Friday's Top 10 with NZ Mint: NZ's amazing property machine; Bo Xilai's many concubines; The global cancer of tax-avoiding multi-nationals; How increasing inequality reduces growth; Clarke and Dawe; Dilbert

Here's my Top 10 links from around the Internet at 4.30 pm today in association with NZ Mint.

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

See all previous Top 10s here.

My must read article today #1 on how increased inequality slows economic growth.

1. Income inequality and growth - The is the core issue of our age.

More and more of the income and wealth share has gravitated to the very top over the last two decades, globally and here in New Zealand.

Now much of that wealth is being hoarded in bank accounts and government bonds as investors age and are understandably nervous about investing in the current environment.

But one of the reasons for weak economic growth is much of the middle and low income groups have seen their real incomes drop in the last two decades and they are now awash in debt after those two decades of spending more than they earned by borrowing.

Any economy will struggle to thrive when the bulk of its population are so financially stretched that they won't consume.

It's a vicious cycle that has to be addressed by redistributing income and getting rid of the debt weighing down the middle to lower income groups.

Here's the New York Times with a comprehensive look at income inequality and how it constrains economic growth:

Income inequality has soared to the highest levels since the Great Depression, and the recession has done little to reverse the trend, with the top 1 percent of earners taking 93 percent of the income gains in the first full year of the recovery.

The yawning gap between the haves and the have-nots — and the political questions that gap has raised about the plight of the middle class — has given rise to anti-Wall Street sentiment and animated the presidential campaign. Now, a growing body of economic research suggests that it might mean lower levels of economic growth and slower job creation in the years ahead, as well.

“Growth becomes more fragile” in countries with high levels of inequality like the United States, said Jonathan D. Ostry of the International Monetary Fund, whose research suggests that the widening disparity since the 1980s might shorten the nation’s economic expansions by as much as a third.

Reducing inequality and bolstering growth, in the long run, might be “two sides of the same coin,” research published last year by the I.M.F. concluded.

2. We've done so much better -  For now. Alistair Helm over at Properazzi does a nice job of charting the relative performances of New Zealand's housing market with those of America, Britain and Australia.

What is so clear from this comparable chart is the extent to which the NZ property market since 2007 has staged such a strong recovery, far outpacing the UK and the US to see prices now heading back to the pre-crash levels whilst both the UK and the US have experienced stagnant pricing.

3. Bo Xilai's many concubines - It turns out disgraced Chinese leader-in-waiting Bo Xilai, who faces a show trial in coming months, had many mistresses, as is the fashion with very wealthy men in China.

Here's the Globe and Mail:

For China’s business and political elite, keeping multiple mistresses – and doing little, if anything, to hide it – is as much a part of the package as the bling watches, the flashy sports cars and the offspring attending expensive Western universities.

China’s top sexologist calls it the “emperor complex” and says powerful Chinese men seek to accumulate women the same way they desire money and power. “I think it mainly comes form the Chinese tradition of having concubines. Monogamy has only been around for 60 years. But in history, there was nothing wrong with [having mistresses] at all,” said Li Yinhe of the state-run Chinese Academy of Social Sciences. “Now successful men take mistresses – I would even call it a subculture – as a way of showing off their success.”

When Liu Zhijun, the former Railways Minister, was ousted last year in another corruption scandal, it was reported in state news media that he had been seeing 18 women on the side. Another famously corrupt official in coastal Fujian province once forced his 22 mistresses to publicly compete against each other for his affections.

4. Let's target Google - The global search engine doesn't pay much tax anywhere, including in Britain and New Zealand. It's about time we had boycotts of this company until it paid its fair share of tax around the world. It's not the only one either. Facebook and Apple don't pay their fair share either.

Here's The Guardian on the topic du jour in Britain where the Daily Mail has called for a boycott of fellow tax avoider Starbucks.

Clearly it's time for consumers to take a stand on the great tax avoidance issue – all those companies with vast turnovers and large profits who pay minimal tax in the UK. But the thought of trying to write a survey of what we should boycott is tricky. Because Google is there at the top of the list of alleged tax avoiders. Google paid just £6m in tax in 2011 on a UK turnover of £2.6bn. That fact was, of course, brought to you with the help of Google.

Facebook – £238,000 in corporation tax in 2011 on UK revenue of £175m, according to analysts– is easier. I have no idea what Facebook is or what it is for. So boycotted. Starbucks, the current cause celebre, is also relatively easily bypassed: Costa, here I come. But what about Amazon, which pays its tax in Luxembourg and in 2010 paid just €5.5m on a whopping turnover of €7.5bn? I really like Amazon for its speed and cheapness. Presumably it is cheap in part because it pays its taxes in Luxembourg, and I'm complicit in the deal. Paying double for books and CDs would be a big sacrifice, but maybe it has to be done.

Apple, which reduces its UK tax bill by basing its European headquarters in Ireland, has figured less prominently than the other four US multinationals in tax campaigners' sights, but it has been mentioned in dispatches, with some tax experts suggesting that while its accounts show UK turnover of just over £1bn, a more realistic figure is £6.7bn. I am a little disturbed to be typing this on an Apple computer.

5. Here's the bill - Euro exits could cost the world US$22 trillion, says a new study cited in BusinessInsider.

6. They're lucky - Back in the olden days bankers were beheaded. Bob Diamond from Barclays got lucky, compared to the 1300s...I'm certainly not suggesting this as a solution...maybe we could cut off their bonuses instead.

The team found one parallel to the appearance of Mr Diamond before the Treasury Select Committee when financier Richard Lyons appeared before the Good Parliament of 1376. He was accused of abusing his position to profit from public funds and was subsequently imprisoned in the Tower of London.

However, once the public outcry had died down, Lyons was released from the Tower and a form of poll tax was imposed on everyone rather than a tax levied on goods. The Peasants’ Revolt ensued in 1381 with government ministers executed by rebels and Lyons was dragged from his house and beheaded in the street.

7. No reserve currency - Victor Shih and Susan Shirk explain at Foreign Policy why the Renminbi is nowhere near taking over from the US dollar as a reserve currency.

There are three degrees of RMB internationalization. First, China and its major trading partners transact in RMB; this has been happening since 2009. The next step is widespread third-party usage of the RMB in financial and trade transactions. In other words, only when parties undertaking transactions unrelated to China regularly use the RMB will it truly be an international currency. For the RMB to take the final step and become a global reserve currency, central banks around the world would have to maintain sizable holdings of RMB to insure against their own financial risks. In other words, the RMB would become a so-called safe-haven currency the way that the dollar and the yen are today.

China's limited financial system and its lackluster global reputation -- not U.S. fears of China's rise -- are preventing the RMB from becoming a global reserve currency. The demand is there. Because U.S.-dollar financial markets seized up during the 2008-2009 global financial crisis, businesses in Asia and other emerging economies desire an alternative trade settlement and reserve currency. The U.S. Federal Reserve stimulated recovery in the United States through "quantitative easing" -- increasing the money supply by buying mortgage-backed securities and Treasury bonds, which lowered the value of these holdings to foreigners like the Chinese, weakened the U.S. dollar, and stimulated capital outflows to emerging economies that increased inflation. China and other holders of U.S. debt viewed the Fed's actions as a sign that it would always put its domestic-policy objectives ahead of global monetary and financial stability.

An initial surge of interest in Renminbi deals has faded this year,.

The level of RMB deposits in Hong Kong, a more reliable sign of offshore willingness to adopt the RMB, has declined since late last year. Since both Chinese and foreign investors bank in the economically liberal Hong Kong, RMB deposits there are a bellwether of general confidence in the RMB. Enlarging the pool of RMB circulating outside mainland China, a prerequisite for it becoming a global currency, thus might prove more challenging than first imagined, especially as global economic woes reduce demand for Chinese exports and put downward pressure on the RMB.

So will the RMB ever truly go global? That depends on whether Chinese decision-makers are willing to accept the risks involved in allowing capital to flow more freely in and out of mainland China. One major risk of capital-account liberalization, as this process is called, is that it could engender financial instability. The upside is that capital-account liberalization in developing countries tends to lead to higher economic growth, lower inflation, and higher returns on equity within two to three years after the reform. In the short term, however, it can cause volatility in capital flows, which can lead to deflation or inflation and even economic crises. Chinese leaders might be worried that if they make it easier to take assets out of China, more and more wealthy Chinese will hedge their bets by moving their children's education, their home purchasing, and their savings abroad. Because wealth is very concentrated in China, such a stampede for the exits could drain a substantial amount of deposits from China's banking system.

8. Supply chain problems - The Economist has a useful discussion here about how the diplomatic spat between China and Japan over those silly islands might (or might not) affect global supply chains dependent on Japanese technology being manufactured in Chinese factories.

Stunned as both Japanese producers and retailers are by the outbursts, there may be a sting in the tail for China. In contrast to 2005, the previous time anti-Japanese riots flared, China is not the only fast-growing, well-populated, low-cost market around. Back then, Japanese firms hedged their China risk with a “China-plus-one” strategy, implying that they would find an extra Asian supply hub, such as Thailand. Now, that has grown into a wider “China-plus” strategy, because their options these days have widened to include Indonesia, Myanmar, Vietnam, Cambodia, the Philippines and India.

As China’s wages rise and its economy slows, analysts say the risk that multinational supply chains may find alternative locations is something the government may want to think about the next time it lets vandals loose in the name of nationalism.

9. Inside Foxconn - James Fallows reports for The Atlantic from inside a Foxconn factory just north of Hong Kong that makes iPhones and iPads. It has 220,000 workers.

And suicide nets.

10. Totally Clarke and Dawe on Economic History on the European debt crisis