Book review – “Robot-Proof” by Joseph Aoun.

Robot-Proof: Higher Education in the Age of Artificial Intelligence by Joseph E. Aoun

This extremely insightful book by President Aoun of the Northeastern University in Boston on the future of higher education in an age of significant technological evolution driven through advances in robotics, artificial intelligence and data analytics provides much food for thought.

This (very) brief summary provides a useful overview of some of the points raised in the book which will be useful for educators everywhere to mull over. Anyone interested in the future of education and learning should get a copy and read it!

A key hypothesis laid out in the book is that we’ve reached an inflection point in time where machines (coupled with big data and underpinned by deep learning systems) have reached a position where their full transformational impacts will be felt by society.

There changing employment landscape (from the rising levels of automation and introduction of robotic algorithms) coupled with changing consumer behaviours will require higher education to introduce transformational changes that ensures relevancy and societal cachet.

The books lays out a new model of higher education that will ensure individuals progressing through the institutions will be able to thrive and prosper in an economy and society transformed significantly through technology.

President Aoun describes the need for higher education to “refit (their) mental engines, calibrating them with a creative mindset and the mental elasticity to invent, discover, or otherwise produce something society deems valuable.”

A framework for a new discipline called “humanics” is set out in this book which calls for education to develop individuals who can work alongside machines.

Humanics will consider the following two areas:

  • The building of ‘new literacies’ such as data literacy (the ability to read, master and analyse and drive insights from data); technological literacy (the ability to code and understand engineering principles); and human literacy (the development of what some consider to be ‘soft skills’ such as communication and design). These will need to add on from old literacies such as reading, writing and mathematics.
  • Development of cognitive capacities or higher order mental skills which will include: systems thinking (the ability to view businesses, technology and machine in a holistic way and considering them in an integrated manner); entrepreneurship (applying a creative mindset to an economic or business sphere); cultural agility (which allows for individuals to adapt to a global environment); and critical thinking (which fosters discipline, rational analysis and judgment).

President Aoun’s hypothesis is that this will enhance individuals’ ability to prosper in a world of highly sophisticated machines powered by AI.

The fourth transformational force

 The first three transformational forces that have shaped society and the economy have been fire (a point raised very eloquently by the good Bishop Michael Curry in his speech at the latest royal wedding!), steam and electricity.

The fourth transformational force shaping society is information (the life source fuelling the sophistication of machines and algorithms).

Aoun touches on the history of how technological advances have often caused great societal divisions and consternations, from the rise of the Luddites to John Maynard Keynes’ view that machines will cause “technological unemployment” to letters by academics to President Lyndon Johnson warning him that technology could undermine the value of all human labour. There is also a further description of how universities approach towards education has been shaped by societal changes from the rise of government funding to build a robust educational ecosystem in the 1800s to the introduction of the G.I. Bill (or the Servicemen’s Readjustment Act) to provide tuition support to returning soldiers from WW2 to the increased levels of federal funding to support university research and development.

There is also a good discourse in the first chapter to consider different views to how technology and automation may shape the future of work. Although the gig economy has been shown to be an increasing alternative to traditional work regimes, there is a suggestion that individuals who rely on the gig economy do not make enough to support themselves and only earn supplemental income.

Given this current state, Aoun postulates that it will be (wo)man’s innate ability for imagination and creativity that will help her/him in thriving in the new world and the power of higher education to further develop and build on this ability.

The view from employers

 With the rise of robotics and advanced machines, even traditionally ‘safe’ knowledge sectors such as law and finance are being impacted. However, despite the increasing demand for individuals with skills in computer science, algorithms and data science, one of the skills most desired (from a 2016 survey) by employers is that of leadership followed by ability to work with people – both very social skills.

Whilst companies need engineers, software developers and data scientists, the area where there will be a significant demand is for someone who has the ability to integrate all the various areas and adopt a holistic ‘systems thinking’ approach.

As employers expect the technical knowledge to be a minimum requirement, they look for other softskills or a high dose of ‘human literacy’ such as the ability to collaborate well, take a team-based approach to development, or demonstrate ‘deep listening skills.’

As professionals begin working with sophisticated algorithms and machines, there needs be a further demonstration of cognitive capacities by employees. Employees need to be able to better observe, reflect, synthesize and analyse information better.

Aoun’s conclusion is that critical thinking and systems thinking need to be instilled into the students of today and tomorrow to ensure they remain relevant for the workplace of the future.

A learning model for the future

A LinkedIn review shows that the top ten most desirable skills center around technology. Even though technology cannot provide jobs for everyone, it has also given rise to new industries and employment opportunities. Aoun argues that education has always had a central role in ensuring that people are elevated to the next levels of economic development. His view is that as the workplace of tomorrow demands more of individuals, there is a greater demand on how education supports people.

Aoun argues that the learning of the future needs to consider not just what technology can do but rather what technology cannot do and how a robot-proof education can further nurture’s man’s unique capacities.

There is a need for education to inculcate and cultivate the creative spirit of people. This necessitates an increasing focus on divergent thinking (as opposed to convergent thinking which leads to a single result). Divergent thinking focuses on the multiple outcomes to issues and stimulates creativity, curiosity and willingness to take risks.

Aoun states, “We need a new model of learning that enables learners to understand the highly technological world around that and that simultaneously allows them to transcend it by nurturing the mental and intellectual qualities that are unique to humans – namely their capacity for creativity and mental flexibility. We can call this model humanics.”

Here Aoun explores the new literacies that education should imbue into learners. Fredrick Douglas says that literacy is the path from slavery to freedom and Aoun argues that the deficit of literacy will lead to a slide into powerlessness.The new literacies include firstly, technological literacy (knowledge of mathematics, coding and basic engineering principles). He argues that as coding is the lingua franca of the digital world (a similar point was made by President Obama who incidentally was the first American President to write code) and the need to be conversant in the language of code.

Next the need for data literacy is made which is about the ability to understand, analyse and utilise data to drive insights. Finally, there is elaboration on the importance of human literacy which is about imbuing in learners the ability to collaborate, communicate and interact with one another and the world around them so that they make the right choices in life.

This chapter also considers how the new literacies need to be coupled with cognitive capacities that will help students participate more effectively in a digital world. These cognitive capacities include critical thinking, systems thinking, entrepreneurship and cultural agility. The role of educators in building these cognitive capacities is crucial.

Higher education provides an opportunity for learners to learn these cognitive capacities in a safe environment which allows them to understand context better and crucially fail and develop their resilience before they apply the lessons in the real world.

President Aoun stresses that the role of higher education is not to merely provide information and content but to help teach the new literacies and cognitive capacities. He argues that teachers need to be more explicit in what they are teaching to students and help students demonstrate to students how each area of their syllabi helps nurture each of the literacies or cognitive capacities. Students will need to be taught how these skills will support their own ambitions in life and contribute in the modern workplace.

A great quote from this chapter attributed to Desh Deshpande that bears thinking about is, “There are three types of people in the world. There are some people who are oblivious to everything, some people who see a problem and complain, and some people who see a problem and get excited to fix it. The difference between a vibrant community and an impoverished community is the mix of those people.” This is a quote that applies to any business as well!

Experiential learning

Here president Aoun underscores the need for classroom learning to be coupled with experience so that the learning retains its immediacy and relevance. Mastery of the literacies and cognitive capacities along will not help learners be robot-proof, they need to be able to synthesise humanics with experience. Students should be able to apply their knowledge in real-world situations and understand and reflect on the implications and outcomes.

In essence, Aoun describes this as flinging ‘open the gates of the campus and making the entire world a potential classroom, library or laboratory.’ It will be important for learning to follow a structured sequence and indeed the cognitive apprenticeship model describes how in order to master any complex subject, learners need to first acquire component skills. These skills must then be practiced in given context and finally apply them to different contexts.

This sequence of acquisition, integration and application leads to expertise. Aoun explains how students are first in a stage of unconscious incompetence (where they don’t know what they don’t know) to then progressing to a stage of conscious incompetence (knowing what you don’t know) to a stage of conscious competence (where they perform well but with deliberation) to a final stage of mastery (where they instinctively operate at the highest level in their domain).

Aoun shares how one of the most direct forms of experiential learning is “cooperative education” – an education model in which students alternate their classroom learning with sustained, full-time immersion in the professional workplace and then integrate with the two. The co-op model is different from internships in that it is much more sustained and go deeper into the learning by experience approach.

This model ultimately leads to greater employer satisfaction and there is a statistical significance in the levels of satisfaction displayed.

Educators also play a crucial role in helping students and learners understand their own experiential learning to maximise the impact of the lessons learnt through their experience in the real-world.

Aoun touches on the effectiveness of apprenticeship models (strongly prevalent in Austria, Germany and Switzerland) and how the education-employment collaborations have helped benefit both employers and learners.

Lifelong learning

President Aoun discusses how higher education can serve learners in a personalised and customised manner and will over time be compelled to serve people throughout their careers rather than at specific points in students’ lives. This will therefore require higher education to bring lifelong learning into the center.

Aoun also argues that it is lifelong learning that will help further drive down social inequality as it ensures everyone has the opportunity to develop and maintain valuable skills throughout their careers.

Higher education institutions need to see themselves as not just education providers towards undergraduate, post-graduate education or research but more as being in the business of lifelong learning. There has been a rise of for-profit education institutions and of “corporate universities.” These corporate universities have seen large corporate employers such as AT&T working with MOOC partners to deliver corporate training.

Aoun argues that these developments demonstrate that higher education is sidelining lifelong learning to its detriment. He also strongly encourages higher education institutions to partner with employers to create the relevancy required by the employment sector.

There will be a need for universities to customise courses to ensure they are designed and delivered in a manner that most appropriately provides education to learners, regardless of where they are on the career journey using the full extent of technology available to them.

The above developments will mean universities will need to consider how they package the content and learning and offer it in a way that allows for universities to consider how they award degrees or credentials. Universities may need to consider developing smaller blocks o knowledge that can be stacked in a way that may be suitable for traditional degrees but to offer it in a way that offers much more permutation, customisation and combinations.

There is also an opportunity for universities to consider how they should engage with their alumni and offer potentially subscription based opportunities towards learning.

Finally, Aoun discusses here the advent of multi-university networks which has universities adopting a multi-campus, multi-modal, multi-national approach to provide students with different learning experiences and environments, and enhancing their own cognitive capacities and contribute better to the world they live in.

Personal conclusion

The book touched on some of the important changes universities must consider as they seek to retain their relevance in being institutions that help societies adapt to an emerging and evolving world.

Education has a place in equipping society with the skills needed to thrive in a future which will look fundamentally different to present day. In a world where we see rising social and income inequality, education becomes a key driver towards social mobility and plays an instrumental part in alleviating the inequality we see in the world today.

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Reflections on the Singapore Budget 2018

It has been a week since the Singapore Budget for 2018 was announced.

Following further reflection, this is a budget that perhaps prepares Singapore the best for the future and remains cognisant not just to the opportunities of a rising Asia but also the very real challenges of inequality and an ageing society.

There is the notion of building society over self built into the Budget that remains hugely aspirational.

It remains hugely relevant to evolving needs and develops robustness and inculcates values of innovation throughout the various initiatives and interventions.

Social mobilily remains crucial and the interventions being proposed will help address social mobility through education and social support. Ultimately, this will help Singapore addressing the growing challenges income inequality presents.

This Budget allows Singapore to remain adaptable as a nation and as a people. The budget will allow Singapore to remain poised to take advantage of the opportunities and ride the challenges the future holds.

Below is a brief 4 minute summary of the Budget 2018 (which was perhaps one of the longest in recent times running to close to 2 hours)

The resurgence of the Indo-China education paradigm

A really important shift has just taken place in the world of international Indian students going abroad. For the first time ever, there are now more Indian students studying in China than in the UK! According to the Times of India (and other sources), there are now 18,171 Indian students in China against 18,015 in the UK, the numbers for 2016 reveal.

UK has always had a strong allure for Indian students (indeed the first Prime Minister of India, Jawaharlal Nehru attained his education in the UK). The strong historical, cultural and social links meant that UK was a favoured destination for Indian students pursuing their studies.

This has now changed. A combination of factors, from Britain’s immigration policies, Brexit, China’s emergence, and greater availability of information has meant Indian students are now taking a much more diverse approach as to where they obtain their education.

Indeed, Indian students are the fifth largest group of international students in China (after S. Korea, USA, Thailand and Pakistan). This number is expected to grow in the coming years.

India and China have both shared a close historic education link dating back to at least 1,000 BC from ancient Taxila (where Chinese scholars met to discuss and learn logic, mathematics, astronomy and science) to Nalanda (from around 5 CE).

Over time, it is through education and dialogue that both these historic neighbours will forge even greater collaboration and partnership. There is scope for greater learning of best practices to create a harmonious and progressive approach to education.

Reflections on the Singapore National Day Rally 2017

The Singapore National Day Rally 2017 took place on the 20th of August 2017. The full video of the rally can be viewed here. However, the salient points of the rally are depicted in the image (copyright: Reza Ali) below. (For a PDF version of the image, please download it here: NDR2017)

My personal reflections on the rally can be found below the image.

NDR2017

Reflections

The emphasis on childhood education and development is an important one. As the Prime Minister noted, this helps ensure greater social mobility over time.

In my earlier article on income inequality, I wrote the following:

Governments and policy makers should also consider more directed interventions to enhance the social conditions of lower income families. For instance, in the UK, the Child Benefit offers a weekly allowance to parents for every child they raise. The transfer could be better targeted by making the income taxable as personal income, which will reduce the size of the benefit for those in higher tax brackets or who do not have face any other mitigating circumstances. In the UK, child poverty has dropped sharply whilst in the USA; it has risen by a third between 1969 and 2013. A child-benefit programme will help make a major dent in child poverty and also represent a powerful investment in the future. Introducing a child-benefit program in the US will make a major dent in child poverty and represent a powerful investment into the future.

The focus towards building greater support and increased investment towards the KidStart programme  – which ensures lower income families are supported in their children’s education and development – will have a huge impact on the recipient families. It will support greater social mobility and enhanced potential for economic empowerment.

The support being provided to expectant mothers even before the children are born is also similar to the Finnish system – and one which I admire deeply. Parents of new-born babies are given books to read to their children so as to inculcate greater reading, social and cognitive development amongst their newborns.

The second pillar of the National Day Rally was on healthcare, and particularly diabetes, is an interesting one. The Prime Minister’s emphasis on a good quality of life, rather than a long life is an important one. Whilst potential solutions, including the imposition of a sugar tax or better consumer awareness of high-sugar food are being reviewed for efficacy, the government needs to provide a clearer framework as to how the war on sugar and diabetes will be fought.

The final area of consideration at the Rally was that of a ‘Smart Nation,’ or the development of an integrated approach to information technology, employability and productivity in light of massive developments in the areas of big data, the Internet of Things (IoT) and blockchain technology.

The Prime Minister spoke of a need to further enhance areas such as mobile payment – but beyond merely the technological enablers, there needs to be a greater consideration in terms of educating and socialising to people the benefits of such solutions and also help convince them that this is indeed the way to go by also clearing up some of the pain-points and fears around online security and their own protection.

The Prime Minister spoke of how technological innovations are driving areas of retail, logistics and security. However, the examples he chose also demonstrated how employability is going to be impacted – with less people able to do more. The Prime Minister spoke of how new areas of employability such as big data analytics will be created but urgent measures are still required to support the employment dislocation that is inevitable as companies use greater technology with less manpower. Whilst programmes such as SkillsFuture will go some way towards alleviating the challenges, there needs to be further measures to support individuals who are further down the education spectrum who need more help and assistance.

The close of the Rally with a fantastic story of three generations of the same family achieving social mobility through education was inspiring and inspired! It carefully encapsulated the central theme of the rally around how education allowed for the son of a gardener to become a rail engineer and how his son, through the investments being made in the areas of technology, has all the opportunities to succeed.

Ultimately, the National Day Rally was one in which the government’s duty to its people and building of the nation’s future was clearly demonstrated. The challenges are many, but not insurmountable.

Inspirational Quotes for Education and Learning

I originally read this in a blog by Dr Maryellen Weimer and found it very inspiring and instructive. I’ve made some minor amendments to the original post in the link above and hope this inspires anyone who’s an educator or a student (which should really be each and every one of us!).

“Education breeds confidence. Confidence breeds hope. Hope breeds peace.”

– Confucius, 500 BC

Tell me and I forget. Teach me and I remember. Involve me and I learn.

Xun Kuang, Xunzi – Ruixiao: The Teachings of The Ru, Book 8, Chapter 11,250BC

“All discussion of reform must begin with the ordinary student, not the genius, not the prospective scientist or professor of abnormal psychology but the citizen of the republic who must earn a living in addition to living a humane life.”

– Paige Smith, Killing the Spirit: Higher Education in America, 1990, p. 200

“Good students are those who learn. Whatever their preconceptions, barriers or deficits—whatever their story—they take new information and new experiences, and to the best of their ability, make them tools for transforming themselves and their world. And at last I’ve learned that a good teacher is someone who can recognize and connect with good students—in all their forms.”

– Mark Cohan, “Bad Apple: The Social Production and Subsequent Reeducation of a Bad Teacher,” Change, November/December, 2009, p. 36

“Our students live in cacophony. Clamour, chatter and din fill their ears, and may even injure them. To many, a moment of silence in unendurable. I cannot ask them to put their heads down on their desk and be quiet, as Mrs. Morgan commanded me to do in Grade 2. But we can educate ourselves to be models of intellectuals who trust and value silence, who practice what we have always known; when no one is speaking, someone is learning. We can create oases of silence where cool springs of insight trickle and flow.”

– Ron Marken, in Silences, 2008, p. 115

“Most teachers resist showing students the dirty part of real learning and by the dirty part I don’t mean the hard work…. I mean the part where we fail nine times in a row before we find a good approach. I mean the parts where we are confused about our project, defensive in the face of criticism, doubtful of our abilities…. Whatever the venue … teachers like modeling their knowledge, not their ignorance, and they avoid referring to the muddy paths, fear-filled moments, and just plain failure that are the unavoidable parts of getting the knowledge we possess.”

– Marshall Gregory, “From Shakespeare on the Page to Shakespeare on the Stage,” Pedagogy, 2006, p. 324

“Skills as complex as questioning, listening and response are learned step-by-step; mastery is a climb up a ladder, not a pole vault.”

– C. Roland Christensen, Education for Judgment: The Artistry of Discussion Leadership, 1991, p. 156

“If members of another profession—say surgeons—were like college teachers, they would perform in isolation without apprenticeships, learning to cut and sew by trial and error. They would know anatomy but be ignorant of biology. They would hold colloquia discussing incision tips and suture innovations. To demonstrate the quality of their work, they would ask surviving patients to fill out bubble-sheet questionnaires with items like: ‘Does the surgeon demonstrate a commanding knowledge of his field? Is the surgeon well organized? Did she show respect for patients?’ No one would look at survival rates.”

– Larry D. Spence, “The Case Against Teaching,” Change, November/December, 2001, p. 14

“The teaching life is the life of the explorer, the creator, constructing the classroom for free exploration. It is about engagement. It takes courage. It is about ruthlessly excising what is flawed, what no longer fits, no matter how difficult it was to achieve. It is about recognizing teaching as a medium that can do some things exquisitely but cannot do everything.”

– Christa L. Walck, “A Teaching Life,” Journal of Management Education,November, 1997, p. 481

“Learning is my daily bread. It is wholly selfish, I fear, but I feel more alive in a community of learners than anywhere else. I am a voyeur, a peeping tom. I like to watch other people doing it almost as much as doing it myself. But unexpected (yet dependable) flashes of intuition or dogged discoveries or familiar ideas enlighten and warm me and make my joy complete. Every day.”

– Peter G. Beidler in Distinguished Teachers on Effective Teaching, New Directions for Teaching and Learning, No. 28, 1986

“The highest education is that which does not merely give us information but makes our life in harmony with all existence.”

– Rabindranath Tagore, Siksa Herfer, 1917

Robots! Clear and Future Danger For Economies

I was at a conference recently and there was a speaker who was extolling the power of robots, technology, automation and artificial intelligence (AI) in the modern workplace and how it was going to revolutionise the global economy.

There was quite a catalogue of achievements as a result of increased robotics and AI including lower ‘FTE’ (or ‘Full Time Equivalent’ of human labour) requirements and greater efficiency, productivity and decreased errors and mistakes. These were achievements that were backed by undisputed statistics and data.

The ability to create consistently high economic value using systems, robots and AI which do not make mistakes, which do not break down often, which can even be self-correcting becomes very appealing.

However amidst the glories of robotics and AI, I felt increasingly concerned about where the world was heading with the increased introduction of automation, robotics and AI and the impact this was going to have on employment, social mobility and income equality.

My concerns

Technology as a displacer of jobs.

Technology, automation and robotics initially replaced blue-collar jobs and roles from the economies. Increasingly greater sophistication of AI means that white-collar jobs are also being replaced. We read various reports about the jobs of the future being technology-related roles that help create, maintain and repair robots and their related technology, but I postulate that robots can fix themselves (and their ‘peers’) better than people ever can and over time, robots can create other robots to do the tasks which they need done.

In the past, technology was an enabler. It was a great source of enhanced productivity for nations’ economies.

However, technology has now become a replacer or displacer – of jobs, of people, of roles. It has now become a tool to enhance economic output but ends up depleting people and their earnings.

This is going to be a longer-term fundamental problem and challenge to societal and economic growth and development.

The impact on developing economies

Let us consider Philippines and India. They have spent billions of dollars investing in the infrastructure and ecosystem to help create thriving shared services and business process outsourcing (SSCs / BPOs) businesses. This was to help meet the needs of multinational companies. However, with AI and automation increasingly taking on a majority of the roles and jobs that are currently being done by millions of people in both countries, it is going to lead to a significant job loss and risk the potential collapse of the SSCs and BPO sector in both countries.

Over time, with increasing automation and AI, multinationals need not outsource various roles to locations of lower labour cost. They will instead seek to outsource the roles to nations with the lowest tax and the best technology infrastructures in which they can base their systems and robots. 

The moral obligation and income inequality

With increasing AI and automation, I struggle to see how the job losses faced by millions as a result of robots taking on their roles are going to be mitigated. There also seems to be little alternative sources of formal employment.

Whilst it is easy to highlight how automation can reduce expenses by 66% and reduce ‘FTEs,’ I think we need to look at people beyond merely being an ‘FTE’ or as a mere factor of production.

 

Over time, it is going to also exacerbate the issues of income inequality which is already one of THE pressing moral issues of our time. I’ve covered this topic at length previously.

The factors of production, the technologies, the AI and robots are going to be in the control of a very small segment of society. Whilst it may create vast economic growths, it does not lead to growth in income or wealth for the majority of the people. This will lead to societal fractures which can be devastating to nations and society.

What then the moral obligation to people and society?

Possible solutions?

Leaving this issue to be dealt with purely by market forces will not result in resolution and frankly will be disastrous in my opinion. There needs to be a concerted governmental approach to resolving this and finding solutions that work.

Using levers such as tax policies will be ineffective, particularly in a world with little tax harmonisation. For instance, increased taxation for robotics-led solutions will only encourage a beggar-thy-neighbour policy and in a world with little tax harmonisation, it becomes a useless endeavour.

 

If we accept that robotics and automation are an inalienable part of the development of society, then we need to accept that the current economic models  will not be best suited for what the world needs. Maybe it is time for us to seriously consider and contemplate universal income as a way to mitigate and tackle some of the problems coming our way as a result of robotics and automation.

Universal income is something a number of countries are experimenting with to tackle income inequality which as I’ve explained earlier will only be growing with greater automation and robotics. Finland for instance has started a pilot programme, the Swiss held a referendum in June 2016 to consider universal basic income which did not pass as only a quarter of the Swiss agreed with it, the Dutch will be carrying out a pilot programme this year, and this is just a start.

What is increasingly clear is that it is not enough to simply hope the challenges brought on by AI and robotics are going to go away, there needs to be a concerted and strident efforts made to mitigate them.

China / Japan? History repeating itself?

japanchina2

Too far fetched?

Let’s consider briefly the facts and also some important caveats.

Population demographics

The results of a census taken in 2015 has placed Japan’s population at just over 127 million – a decline of about 1 million in about 5 years. Japan’s birth rate has been long below the total fertility ratio of 2.1 (currently 1.4) and nearly a third of all Japanese citizens are now over 65. This is already a source of policy and economic challenges for Japan and one that is likely to keep growing.

China’s one-child policy starting in the 70s has had a major impact. Whilst the policy has now been relaxed, the population control genie, once out of the bottle can rarely be controlled. Changing economic trends, mindset shifts, and a movement towards an urban citizenry means less people are keen on having children. The United Nations estimates that that the number of Chinese over 65 will increase by 85% to 243 million in 2030 (from the current 131 million). The Chinese working population saw its biggest decline in 2015 – a fall by a record 4.87 million.

Both Japan and China have very restrictive and insular immigration policies which will only serve to further exacerbate the population and demographic challenges. These demographic issues will also impact economic growth and development as in time both economies will have inverted population pyramids, where one active working individual will be supporting two parents and four grandparents – and better medical facilities and healthcare will lead to a greater demand on the working population.

Perhaps the spur in investment in robotics will help alleviate these challenges?

Economic growth history

Japan’s economic growth started with the development of its manufacturing base following World War Two with support from the USA and other Allied nations. Japan’s growth was an average of 9% between 1955 and 1973 (when the first ‘oil shock’ impeded growth).

In the case of China, following a debilitating post-war economic situation and the challenges of the Cultural Revolution, the opening up and reformation of the economic system from 1978 was instrumental in China’s economic story. China’s growth has averaged between 7% and 10% since.

The main engine of growth both in the case of Japan and subsequently China was manufacturing. It will surprise users of top-notch Japanese products today to learn that from the 1950s to around the 80s, ‘Made in Japan’ meant low-quality and cheap and people preferred to use American or European produced goods. However, the Japanese investment into their manufacturing processes, research and development over time meant that they started developing high-value and high-quality goods and products. It’s a process that took decades and systemic investment into innovation.

In the case of China-made products, there are still some challenges around quality and value, but this is something that is being addressed as we now increasingly see greater investment into research and innovation.

Funding world’s developing needs

Japan became development donor from as early as the mid-50s and by the early 90s, Japan became one of the largest officual development assistance (ODA) providers in the world. Grants, aids and soft loans were provided through agencies such as the Japan International Cooperation Agency (JICA) to countries across Asia, Latin America and Africa.

Japan then became instrumental in the establishment of the Asian Development Bank (an institution for which it has maintained presidency since inception in the 60s).

This allowed Japan to project its soft-power and help foster policies favourable to Japan across recipient nations.

If we examine China’s development assistance, aid and grants – it has grown from less than US$1 billion in 2002 to over $25 billion in 2007 to currently over US$100 billion. Due to differences in the way ODAs are valued, it is possible that China’s current aid and grants may be undervalued.

China also was instrumental in the set-up of the Asian Infrastructure Investment Bank (AIIB) with an express aim of building infrastructure across Asia-Pacific. Whilst both ADB and AIIB officials have been at pains to stress that they do not see each other as competitors (indeed they have already co-financed a number of projects), a primary reason why the AIIB was set up so as to have greater autonomy by China and other partners in multilateral banking institutions.

Slowing growth and liquidity trap

In the late 80s, Japan was running a very large trade surplus and the stock market and property prices were booming (there were properties which were valued at US$1.5 million per square meter – or ten square feet in Ginza!) which collapsed in the 90s. There was an asset bubble across both the stock and property markets and when the bubbles burst, it led to the loss of trillions of dollars of value.

Deflation set in and whilst the Japanese government tried its best to promote spending (including setting interest rates at near zero levels), there was little effect. Growth has been anaemic and in 2009 the GDP fell by 5.2%.

Japan found itself stuck in a classic liquidity trap where where its monetary policy had little or no impact on economic output and production levels. This led to the ‘tragedy of Japan’s lost decades.’

Let us now consider China. Relatively easy loans made by banks? Check. Booming property prices? Check. Booming stock market? Check. Corrections across all three areas? Check.

China’s economy has been slowly significantly and it’s GDP growth rate has fallen to a level not seen since 1990. A report from the Wall Street Journal indicated that investors are hoarding cash rather than investing – a classic sign of a liquidity trap. The stock market debacle in Shanghai in 2015/2016 has also dampened investor enthusiasm.

The Chinese Communist Party Politburo has also cautioned against debt-fuelled growth and rising asset bubbles. There is also evidence to suggest that the stimulus packages initiated by the government are having little impact.

Some key differences.

Whilst there are some similarities, it is important to note a number of major differences and caveats before any quick conclusions are made. Firstly, China starts off with a much bigger population base and the reverberations from the impacts will take a much longer time before they are felt.

Secondly, China’s political system lends itself to a greater continuity in policies which may be effective in warding off economic downturns and avoid ‘lost decades’ the likes which Japan went through. Japan on the other hand went through nine prime ministers in the 11 years between 1989 and 2000 which hardly allows for lasting measures and policies.

In order to avoid the liquidity trap challenges, the Chinese government will need to focus on its war against graft and corruption and instil trust in the public institutions. Long-term and difficult policy decisions in the areas of state-owned enterprises reform need to be made in order to boost productivity. There needs to be continued efforts to keep narrowing the inequality gap and create greater employment opportunities which will in turn boost spending and help deter deflation.

The road ahead is a difficult one but there is no reason for history to repeat itself as long as the mistakes of the past are not repeated.