The Future Of: Economic Development & Robot Economy

Dr Eduardo Pol is a Senior Lecturer in the School of Accounting. Economics and Finance (UOW Faculty of Business). He has extensive experience both internationally and domestically in teaching economics, mathematical economics, and innovation as an economic activity at both graduate and undergraduate level. He has published scientific papers in a variety of academic journals and written 14 books.

His paper 'Social Innovation: Buzzword or Enduring Term?', jointly written with Professor Simon Ville, has been cited in 515 related articles (Google search on 27 March 2018). He is the creator of the business subject ECON 231: The Creative Economy where students learn the interpretative tools necessary to understand the mechanism of an ideas-driven economy.

What are you researching or working on in 2018?

My areas of research for 2018 are: Technological unemployment and robot economy; Innovation as an economic activity; Human development and social innovation; and Economic development issues, including appraisal of barriers to economic development. At this early stage, I am concentrating on the first two areas.

In regards to your field of study or expertise what are some of the most innovative or exciting things emerging over the next few years?

I specialise in the economics discipline. There are two compelling topics that have attracted my research interest:

Competition between humans and robots:  Analysts do not disagree about jobs vanishing in the future due to the rapid worker-replacement technological progress as illustrated by the incessant deployment of robots. The biggest issue is whether the disappearing jobs will be replaced by new human jobs. In passing, I note that ‘robots’ are software programs that perform mental functions, including making calculations, sorting and manipulating data, speech recognition, and visual perception.

Decoupling of productivity and overall living standards:  Economists have traditionally stressed productivity of labour as the most important ingredient for improving overall living standards, asserting that ‘increases in productivity are followed by rising real wages.’ However, the link between productivity and the wages of ordinary workers has broken down.

In regards to your field of study or expertise what are some of the things readers should be cautious/wary of over the next few years?

Before I answer your question I need to pause for a moment to point out what the current wave of automation is doing to us. Otherwise, my answers could be difficult to evaluate. A human being possesses internal intelligence resulting from education, training, and skills stored in her brain that economists call human capital. Human capital enables humans to perform intelligent functions useful to carry out economic activities.

Now comes the critical point. The introduction of the Internet in 1995 marks a bifurcation of the real economy into two interconnected economies: the physical economy (think of human workers and other tangible resources such as, for example, land and factories) and the virtual economy (technologies useful for the physical economy, e.g. digital labour). While the physical economy houses internal intelligence (human workers), the virtual economy contains an ever growing external intelligence in business – digital algorithms performing intelligent functions previously carried out by humans.

Somewhat roughly, technology digitalises repetitive tasks performed by humans (think of bank tellers, office receptionists, book keepers, and data collectors) and bit by bit renders those human tasks obsolete. Humans observe and record the way other humans complete their assigned tasks, and then create technology able to do the same tasks. It is as if technology were a gigantic human capital suctioning machine transforming internal intelligence into external intelligence.

Reverting to your question, it is clear that readers should protect their human capital against automation and become astute participants to navigate the new wave of automation. What may not be so obvious is how to do that.

I believe that in times of rapid worker-replacement technological progress one has to accumulate the ‘right type’ of human capital, that is, we need to acquire and develop skills possessing economic value but which cannot be easily replicated or nullified by robots.

Where do you believe major opportunities lie for youth thinking about future career options?

The major opportunities lie in careers with sharp focus on problem-solving activities where analysts formulate the assumptions of the problem (not the robots), where professionals need ‘tacit knowledge’ (personal knowledge to perform tasks that is difficult or perhaps impossible to put in digital form because nobody can explain with precision how to do a particular task), where practitioners are expected to do critical thinking (e.g. appraise arguments and identify inconsistencies in reasoning), and finally, where workers have to be creative (discovering, testing, and refining ideas with economic value) in order to solve problems.

In a nutshell, if I were to choose my future career today, I would follow two guiding rules (not mutually exclusive). First, I would select a career that enables me to develop skills that will be difficult to supersede or nullify by robots. Second, I would make sure that my future career is something I am truly passionate about.

In regards to your field of study or expertise, what is the best piece of advice you could offer to our readers?

I believe that the economics discipline is illuminating and rewarding because it provides useful economic logic and predictions which help make decisions in our daily activities. But readers should be aware of the limitations of economic forecast. Prognostications of the future are based on assumptions, e.g. some of the basic conditions prevailing today will hold good in the future, and require that many factors have to be constant. Unfortunately, no one can guarantee that the ‘other things being equal’ condition attached to each economic forecast will hold true in the future.

Consequently, economic predictions are always doubtful. Regrettably, some economists claim for their predictions more than they deserve and this attitude tends to provoke strong reactions against economic forecast. The following quote – attributed to the American economist Kenneth Galbraith – illustrates the widespread lack of credibility concerning economic predictions: “The only function of economic forecasting is to make astrology look respectable”. Having said this, I believe that it is better to have some knowledge about what to expect than no knowledge at all. In brief, my advice to your readers is as follows. When economists try to convince you by means of technicalities (such as, for example, esoteric language, mathematical models and econometric predictions) ask them: “Would you mind terribly if I asked you to state in plain English what are the basic assumptions of your policy recommendations, including what factors are assumed to be constant?”

For more from Dr Eduardo Pol you can visit his UOW Scholars profile, which links to his papers and publications.

A story featuring Dr Pol titled 'The march of the robot economy' also features in The Stand. View it here.