reason we’re here.
Do you prefer being here to working in an international or central bank?
Yes, because it’s a moment of transition. Things are shifting in the world. That’s a very good moment to be in a university, because there is intellectual creativity, many points of view and new ideas being formed.
How many students do you have?
About 11,000, half undergraduates, half postgraduates. We are one of the most global universities in the world. Our student body are 30% from the UK, 30% from Asia, 20% from Europe, 9% from the Americas, and the rest from everywhere else.
What kind of university is LSE?
Ranked second best in the world for social science, just after Harvard. In economics we’re number five in the world, number three in politics. LSE was created by the Fabian Socialists in 1895 to know the causes of things and for the betterment of society. It is empirically focused, evidence based, and takes a scientific approach to social policy and poverty issues. Our students are interested in the real world.
“This generation will change jobs many times in their career.”
How do you prepare students for a changing world?
In their first year all undergraduates do a class called ‘LSE 100’ where they look at the big issues of the day. Lord Nicholas Stern, who wrote the famous report on climate change, lectures them, and they debate and discuss the issues around climate change. They have another session on global poverty; and another on the future of the financial system with Mervyn King, who was Governor of the Bank of England. This interdisciplinary base engages students with the big issues of the day, and then they specialize, but this generation will change jobs many times in their career. The average CV on LinkedIn today has 20 jobs on it. That is something new.
What are the implications of this?
Teaching and memorizing facts is irrelevant today. Being able to learn on your feet, to analyze, to think critically, to quickly absorb new knowledge, to assemble and make an argument, is what we focus on. Our graduates are the highest earning in the UK, with skills that make them very effective in whatever career they choose to follow. We also try to make them good citizens.
Do you miss your previous activities?
I see many of my former colleagues almost every day, because they come to the school, they speak, meet the faculty, and work on projects. This is a unique university, and this is a good time to be in a university environment, where one can have a bigger impact thinking about how to shape things in the world.
What are your major concerns?
The ‘Enlightenment values’ on which universities are based are under threat because of the rise of populism – a sort of anti-intellectual, anti-expert sentiment.
What are the underlying causes of populism?
A rise in inequality and a decline in social mobility. People don’t feel the system is fair and that their children can do better than them. ‘Technological unemployment’ is a big driver. Issues around racism, fear of difference, have caused divisions in society.
Is democracy in danger?
In the Cold War we had a competition between capitalism and communism. The new conflict is between democracy and authoritarianism. Democracies need to renew themselves. People have come to take democracy for granted, and that’s dangerous.
Italy just voted for parties who are against immigrants, Brexit is more or less the same idea. Do you have a solution?
Leaving the European Union or reducing the number of immigrants is not going to solve the real problems. The underlying causes of the problems are different, and serious people have to look at these.
What are the real problems?
Do workers today have the skills they need for the future? Will they be able to find good jobs in the age of automation? Are labor markets working in a way so that young people can get educated and find jobs? Are we building a social safety net that looks after people when they fall on hard times? Are our health systems affordable? How do we look after old people? In current politics those questions have got lost.
What is really happening?
We’re on the edge of major change because of automation and machine learning, and most jobs which are routine and repetitive will be automated. This will take decades, and it includes not just physical mechanical jobs like assembling a car, but also things like diagnosing eye disease or self-driving cars and big parts of the accounting profession.
Is this change causing panic?
Every technological revolution in history results in panic that jobs will disappear, and every time new jobs have emerged, but jobs will change. We need to invest to make sure that both young people and current workers have access to the kind of training they’ll need to adjust to this new labor market. That is what we should be thinking about. For example, Denmark invests 1.7% of GDP, a really big number, on what they call ‘active labor market policies’ to help workers train to get new jobs. As a result unemployment in Denmark is very low; people move quickly, the labor market is very flexible. It’s easy for firms to get rid of workers, but then workers get generous unemployment benefits and are able to get training for new jobs. They call it ‘flex security’; it’s flexible but the workers are secure. This could work in the age of automation.
“In the past jobs were about muscles, now they’re about brains, but in future they’ll be about the heart.”
Are stock markets a good barometer of how things are?
Not in their day to day movements. Longer term measures of economic success are much more important. What’s happening to investment in the economy? What’s happening to productivity? What’s happening to the well-being of citizens? Are they living longer and healthier lives?
Do governments think about that?
Governments do look at broader definitions of economic progress, GDP is only one measure. The thing that’s in common now is a desire for change, people are very frustrated with the status quo.
How do you prepare a person for the unknown world of tomorrow?
Education is absolutely vital. Those who voted for populist leaders tend not to have a higher level of education, but they’re voting for policies they think will improve their lives, because the current system isn’t working for them.
What kind of education?
Being able to synthesize information, analyze it, and be critical about it, will be very important. In the past jobs were about muscles, now they’re about brains, but in future they’ll be about the heart. The caring and creative professions have high levels of emotional intelligence, the skills that robots can’t do will be required in future. In Japan they are developing robots that are companions for old people, but that will not be a perfect substitute for real companionship. Working in teams and with other people across disciplines is an important skill, and at LSE we also teach them to have coding skills and to work with large amounts of data. Increasingly the students are really eager to have these skills.
The New Academic Building at LSE
Dame Minouche Shafik engages with students
An aerial view of the LSE campus in the heart of London.
Dame Minouche Shafik: “The future of jobs is about the heart.”
LSE won the Queen’s Anniversary Prize for training, research and policy formation for cities of the future.
“Thinking is the most valuable skill we give, because that lasts.”
Has education completely changed?
It is changing. 95% of our lectures are captured online. The professor gives a lecture but the students can listen to it again online when they’re revising for their exams. We didn’t do that 10 years ago. Students work together online, interact online, do projects online. Increasingly we have students who do part of their studies from another place, and then come to school some of the time.
As you’ve said, thinking has to be developed and used in a critical way?
Yes, absolutely. The computer provides you with information and you have to think for yourself about how to interpret it. What it means, whether you believe it or not, what a different point of view might be. Most people used to get one local newspaper, and that was all they were exposed to. Now they have much bigger choices, so people have access to much more information. The problem is the kind of algorithmic channeling that happens with some media platforms, where you just get information that confirms your own prejudices. Teaching people how to think is the most important thing.
How do you teach people to think?
They practice. Whether in a law degree or an economics degree it’s the practice of: here’s evidence, here’s a theoretical structure. Does that theory hold? The rigor of having to look at data and make an argument. Thinking is the most valuable skill we give, because that lasts.
You said that one of the things young people are going to do is change jobs a lot?
This generation don’t think of their careers in a linear way. They find it completely normal to work for an organization for a while and then do a different but similar job in another organization; and then they might go independent and do some consulting. Some of our students go and work in the City and are very successful in the financial services industry. Many go into the public sector and public service. Many more go into entrepreneurial businesses and set up their own companies.
How would you describe your students at LSE?
They are very serious. There is more competitive pressure, because there are more and more hopeful, young energetic people traveling all over the world to go to the best universities.
Where do they stand politically?
The problem is that young people don’t vote, and need to be encouraged to vote. Governments respond to who votes and only older people vote. There are very big intergenerational issues today, climate change, pensions, health care. The only way we will get a fair outcome for young people is if they vote.
Do you think China, which has just proclaimed Xi Jinping its lifelong leader, will be the leading country of the world?
Certainly the largest economy. The international rules of the game are being renegotiated. China, as it becomes more powerful, will want to write its own rules. The U.S. will continue to grow and be very important, but China will be the locus of economic activity and the weight of the world will be tilting east. The European social model of individual freedom but also collective security is important. It’s not comfortable this time of transition, there are big shifts going on in our society, and something different will come of it, but it’s not a foregone conclusion that the outcome will be negative.
Are you frightened?
I worry and I work, but I am not frightened. There will be disruption. If we do nothing there will be more unemployment, but we need to be a little more creative about how the labor market works. If we adjust our labor market institutions you might find a way to help people have meaningful work in the future but work fewer hours; quite a nice solution for many people.
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