Here's my Top 10 links from around the Internet at midday today.
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 is #7 on some academic research showing increases in minimum wages don't actually hurt jobs that much.
1. 56.1% - That's the percentage of Spain's youth that are now unemployed.
It's worth thinking about what that means over the long term, and more broadly for the likes of New Zealand.
Luckily for New Zealand, we're not dependent on either Spain or Europe for our economic future.
If youth unemployment in Australia or China was anywhere near that level we'd be in deep trouble.
But at some point the political unsustainability of the depression in Southern Europe is going to blow up again in the European (and therefore Global) financial system.
With close to six million Spaniards out of work, unemployment is so entrenched that there was no political reaction to the latest figures, neither from government nor the opposition. Indeed, mentioning the economy at all has become virtually taboo across the political spectrum. Meanwhile, Spaniards and recent immigrants are deserting the country in search of work, with 500,000 leaving in 2012, 60,000 of them Spanish nationals, most of them to Latin America and Europe.
The total number of unemployed across the eurozone is 19.2 million, 15,000 fewer than in June. Across the EU the figure was 26.7 million, down 33,000 from June. However, it has remained at a record rate of 12.1% for the fourth months. The overall rate across the eurozone is 11%, half a percentage point up on last year.
2. Firms of Endearment - In covering the Living Wage debate yesterday, I got to thinking about the Warehouse's move to pay the Living Wage.
The inspiration may have been a growing number of companies trying to look beyond just pursuing short term profits.
This book called 'Firms of Endearmnent' describes how companies such as Whole Foods and Costco are bucking the trend to make more profits over the longer term. It turns out it's better for them in the long run to pay their workers more, to pay their CEOs (relatively) less and to care about their customers and suppliers as much as they care about shareholders. HT Snodgrass Throg in yesterday's thread.
3. China's corruption crackdown - China's new leader Xi Jingping is now consolidating his power and shuffling aside any rivals. He's also cracking down on all sorts of corruption. Bloomberg reports the latest is causing a real sensation in China.
By pursuing Jiang, the leadership is widening graft investigations after Xi warned that corruption threatened the Communist Party’s six-decade hold on power. Focusing on the state-owned companies Jiang oversaw and China’s oil industry may give Xi, who became president in March, and Premier Li Keqiang greater impetus to push through changes at a key party economic policy meeting in November, said Willy Wo-Lap Lam of the Chinese University of Hong Kong.
“Xi probably emerges more powerful than ever,” Lam, an adjunct professor of history, said by telephone. “Xi and Li will subject these huge conglomerates to more intense scrutiny, -- this is a way to impose some sort of discipline.”
Jiang Jiemin , the latest in a string of top mainland officials detained for corruption investigations, was last year questioned by party officials in relation to a Ferrari crash in Beijing, though the cases appear unrelated. The accident claimed the life of the only son of Ling Jihua , a top aide to then party general secretary and president Hu Jintao .
Sources had told the Post that the probe over Jiang focused on a large sum of money - several tens of millions of yuan - that was transferred from state-owned China National Petroleum Corp (CNPC) to the families of two women injured in the single-vehicle accident.
The driver killed in the accident was Ling's son, Ling Gu. He lost control of a black Ferrari on Beijing's North Fourth Ring Road in the early hours of March 18 last year and slammed into a wall. He was found dead at the scene, half-naked. Two young women - one naked and the other semi-clothed - who were with him in the car were seriously injured.
5. Singapore's latest 'speed limit' - Last week Singapore further tightened its rules around property ownership and home lending to try to slow its property market. The new rules included a block on new residents buying existing state owned flats (HDB flats) and a reduction in the portion of a salary used for mortgage repayments to 30% from 35%. Yet somehow, any attempts to block access to non-residential purchases of existing homes in New Zealand is somehow xenophobic and left wing.
It would be hard to accuse Singapore of being either (or unsuccessful for that matter...)
Aimed at ensuring greater financial prudence and to discourage speculation, the maximum tenure for HDB housing loans has been reduced from 30 years to 25 years. Borrowers are now only allowed to use 30 percent of their monthly income to service their HDB loan. Previously the cap was set at 35 percent. The Monetary Authority of Singapore (MAS) has also introduced similar measures for HDB borrowers.
Singapore permanent residents (PRs) have also been targeted by measures which will see newly-minted PRs having to wait three years before they are able to purchase a resale HDB property. Previously, they were able to buy a resale HDB property immediately after obtaining their PR status.
6. Baby-boomer NIMBYs win again - Len Brown yesterday capitulated to the whinging NIMBYs of Auckland and dropped clauses in the unitary plan designed to increase density of housing, which is the one way younger people will be able to afford housing anywhere near the centre of town.
Here's the NZHerald with the story:
Officers have argued strongly against plans to scrap 'no density limits' in the zone, which covers 40 per cent of residential Auckland, on the grounds it will provide for better design and housing choice.
The Auckland Plan committee put the issue off twice last week after councillor Ann Hartley sought to scrap the 'no density limit' and have a minimum density control of one house her 250sq m on sites greater than 1200sq m with a 20m street frontage.
This resulted in another compromise being put forward by Mr Brown for a 200sq m minimum house sites greater than 1200sq m, and no density limits on sites greater than 2500sq m.
The reason why the only things being built are huge standalone houses is because the density controls mean a minimum amount of land needs to be set aside for each dwelling, leading to effectively a minimum size of house in order for the developer to make a profit and therefore a minimum sale price that’s often well north of $500,000.
The frustrating thing about density rules is that the urban form above does not necessarily result in more greenspace or less building bulk or a more spacious urban environment. Those aesthetic outcomes are controlled through the use of regulations like height, site coverage, yard controls and the like.
Sadly, yesterday the Council effectively banned the provision of affordable housing in the widespread Mixed Housing Suburban zone by requiring a density controls to be applied for all developments in that zone. Supposedly they did it to protect the character of the suburbs, but as explained above, density rules don’t affect the bulk, scale and location of development.
The employment effect of the minimum wage is one of the most studied topics in all of economics. This report examines the most recent wave of this research – roughly since 2000 – to determine the best current estimates of the impact of increases in the minimum wage on the employment prospects of low-wage workers.
The weight of that evidence points to little or no employment response to modest increases in the minimum wage. The report reviews evidence on eleven possible adjustments to minimum-wage increases that may help to explain why the measured employment effects are so consistently small.
The strongest evidence suggests that the most important channels of adjustment are: reductions in labor turnover; improvements in organizational efficiency; reductions in wages of higher earners ("wage compression"); and small price increases. Given the relatively small cost to employers of modest increases in the minimum wage, these adjustment mechanisms appear to be more than sufficient to avoid employment losses, even for employers with a large share of low-wage workers.
8. Not so bad - SRA's Rodney Dickens has written a useful 'Raving' pointing out Japan's real per-capita GDP actually did slightly better than America over the last decade. Japan's real problem is a population decline and an ageing population.
9. Winners and losers - Tyler Cowen writes at the New York Times about who will be the winners and losers in a new world where machines replace many people in work.
He makes the good point that political radicals may be among the losers, in large part because of the ageing of the population.
A mechanized, computer-driven, highly unequal future is sometimes viewed as a recipe for rebellion. But the Edward J. Snowden saga shows this won’t be easy, as tech is at least as much an instrument for surveillance and control as it is for revolt.
We’re also aging rapidly, and that tends to make society more peaceful, less violent and less extreme in all directions. It was the 1960s, a peak era for manufacturing jobs and the American middle class, that brought so much social turmoil and unrest.
10. Totally The Daily Show on the departure of John Oliver. I enjoyed his short temporary reign.
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