Here's my edition of Top 10 links from around the Internet today.
We 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 email@example.com.
1. Irrigation progress
Last week, the Rangitata South Irrigation Scheme was finally at capacity and is supplying water to 16,000 hectares of South Canterbury land.
It is just one of the giant Canterbury irrigation schemes and has cost $115 million to develop.
The first water flowed into the scheme in November 2013 and is only now at capacity.
Storing water is a key strategy to enhance the output of the Canterbury Plains, and many projects are either completed or under development.
They will be central and crucial to the Governments target of doubling New Zealand's farming exports.
The Arundel-based scheme will harvest floodwater from the Rangitata when flows exceed 110 cubic metres per second (cumecs), and it will store up to 16.5 million cubic metres of water in a series of seven storage ponds.
The scheme will be capable of delivering water to irrigate up to 16,000 hectares of land between the Rangitata and Orari rivers, currently involving 33 water users and their farms.
Rooney and his team have also collaborated with the Rangitata Diversion Race scheme to reach a reciprocal agreement which allows the two schemes to share their consented water and further increase the reliability of both schemes.
Water abstraction, filling and emptying of the storage ponds and water supply to the race network will be operated by a state-of-the art automated, wireless telemetry control system.
It includes 13 hydraulic gates, and around 80 kilometres of open races in four main legs.
2. Good price supply!
Giant Chinese ecommerce website Alibaba is grappling with its size. You can buy anything on there, and all its prices are quoted "delivered". But as it is about to be floated on the NYSE it is having to deal with some interesting issues. More from the FT:
Gallium, a silvery liquid at room temperature, is one of the earth’s rarest metals, used in semiconductors, microwave circuits and other advanced electronics.
It also has one other singular application: according to a recent advertisement for the metal on Alibaba, the Chinese ecommerce website: “Gallium stabilises the plutonium.”
Due to its unique bonding properties, gallium is used in the plutonium cores of nuclear bombs, which another advertisement on the same site made clear: “Gallium, used in nuclear weapons.”
Alibaba.com is an ecommerce website belonging to Alibaba Group Holding, the ecommerce company that is to list in New York later this month in what is likely to be the biggest internet initial public offering of all time. But as Alibaba heads to the big time, with an IPO that could value the company at $162bn, the business is having to confront headaches endemic in its model, which involves policing an estimated 11m third-party sellers that use its websites.
The gallium advertisements were placed earlier this year by Litop Non Ferrous Metals, a company based in Guangzhou. At some point in the past four months, both ads appear to have been removed and replaced with less threatening versions. The latest iteration reads: “Gallium: Good price supply!”
3. A 15 year aberration
I have grown to accept that the developing world is catching up with the developed world in terms of wealth and incomes. After all Japan, South Korea and Taiwan, not to mention Hong Kong and Singapore have caught up already (and all have in fact passed New Zealand). China, Brazil, Russia, Mexico, Indonesia et al are on their way along the same path. Or so I thought. But it is not so, says the Economist. The notion of catching up is something that did happen over the past 15 years or so, but the momentum seems to have died out.
They remind us how long it actually took for Japan, South Korea and Taiwan to shift their status, and how important new civil society rules and robust institutions are to that process to take hold.
The past 15 years have changed perceptions regarding just what is possible. But they also deceived people into thinking broad convergence is the natural way of things. It looks like the world is now being reminded that catching up is hard to do, they say. Those last 15 years were an aberration for many aspiring counties.
While the manufacturing sectors of developing economies can quite often come to match the labour productivity of rich-world economies, the distance towards rich-world levels of wealth that an economy can travel simply by developing its manufacturing has been falling. With manufacturing as a proportion of the total economy peaking earlier and at a lower level, emerging economies can now find their catch-up more likely to stall at disappointingly low levels of income.
There could be ways forward for those willing to take them. A new round of global trade liberalisation focused on services could touch off a new wave of globalisation. As industrial employment declines in importance around the world, development increasingly means shifting workers from agriculture into urban service occupations. Expanding the range of services easily traded across borders could enable more developing-economy workers to participate in sectors with rising levels of productivity and wages. But trade in services remains highly restricted.
4. More education = more income
Access to education continues to expand worldwide but the socio-economic divisions between tertiary-educated adults and the rest of society are growing. Governments must do more to ensure that everyone has the same opportunity to a good education early in life, according to a new OECD report.
Basically it shows that more education equals higher incomes. And given the clarity of the data it seems astounding that more people don't go after the benefits. Many do, and many more are however.
In New Zealand a tertiary qualification (that is, any qualification after high school) will get you an income +30% to +50% more than not having it. Those without out it don't seem to be slipping behind, except for women.
The differences are larger in the US than NZ. But perhaps that just indicates that those without such qualifications are paid so much less.
5. Farmers 1, critics 0
Fonterra is reporting that its production will be up 2% in the coming season, and its already ahead 5% so far. That will be an all-time record. Ditto Australia. The US Department of Agriculture is predicting that this year's harvests of both corn and soybeans in the US will obliterate previous records for both yield per acre and overall production. Record production for crops and animals are being reported in many other countries as well, and prices are falling.
The world is awash in food. Farmers are producing more than we can consume. Malthus' time seems a long way off yet. If fact, his predictions seemed closer in the mid 20 century than they do now.
It's a clear-cut win for modern farming practices, even new techniques like genetically modified crops and animals.
6. The next step
OK, we have talked about 3D printing for a while in this column, but eyes glaze over because it's sort of unrelated to everyday products we use. There are obvious applications in industry for spare parts, and exotic applications like whole house frames. But now comes a very real application: shoes. It turns out Nike is using the technology for customised footwear for athletes, and customised footwear for you (yes, you) could be at your local footwear store soon. And then perhaps you could do it at home.
OLS Systems, the maker of custom, corrective orthotics, is using 3D shoe printing to make orthotic shoes that alleviate a patient’s foot pain and improve comfort. In the process, they are taking the orthotic scanning and prescription process from archaic and sterile to tech-savvy and fashionable. And because the shoes are custom made, patients experience a high level of engagement with the product, while podiatrists enjoy a higher conversion rate at the point-of-sale.
7. This is what we compete with
As the supply of oil grows faster than the demand for it, Americans are paying less for it at the pump. In fact, they are now paying about the same as what they paid in early 2012. The high prices here just reflect the taxes we impose on ourselves, rather than the cost of the product itself. The benefits of fracking are showing up in their cost of living.
Due to Stockholm’s infamously strict housing market, its citizens are having an incredibly hard time finding an apartment.
There are two main factors underlying this phenomenon. First, the city wait list for a new apartment is now 15 years on average, or 7.7 years in the Greater Stockholm region. Second, Stockholmers live alone. Very alone. In fact, Sweden has the lowest number of persons per household in the OECD, with just 1.99 persons per household, compared to the OECD average of 2.63. And in Stockholm, that numbers is 2.1, almost the lowest for any capital in the world, while the average household size comes in at 41 sq m, on par with other countries.
Stockholm is today one of the few capitals in the world where you cannot simply move to and hope to find a rental. You either have to wait in Stockholm’s official housing line, which has about half a million people ahead of you, or you can wait in one of the co-op lines, which own 28% of rental properties. Yet, if you look to Sweden’s largest co-op, there are exactly zero apartments available in Greater Stockholm.
9. Getting the rules right
An economist, Amit Tyagi, argues that risk weightings should be higher, not lower, during times of housing booms. Makes sense to me. Letting banks set them based on their perception of current (or recent past experience) risk is madness. That's what the RBNZ allows, however.
Moreover, while risk weight is an important macro-prudential lever, it must be used in conjunction with regulators’ other tools. These include mortgage eligibility criteria, such as loan-to-value and loan-to-income ratios, and dynamic provisioning (that is increasing banks’ mandatory loan-loss reserves during housing booms). It is important to calibrate the impact of risk weights on housing-market cycles relative to other measures, not least because excessive and overlapping intervention could itself fuel dangerous cycles.
The reliance of modern banking regulation on risk weighting is nowhere more important than in the mortgage market. If regulators get it wrong, the entire edifice could collapse – yet again.
10. They get through ...
"Dogs have no money. Isn't that amazing? They're broke their entire lives. But they get through. You know why dogs have no money? No pockets." - Jerry Seinfeld