Monday's Top 10: Give war a chance; Greenpeace blames employee; India's 21 targets; organic farming's problem; Tesla's patent gamble; Mr Bean wants you to like higher rates; George Carlin; Dilbert, and more

Here's my edition of Top 10 links from around the Internet at 10:00 am today. We now have a Monday-Wednesday-Friday schedule for Top 10.

Bernard will be back with his version this Wednesday. We will have another guest posting on Friday.

As always, we welcome your additions in the comments below or via email to david.chaston@interest.co.nz.

See all previous Top 10s here.

1. The pitfalls of peace
Despite what you may read in today's 'paper', we live in very safe times.

We expect safety now. 'Unsafeness' is unacceptable.

Even 'near misses' are no longer acceptable.

The possibility of pain or anyone getting hurt is now even an issue on the sporting field.

In short, humans have become unbelievably soft in super-quick time. The blamer has the upper hand in most arguments.

This is true in how we set public policy.

There is now almost no appetite for change that involves any negative aspect. Conservatives have won.

Tyler Cowan thinks this is the reason that economic growth rates are stagnating; we can't bring ourselves to make decisions that would make most people better off in the intermediate and long run.

He usefully points out that 'wars' (hot or cold) encourage policy makers to make the necessary bold decisions for the 'common good'.

It is certainly a shame it has come to this. Without 'radical' it is just too easy for the clever to game the world as we find it. Conservatives (with a small 'c', whether they be social, environmental, financial/economic) have laid the ground for capitalism to wobble. Capitalism needs 'radical' and 'failures' to continuously renew and 'learn'. Count me a radical.

Counterintuitive though it may sound, the greater peacefulness of the world may make the attainment of higher rates of economic growth less urgent and thus less likely. This view does not claim that fighting wars improves economies, as of course the actual conflict brings death and destruction. The claim is also distinct from the Keynesian argument that preparing for war lifts government spending and puts people to work.

Rather, the very possibility of war focuses the attention of governments on getting some basic decisions right — whether investing in science or simply liberalizing the economy. Such focus ends up improving a nation’s longer-run prospects.

2. The chart tells the story
China may be in trouble, which is why last week, as we reported on 90 @ 9 their State Council, China’s cabinet, unveiled plans for even more infrastructure projects.

Here is the story in Quartz:

As you can see, infrastructure investment growth ramped up from 22.5% in April to 28% in May—the fastest rate in nine months.

That suggests China’s leaders are hitting the stimulus pedal hard—as does the fact that fiscal spending bounced last month too. May’s 25% jump in government spending (paywall) was a marked break from the 10% average monthly increase in the first four months of the year.

Where’s this money coming from? The government has twice lowered capital reserve requirements for banks in recent weeks, effectively pumping more money into the system (more on how that works here). And even though the central bank is reportedly worried about inflation (paywall), it seems to be resorting to pumping more money into the system, as evidenced by the unexpected uptick in May lending.

But an even bigger worry is real estate. Property investment growth fell to a 22-month low of 10.4% in May. Property sales fell nearly 11% last month, while housing starts shrank by around 8%. “The housing downturn is still playing out and has shown no sign of turning around,” wrote SocGen economist Wei Yao.

3. It's not just the banks
Greenpeace has its own currency trading failure, and just like the banks it is blaming a rogue rouge trader. More from the ABC:

Greenpeace has fired an employee who lost the environmental charity $5.47 million in a failed gamble on international currency markets.

Greenpeace communications director Mike Townsley said the unnamed employee "went above his authority" in agreeing the deal with a broker who was meant to mitigate currency losses for the charity.

Sounds familiar.

4. India's turn to shine
Here are the 21 priorities of the new Indian government of Narendra Modi. It's a remarkable list. There is always a big gap between government promises and government performance.

But this list of initiatives is remarkable for what it doesn’t emphasise. There is not much in the way of direct handouts, which has been the staple of previous Indian governments, and the basis of their relatively poor economic performance.

1. "Minimum government, maximum governance";
2. "basic infrastructure such as roads, shelter, power and drinking water" in rural areas;
3. helping farmers to farm better in order to raise yields;
4. pursuing irrigation projects;
5. more use of massively open online courses (MOOCs) for education with the most bang for the buck;
6. toilets for everyone;
7. garbage collection;
8. making sure girls receive an education and are protected from violence;
9. encouraging groups of states within India to cooperate on economic development;
10. combating corruption with “transparent systems and timebound delivery of government services;”
11. trying to eliminate “obsolete laws, regulations, administrative structures and practices;”
12. digitization of government records;
13. “Wi-Fi zones in critical public areas” and broad-band in every village;
14. social media as a way of getting feedback about how government is doing;
15. “rationalisation and simplification of the tax regime to make it non-adversarial and conducive to investment, enterprise and growth” including reducing taxation of saving and investment by shifting toward a value added tax;
16. reducing red tape to “enhance the ease of doing business;”
17. providing workers with “access to modern financial services;”
18. creating “dedicated freight corridors and industrial corridors” as attractive destinations for investment;
19. more airports and upgraded seaports;
20. 100 newly developed cities;
21. allowing more foreign investment in making military equipment to make this sector more efficient.

If India starts to grow "like China", the world will change even more than it is now. Urbanisation will be a major driver. China is currently 50% urbanised, but India only 30% (both 2011 data). Both countries will likely end up at more than 80%. There are huge opportunities for food producers like New Zealand.

Don't ignore the Modi change in India. It will be rocky - things in India usually are - but for the first time in a long time, real change is probably on the way.

5. 'Organic farming is unsustainable'
Sophistry - a subtle, tricky, superficially plausible, but generally fallacious argument - is what organic farming is accused of. It's a middle-class fad that fails any sensible analysis. It can't feed populations and it is unsustainable. That is what Henry Miller and Richard Cornett argue in Project Syndicate. And there are increasing studies to back them up. Here's one. And another. The drive by big supermarket chains to meet the 'demands' of ignorant shoppers is starting to be challenged in a scientific way.

The big accusation is that organic farming is wasteful of fresh water resources.

The organic movement’s claims about the sustainability of its methods are dubious. For example, a recent study found that the potential for groundwater contamination can be dramatically reduced if fertilizers are distributed through the irrigation system according to plant demand during the growing season; organic farming, however, depends on compost, the release of which is not matched to plant demand. Moreover, though composting receives good press as a “green” practice, it generates a significant amount of greenhouse gases (and is often a source of pathogenic bacteria in crops).

The study also found that “intensive organic agriculture relying on solid organic matter, such as composted manure that is mixed in to the soil prior to planting, resulted in significant down-leaching of nitrate” into groundwater. Increasing the nitrate levels in groundwater is hardly a hallmark of sustainability, especially with many of the world’s most fertile farming regions in the throes of drought.

A fundamental reason that organic food production is far less “sustainable” than many forms of conventional farming is that organic farms, though possibly well adapted for certain local environments on a small scale, produce far less food per unit of land and water. The low yields of organic agriculture – typically 20-50% below conventional agriculture – impose various stresses on farmland, especially on water consumption.

6. More than one country
Players and fans in Brazil for the World Cup will find themselves in not one country but many. As The Economist's interactive map shows, Brazilian states' economies, population and GDP per person vary wildly. The biggest state, São Paulo, has the population of Argentina and an economy the size of Turkey's. At the other end of the scale, Roraima has barely more people than Malta and the economic output of Mauritania. 

When Brazil last hosted the World Cup in 1950 half of its states were more destitute than present-day India. The poorest, Piauí and Maranhão, are now more like Jordan. But that is still a long way from the wealthiest state, around the capital, Brasília, which enjoys an Italian standard of living. For more on Brazilian states' GDP per person, see article.

7. 100 days to go
Every election since 2002 we have provided a detailed independent comparison of the policies of our political parties. It started out as a separate offering as policy.net.nz but in 2009 we incorporated it as part of this website.

We are doing this again for the 2014 election and you can find the first of these comparatives here. The major parties get tactical on the release dates of their key policies, so there are on-going updates. And voters don't really turn on to their final decision until well into the final month.

Other media will give you their 'interpretation', usually by their political writers. Our's is designed to be entirely neutral.

Although most parties produce extensive, detailed policy positions few read them because they are often quite long. Virtually no-one compares positions between parties. It is a big job, one we have hired Scott Palmer to process. By making it easier to compare, we hope more people will take the time to be interested in policy. Our summaries have the links to each party's policy so there are quick and easy ways to see the whole thing if one takes your fancy.

Our work only compares 'what they say'; you are on your own in the assessment of 'what they do'.

8. Mr Bean says be happy about rising rates
The deputy governor of the Bank of England Charlie Bean reckons it would be unhealthy to keep rates low "for too long". Governor Mark Carney surprised markets on Thursday when he said interest rates could increase sooner than they expected. More from Reuters:

“I would welcome us getting on to the path of normalisation, as a demonstration that the economy is healing. Frankly, having interest rates at an emergency level for a very long time is not a situation one wants to be in,” [Bean] said.

[He]reiterated the BoE's view that rate rises would be gradual when they came, and was upbeat about the economic outlook for Britain.

“I am optimistic. This is a recovery that has legs. We are starting to see better balance, with investment picking up. Manufacturers we talk to are pretty positive. There are still risks but there are plenty of reasons to be cheerful,” he said.

With the English about to raise their rates, and the Americans signaling they will do the same in 2015, the cost of capital will surely rise. Cheap money dives asset prices higher; hopefully more normally priced money will see those asset prices fall, or at least become more reasonable. The losses asset speculators incur will be an important 'lesson' about greed and hopefully start to rebalance much of the spike in inequality.

9. Giving it away for a 'cause'
One of the more interesting people in Silicon Valley did one of the more interesting things that the car industry has seen in a while. Elon Musk, the CEO of electric car maker Tesla, opened up all of his patents. “Tesla will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology,” he wrote in a blog post. Tesla’s competitors can now freely take advantage of its batteries, chargers, or sunroofs.

Musk’s move isn’t entirely unprecedented, either. In 1959, Volvo shared its seat-belt technology. In the nineteen seventies, General Motors shared innovations on catalytic converters. But what Musk is doing is broader: he’s opening up everything. It’s a risky move but a shrewd one. It’s one that wouldn’t make a lot of sense for a lot of companies. But it does for Tesla. The company’s stock has doubled in the past year, but the industry is struggling. Musk’s biggest electric-car-entrepreneur-frenemy, Shai Agassi, led his company, Better Place, into bankruptcy a year ago. It’s a good moment for the industry to get a jolt.

“Putting in long hours for a corporation is hard,” Musk said on Thursday during a conference call. “Putting in long hours for a cause is easy.” What exactly is that cause? It’s bringing clean cars to the people, of course. But it’s also, it seems now, showing the world a new way to think about innovation.

And that is what’s most provocative about Musk’s decision. In his post yesterday, Musk wrote, “When I started out with my first company, Zip2, I thought patents were a good thing and worked hard to obtain them. And maybe they were good long ago, but too often these days they serve merely to stifle progress, entrench the positions of giant corporations and enrich those in the legal profession, rather than the actual inventors.”

10. Today's quote
"A house is just a place to keep your stuff while you go out and get more stuff." - George Carlin