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  1. The Business Interview
2 November 2021

“Why are people so angry?” Minouche Shafik on how the pandemic will change society

The director of LSE and former deputy director of the Bank of England calls for a post-Covid rethink of our social contract.

By Emma Haslett

The last time the UK experienced social change on a similar scale to the Covid-19 pandemic was during the Second World War. In 1942, as the impact of the war became clear, a former director of the London School of Economics (LSE), William Beveridge, argued in a government report that recovery would be made possible by a new “cradle to grave” social policy. These ideas helped bring about the modern welfare state and the NHS.

The present director of the LSE, Nemat “Minouche” Shafik, believes it is time to plan for recovery once more. Her book, What We Owe Each Other, proposes we take another look at our social contract – how we interact with one another – and fix the bits that aren’t working.

She spoke to me via video from her office at the LSE. Her appointment there, in 2017, was the latest in a line of high-ranking posts: she was a deputy governor of the Bank of England in 2014-17, following stints as deputy managing director of the International Monetary Fund and at the Department for International Development, as well as teaching at Wharton School and Georgetown University. At 36, she was the youngest-ever vice-president of the World Bank.

Her book takes a methodical approach to reorganising society, working through themes – from childcare to healthcare and education – and analysing how different countries and cultures approach them. Her background helps her cross-examine these differences: at 59, she has lived in Egypt (where she was born), the US (where her family emigrated after their land and property were nationalised by the Egyptian state in the 1960s), and the UK, where she has settled.

Although the pandemic has highlighted problems with many of our social structures, Shafik said she began the book before it started. “It was partly in response to the wave of populist politics across the world,” she explained. “I just wanted to understand – why are people so angry? Why are they so disappointed? And how do we address that and reduce the polarisation in our societies?”

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The pandemic provided a perfect case study. “My first reaction was, ‘Oh my god, I’ve got to rewrite this book now.’ But I realised that actually, [it] just revealed those fractures in our societies even more.”

One reading of the book suggests that if Covid was a test of our social contract, it was one we failed. “Who took the biggest hit?” Shafik asked. “Precarious workers, people who had vulnerabilities, women, older people. In many ways, all those fractures in our society were revealed even more by the pandemic.”

The subtext to much of her book is more that we should be doing better by now. Different metrics may make different observations about inequality, but Shafik’s point is that fundamentally, things are getting harder for the worst off in society.

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“The opportunities people face are just so unequal,” she said. “Depending on which family you’re born in or where you’re born in the country is just so determinant of your life chances.

“It’s deeply problematic for society as a whole, because so much talent is being wasted around the world.”

Shafik’s book came out around the same time as that of her former Bank of England colleague, Mark Carney. As one reviewer noted, when a former governor and a former deputy governor of the Bank simultaneously publish books arguing there’s something profoundly wrong with the economy, we should either be very comforted or very worried. Which is it?

“A little bit of both,” she said. “Worried because there’s a sense that there’s something wrong with our economic model. But I think you need to be comforted by the fact that a lot of people who are inside the system are asking the difficult questions and trying to figure out how to fix the problems.”

Beveridge’s report came out as war raged through Europe and the fabric of society was being torn apart. Eight decades later, is now the time to be making such radical proposals? “If you look historically, sometimes when you have a critical juncture like this, there’s an incredibly big piece of progressive reform, like the Beveridge report [or] like the New Deal in the US.”

On the other hand, “sometimes, not a whole lot happens that’s really transformative, like after the 2008 financial crisis. So it could go both ways,” she said. “I’m just hoping that my book nudges it in a slightly more ambitious direction.”

[See also: The biggest barrier to radical climate action is the global epidemic of mistrust]