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Tuesday's Top 10 with NZ Mint: Social safety net stress; Nigerians should run the World Bank; Ikea should do our housing developments; Monorails

Posted in Opinion

Bernard Hickey is on a well deserved vacation in France. This edition of Top 10 is not Bernard's. In fact it won't be again until early May.

Here's my Top 10 links from around the Internet at 10 am in association with NZ Mint.

I welcome your additions in the comments below or via email to david.chaston@interest.co.nz.

See all previous Top 10s here.

1.  European social safety nets can't handle the consequences of bad long-term public policy either

The plight of the "working poor" is a well-known phenomenon in the US - it has been documented in this column a number of times. In fact observant New Zealanders will know the issue is growing right here too.

But it is fast becoming a European issue as well. Liz Alderman at the New York Times reports:

As European governments respond to the crisis by pushing for deep spending cuts to close budget gaps and greater flexibility in their work forces, “the population of working poor will explode,” said Jean-Paul Fitoussi, an economics professor at L’Institut d’Études Politiques in Paris.

To most Europeans, and especially the French, it seems this should not be happening. With generous minimum wage laws and the world’s strongest welfare systems, Europeans are accustomed to thinking they are more protected from a phenomenon they associate with the United States and other laissez-faire economies.

Structural deficits have consequences - the best measure is to follow the track of the current account. As you let debt and deficits build, none of the public policy choices you have get easier. Which is why dealing with them early, and having mechanisms to bank the good times over the full economic cycle, is the only sensible approach. But it is rare voters will tolerate what it takes.

Let's hope we are adding new DNA to our current voting generation that gives us a chance to avoid the mistakes of the decade to 2008. A class called the "working poor" is both an indictment of previous public policy settings, and a lesson for future elected officials.

2. Getting it right
We love stats. They help us get a perspective on everyday problems. But they have to be used correctly, as Eric Crampton points out. The Press has run a piece about the earnings of tobacco companies, and the cost to the public of using their products. In NZ it's $7 bil. per year, they reckon.

In Australia, smoking costs equated to between 2.1 per cent and 3.4 per cent of gross domestic product.

New Zealand was not featured in the report but, if the results were comparable here, it would mean Kiwi taxpayers fork out about $7 billion a year to treat smoking-related diseases.

But as Crampton points out, that is $1,600 for every man, woman, and child in the country. He doesn't need to delve very deep to raise serious doubts about that number.

That number seems very high. Recall that New Zealand is a country of about 4.4 million people. Is it any way plausible that each and every one of us are shelling out about $1,600 per year to cover smoking-related illness? That's the first thing that a numerate journalist should have thought about: a sense of scale.

Next plausibility check: how much does the government spend on the health system in total? Treasury's site is down again and so I'll have to trust in this infographic; it's from Keith Ng, so it's almost certainly correct. It cites numbers of $13.2 billion for 2011 and $13.9 billion for 2012. Does it seem plausible that smoking accounts for half of total government health expenditures? That we could double health services but for the existence of smokers?

[Disclosure: we don't always get it right here at interest.co.nz either, but when we know its wrong we try to correct the record.]

3. How your iPhone is made
A labour monitoring organisation has audited Foxconn - the huge electronic device manufacturer in China - and has found numerous breaches of their standards.

4. Why a Nigerian should run the World Bank
Nigeria might be threatened with collapse from sectarian tensions between its Muslim north and the Christian south, but Felix Salmon thinks Ngozi Okonjo-Iweala should be the next head of the World Bank.

I think it’s important this story be much better known than it is, because it neatly encapsulates a lot of why Okonjo-Iweala would be a fantastic head of the World Bank. When she arrived as Nigerian finance minister in 2003, the country was what you might call an oil-poor kleptocracy, with virtually no credibility in the international community. Within two years, she had managed to use $12 billion of windfall oil profits to pay off $31 billion in bilateral debt, thereby not only massively improving the country’s debt dynamics, but also ensuring that money didn’t get stolen domestically.

5. But what would Hugh P think?
Although its not here in New Zealand (yet?), most of us know of Ikea and its giant furniture stores that sell basic-but-quality well-priced Scandinavian-designed furniture. Well, they are branching out into doing full housing developments, but they won't be at the fringe or in the 'burbs.

“We are in keeping with the Ikea philosophy: We don’t want to produce for the rich or the super-rich; we want to produce for the families, for the people,” says Harald Müller, the head of LandProp, the property-development branch of Inter IKEA, the company that invests the profits from the furnishing giant.

“Our approach must be to get the right housing and office prices while delivering very good quality at the same time, he added. “We want to be smart enough in our design that we can offer the product for a reasonable price.”

I wonder how our local authorities would handle such an approach, and whether after Ikea met all our local requirements, such a development would be affordable "for the people" if they were doing it in New Zealand.

6. Calling America's builders, Australia needs you! So screams the Reuters headline. Having hovered up plenty of New Zealand workers, the Lucky Country has now set its sights on the US of A. In particular it's seeking plumbers, electricians and builders to fill "chronic shortages" of skilled workers stemming from the resources boom fuelled by Chinese demand.

Industry projections from Australia's employment department show Australia will need 1.3 million extra workers over the next five years, including almost 200,000 more workers for the construction sector.

Australia will also need around 320,000 more health care and social assistance workers.

Australia has been running immigration seminars in India and Europe to attract skilled workers, and will now target the United States for the first time, with a skills expo set for Houston in Texas on May 19 and 20.

Australia's Skills Minister Chris Evans and the U.S. Ambassador to Australia Jeffrey Bleich on Monday unveiled a new scheme to help U.S. workers have their trade qualifications recognised more quickly in Australia.

"While the government's first priority is to train Australians for jobs in the resources and construction sectors, projections show that we will need workers from overseas for a peak in activity in the next three to five years," Evans said.

7. Are we really in a fraud crime wave?
I know, I know, there are plenty of court cases at present where fraud is the issue. But it seems we are not reporting more. Violent crime may be up, but overall, reported crime is falling and it has been for a while. Fraud crime is not growing. Maybe the fraud cases are 'news' because there is so few of them ... ?

8. The Aussies are deleveraging big-time
Australians are paying down their mortgages in big numbers and keeping their cash in their pocket - or more precisely, their bank accounts. Simon Johanson of the SMH surveys the fast changing mood in Australian real estate markets.

In the last four years, [Australian] households have taken $50 billion out of equity markets and deposited an extra $210 billion in the bank.

But our newfound frugality is so pronounced, it's causing headaches all round. Builders, retailers, property professionals, bankers and the hardware and whitegoods sectors are bearing the brunt of high-minded consumers determined to reform their profligate ways.

''This is the sort of activity you see in recessions,'' says BIS Shrapnel veteran Robert Mellor about home owners' lack of enthusiasm for forking-out on additions or alterations.

9. The killing graph
A 46-year old statistician’s ability to quantify mass atrocities has launched a data revolution in the human-rights world. It is a story of how cheap distributed devices in the hands of thousands on the ground have enabled the collection of data good enough to correlate well with events, and put dictators behind bars.

10. The last laugh
The good folk of Fiordland are contemplating a monorail for their backyard to help put them on the map. Another well-known town went through a similar project ...

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment in the box on the right or click on the "'Register" link at the bottom of the comments.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current Comment policy is here.

41 Comments

The beauty of gold is that it

The beauty of gold is that it doesn't "tarnish" seems to be holding up pretty well considering.  Imagine if the worlds second largest buyer of any other commiditie reduced consumption by 70%.  Seeing as price is set at the margin, I would JBTFD.

Items #6 & #8 are

Items #6 & #8 are contradictory.  #6 says that Australia needs more foreign building workers and #8 says that current Australian building workers are feeling the pinch.  Which is it, it can't be both?

Sorry, that's my fault. David

Sorry, that's my fault. David had to leave the office and asked me to check Top 10 for him. I noticed he had repeated a gold story from yesterday's top 10 so replaced it with No. 6. You're right there's a contradiction between 6 and 8. But perhaps that reflects the mining v everything else aspect of the Aussie economy?

The Australian Retailers

The Australian Retailers Association is lobbying the Federal Government to install a new tax on goods coming in from offshore , purchased on the internet ......
 
Retailers are struggling here in Oz , as evidenced by the recent profit slumps of David Jones , Kathmandu , and Metcash .........
 
...... but ( and this " but " is even bigger than Julia Gillard's )  internet retailing currently accounts for just 1 % of all retail sales ( and much of that is purchased from Australian internet sites , anyway ) , .. one wonders if the ARA havn't just  gone out of their banana bending tiny minds !

Fear and loathing  of a

Fear and loathing  of a retail concept with low overheads GBH.......paranoia leads to suspicion....suspicion to blame.....shortly followed by an irrational outburst...then tears ...then medication...and some quiet time to reflect.
 Yes..!   stark ....raving ....mad........but what are they to do..? impose a non purchase tax upon the stinking frugal public......?
 Therein lies their rationale....
 Pass me a bananna...I've got an idea. 

.... Australian's are a

.... Australian's are a pro-active bunch , Count ......... they don't shag around with all those intermediary steps like tears , reflection , and medication  .....
 
...  at the drop of a hat , they charge straight into full blown paranoia and xenophobia .......
 

Now come on GBH be

Now come on GBH be fair....their also relieving themselves of unwanted N.Z. miscreants....Lebanese pizza delivery boys on scooters.....persons who don't know the words to Tie me Kangaroo Sport.....so, hardly indiscriminate......um....I think.

#7 The Police are notorious

#7 The Police are notorious for fiddling the statistics depending on the flavour of the moment. Usually it is an attempt to get funding, so there will always be a correction in a non negotiation year.
 
If you look at the statistics there are some serious swings in yearly results that would seem to confirm this, although the overall trend does appear to be down.
 
But the other flaw with this is that reported crime does not necessarily correlate to actual crime. It could also be argued that there is a long term trend where people have lost faith in the Police and simply don't bother reporting crimes. I have read stories in the Police Association News where seniour officers report productivity has halved over the last 20 years due to the administrative burdens on officers.

Re #2 - error in cost of

Re #2 - error in cost of smoking - at first, like the author quoted, I thought this was one of those mistakes so widespread in the media that it would be a fulltime job correcting them. Here's another example on the same topic, from Radio New Zealand:
 

"Cigarettes rose in price on 1 January, for the third time in 21 months. The price of a packet of 20 cigarettes is now about $14... The Quit Group estimates each smoker costs the economy $139,000 per year in health and other costs."

 

$139,000?!?! Let's see, if a quarter of the adult population smokes, that means they are costing us over 50% of GDP in health and other costs. 

 

But on reflection, in this case I think it is not so much a mistake as a question of assumptions.

My estimate would be that the cigarettes themselves cost about $1.7b (2.4b smoked a year), and health costs about the same. That's already $3.4b (although some of the sticker price pays for the health costs). I suspect they get their figure by putting a price on deaths - there are 5000 smoking deaths a year in NZ. Road deaths are priced at $4.2m. Road deaths cut an average of 45 years off your life, smoking about 15, so the deaths might add about $7b to the total cost of smoking. Halve it for caution and there's your total of $7b.

 

 

 

Smoking related illness kill

Smoking related illness kill 5300 New Zealanders every year ....... road accidents kill 250 - 300 or so .....
 
..... you do the math  on which we should stomp down hard upon  , the car ,..  or the ciggie !

Um...er....ahhhh...GBH...By

Um...er....ahhhh...GBH...By all means stomp out  my filthy habit or option to indulge in...but pray tell , who will pick up the shortfall in revenue...?  the drinker...the gambler...the patronisers of La Lesbos..? who ...who ..? my good man.

....... alcohol excise !

....... alcohol excise ! ..... the Gumnut will re-coup those lost revenues from all the extra booze that the ex-smokers will subsequently buy ......
 
Gotta go , me times up . Grand to see how much happier this site is of late ......
 
Bernard should go on more holidays ,....  many many more ....... Haaaaaaaaaaaaaa !

Me Too..!! Gnite....from me

Me Too..!! Gnite....from me and it's goodnight from............him.

So now we need Nanny State?

So now we need Nanny State?

How you figure that

How you figure that skudiv....iffin fools want to saturate their lungs with shite, why the hell should they be allowed to poison those who prefer to breath in fresh air...the vast majority of people including 100% of those under the age of 5 want the fresh air and not the shite....or do you think otherwise?

No I agree.  Make smoking

No I agree.  Make smoking illegal, and also make being fat illegal, there are more fatties then smokers in NZ.  Far more children 'suffer' from obesity then secondhand smoke.
http://www.health.govt.nz/our-work/diseases-and-conditions/obesity
 

Well said Skud....big problem

Well said Skud....big problem there is the Corporates designing the low cost  high sugar/starch/fat  affordable foods to taste great  will have the dog chashing it's tail for years to come.
 The equivilent wold be B&A tobaccos coming up with a cigarette that cures you.!
 P.S. I think they gotta have a serious look at Gypsy campers with moonshine stills on the back of the bus too......oh where has all the copper gone...?

But all these studies fail to

But all these studies fail to account for what smokers save the country. By dying younger, they are reducing the burden of retired people on the country in pension costs. By going to hospital and dying of lung cancer, they are avoiding having to go into hospital for a whole variety of other diseases later on in life.
 
 

I don't smoke, but trying to

I don't smoke, but trying to suggest that smokers cost more money than someone who lives 'till 90 and spends a good amount of time in a rest home and in and out of hospital is rediculous.
I think the right thing to do is to raise the smoking age by one year every year - let the current smokers keep smoking if they choose, but stop young people taking it up.

Anyone know when Spain will

Anyone know when Spain will default...?

see post below.

see post below.

Spanish Sovereign defaults

Spanish Sovereign defaults throughout history
Pick one.
(1557, 1575, 1596, 1607, 1627, 1647, 1809, 1820, 1831, 1834, 1851, 1867, 1872, 1882, 1936-1939)

wow....and I dont think

wow....and I dont think Greece is much better?   Portugal?
regards

4 ) IKEA - a wonderful firm.

4 ) IKEA - a wonderful firm. The more diversity - the better - just so long as they are having to pay true market value for the land of course David - not the artificially punped up current prices !
 
You are doing a great job of the 10 at 10 compilations. Very interesting stuff indeed !

interesting site, thanks

interesting site, thanks

A good piece deserving the

A good piece deserving the top ten....best line,
"Total unregulated derivatives (real WMD) outstanding now exceed $700 trillion."
mind boggling.
regards

Great read.  Part 2 there as

Great read.  Part 2 there as well.  Interesting to see what he writes for part 3.

Ikea I know  a great many

Ikea
I know  a great many people shop at IKEA, They sell things vaguely cheaper than others in the market. They are also well know international tax dodgers of the first order.
Back in 06, The Economist had these not very nice things to say.
http://www.economist.com/node/6919139
By 2011
The new Ecomomist, Has downgraded it to 'Shrewd Tax Planning'. ( But that says more about the state of The Economist than that of IKEA)
http://www.economist.com/node/18229400
So they drive competitors who are less 'shrewd in their Tax Planning' out of the market. 
I dislike what they sell, and how they sell it but plenty of people like it and as choice is reduced through globalisation more people have to shop there.  I think I am right about choce actually reducing. 
 
 

Little boxes made of

Little boxes made of ticky-tacky,
Little boxes, little boxes,
Little boxes, all the same.
There's a green one and a pink one
And a blue one and a yellow one
And they're all made out of ticky-tacky
And they all look just the same.

2. And the people in the houses
All go to the university,
And they all get put in boxes,
Little boxes, all the same.
And there's doctors and there's lawyers
And business executives,
And they're all made out of ticky-tacky
And they all look just the same.
3. And they all play on the golf-course,
And drink their Martini dry,
And they all have pretty children,
And the children go to school.
And the children go to summer camp
And then to the university,
And they all get put in boxes
And they all come out the same.

4. And the boys go into business,
And marry, and raise a family,
And they all get put in boxes,
Little boxes, all the same.
There's a green one and a pink one
And a blue one and a yellow one
And they're all made out of ticky-tacky
 
guess it appeals to a certain narrow type. Of developer.

But what if said boxes are

But what if said boxes are well insulated, environmentally sustainable boxes? I am not sure on the regeneration rate of ticky-tacky plants or the embodied energy in ticky-tacky frame houses, but I suspect that they are also reasonably earthquake resistant. But yes, I guess good quality, efficient, affordable houses do appeal to a certain narrow type. Of people that care more about the sustainability of their house than it's individuality or aesthetics.

In the Red - well said. PDK's

In the Red - well said. PDK's sneering snobbery breaks my sensitive heart !

DR OLIVER MARC HARTWICH

DR OLIVER MARC HARTWICH MOVING TO NEW ZEALAND
 
It is particularly pleasing to learn today Dr Oliver Marc Hartwich of the CIS in Sydney will be moving to New Zealand shortly to head up NEW ZEALAND INITIATIVE - a joining together of what was formally the New Zealand Business Roundtable and the New Zealand Institute.
 
I have known Oliver since the time he had been with Policy Exchange in the United Kingdom.
 
He has that rare ability to articulate public policy and economic issues in an engaging way that is readily understood. The work he did with respect to urban planning while with Policy Exchange was truly outstanding.
 
Further information about Dr Oliver Marc Hartwich is available at his website -
 
http://www.oliver-marc-hartwich.com/
 
The following is a copy of the Release from New Zealand Initiative....
 
A Name to Start New Conversations
 
 
A new independent, non-partisan public policy think tank was launched today by Business Roundtable chair Roger Partridge and New Zealand Institute chair Tony Carter, following the merger of the two organisations on 1 April.
 
 
The new think tank has been named The New Zealand Initiative. It will build on the legacies of its two founding organisations and will focus on raising debate on public policy and contributing bold, rigorously-researched ideas to achieve a more prosperous future for New Zealand.
 
 
Roger Partridge and Tony Carter, who will co-chair the new organisation, also today announced the appointment of Dr Oliver Hartwich as executive director.
 
 
Dr Hartwich is a German-born economist and former chief economist of the highly-regarded British think tank Policy Exchange.  His work and publications have covered a wide range of public policy topics, including housing affordability, transport, local government, infrastructure, welfare reform and global economic issues.
 
 
Dr Hartwich is currently Research Fellow at the Centre for Independent Studies in Sydney, and writes, among other things, a weekly column for the Australian Business Spectator.  He has been a frequent guest commentator on television and radio programmes in Australia and the UK, and his articles have been published by all the major newspapers in Britain, Germany, Switzerland, Australia and New Zealand.
 
 
Tony Carter said the joint member steering group that managed the international search process was delighted with the appointment.
 
 
“Oliver will bring a fresh face and style to the role, and an international reputation as a very sound and intellectually rigorous thinker and a strong communicator. We are very fortunate to have secured someone of such calibre.”
 
 
Dr Hartwich will take up his position on 1 May.
 
 
The New Zealand Initiative is supported by a foundation membership of major company chief executives.
 
 
Roger Partridge said the process of bringing the two organisations together had been very cordial and straightforward. Both had recognised that the New Zealand market was not big enough for two independent CEO think tanks and could see that by joining forces they could be much more effective.
 
 
“We found we had a strong sense of common purpose. We want to help shape the landscape and start a national conversation on ideas that have intellectual integrity and rigour and the potential for profound, positive long-term impact on the well-being of New Zealand”, said Mr Partridge.
 
 
A web page about the New Zealand Initiative will go live on Wednesday evening at nzinitiative.org.nz.
 
 
ENDS....
 
 
The people involved at the NZBR and NZI in joining forces and appointing Dr Oliver Marc Hartwich to head up this new organisation New Zealand Initiative, are to be congratulated for their great efforts.
 
 
Hugh Pavletich
www.cantabriansunite.co.nz
www.PerformanceUrbanPlanning.org
 
 
 

I find that investigating

I find that investigating truths, is just a tad better than swallowing lobby-group spin.
 
Says a lot about you, Hughey.

PDK - you really do need to

PDK - you really do need to lift yourself out of this deep morass of Malthusian despair !
 
This is the New Zealand Business Roundtable and the New Zealand Institute getting "married". Really quite remarkable - as they had been oil and water.

What has a predilection for

What has a predilection for ascertaining the truth, got to do with despair?
 
What will be interesting, is to see what an outfit which spewed the Kerr spin for years, will make of this:
 
Global environmental trends and New Zealand’s future
28 Feb 2012 | 726 Kb PDF | Presentations
 
Be interesting to see what Hugh makes of it too.
 
But maybe these folk have always known, and have just cynically been keeping the average Joes in the dark while they are bled dry?

Great link cheers.  I'd say a

Great link cheers.  I'd say a bit of secondhand ciggy smoke will be the least of the concerns children under 5 will have once they grow up.

From #8 ''This is the sort of

From #8 ''This is the sort of activity you see in recessions,'' says BIS Shrapnel veteran Robert Mellor about home owners' lack of enthusiasm for forking-out on additions or alterations.

A case of if walks like a duck, quacks like a duck, looks like a duck, it is a duck?

#5 There are feelings you get

#5
There are feelings you get when you enter an Ikea store. The vertiginous experience of getting lost in their craftily designed labyrinth. The surprise of wandering into something you hadn’t intended to buy. The discomfiting almost-warmth of a fake apartment. The faintly reassuring sense that your children and your car are in someone else’s hands. Then the odd realization that you’re really inside a high-security structure on the distant edge of town.
 
 
What a fabulous piece of writing that evokes some of the feeling that good architecture and urban design embodies. The trouble is that this sort of thinking is completely absent from New Zealand urban development or design.
 
The challenge was laid down Hugh, Ikea have produced something in quite stark contrast you what you normally promote and clearly of higher quality.
 
 

You need to knock one of

You need to knock one of these xtranormal videos up Hugh!
http://www.youtube.com/watch?v=HftfvIGdeBo&feature=player_embedded