Bernard's Top 10: The ghost houses of Auckland; What's the point of the TPP if even dairy exporters don't see much benefit?; Even the IMF and OECD now want inequality addressed; Clarke and Dawe; John Oliver

Here's my Top 10 items from around the Internet over the last week or so. 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 reads are the reports from the IMF and OECD at #4.

1. Ghost houses - There's been a rash of articles recently on whether there's swathes of empty houses in Auckland because foreign buyers or flippers or real estate agents acting as flippers can't be bothered putting tenants in them any more.

Joanna Wane has a good go here a Metro at working out how many houses might be empty.

The 2013 Census found there were 33,000 empty on census night, although a third of those occupants were away that night, meaning over 20,000 might be empty. That's significant given the shortage in Auckland is widely touted at around 25,000 to 30,000.

Wane goes on to quote Keith Rankin, who has also written a blog about the issue.

Rankin says the “new rich” in China are only part of a global propensity for people to acquire multiple properties. He suspects many expat Kiwis and former residents who’ve maintained links with New Zealand are sitting on chunks of suburbia too. A former colleague, who’s returned to Kazakhstan, owns an apartment in Auckland that’s unoccupied except for a few weeks’ summer holiday most years. Another European academic takes regular sabbaticals here and offers short-term rentals on his Auckland house and basement granny flat, “but the property as a whole is empty much of the year” – just two examples of how some properties that aren’t principal residences are vacant for extended periods.

2. A haven for squatters? - Max Bania reports in this TVNZ piece on 'ghost houses' in Auckland. There's a couple of good anecdotes, but again no hard data on how many are empty because of foreign buying or speculative flippers.

The theory is there's plenty of opportunities for squatters. That's one way to get rents down, I suppose...

3. So what was the point of the TPP again? - Keith Woodford has written a nice summation of the ambivalence that greeted the Congressional failure of 'fast track' for the TPP this week.

He points out that the pot of white gold in North America that we all just assume is there is more assumed than actually there.

When the TPP was first touted back in 2005, our then Labour Government told us that it would bring big benefits from dairy access to the USA. Back then, this might have been a prospect, but the USA is now very competitive on international markets, and is itself a global exporter. Regardless of any free trade agreement, we won’t be exporting much dairy to the USA.

Currently, Canada produces about 8 billion litres of milk per annum of which nearly all is consumed within the country.  Take off the production shackles, and Canada could soon produce 20 billion litres, with much of that going to exports. In any case, it will be the Americans who will ship fresh milk across the border while the new Canadian industry gets itself organised, rather than New Zealand sending milk powder across the sea.

One of the big problems for New Zealand in our approach to the TPP is that our negotiators have got locked into a mind-set that has become irrelevant. Our bureaucrats and their political masters have failed to keep up with the reality that the dairy world has changed. Neither the US nor Canada is going to be an important destination for our milk.

4. Just in case you think it's just lefties saying this - The IMF and the OECD have both come out strongly in recent weeks saying that improving the incomes of poor and middle income groups actually improves economic growth. And not just improving incomes, but increasing the share of income going to the low to middle income groups.

Here's the OECD:

The gap between rich and poor keeps widening. Growth, if any, has disproportionally benefited higher income groups while lower income households have been left behind. This long-run increase in income inequality not only raises social and political concerns, but also economic ones. It tends to drag down GDP growth, due to the rising distance of the lower 40% from the rest of society. Lower income people have been prevented from realising their human capital potential, which is bad for the economy as a whole.

And here's the IMF:

Widening income inequality is the defining challenge of our time. In advanced economies, the gap between the rich and poor is at its highest level in decades. Inequality trends have been more mixed in emerging markets and developing countries (EMDCsf), with some countries experiencing declining inequality, but pervasive inequities in access to education, health care, and finance remain. Not surprisingly then, the extent of inequality, its drivers, and what to do about it have become some of the most hotly debated issues by policymakers and researchers alike.

Against this background, the objective of this paper is two-fold. First, we show why policymakers need to focus on the poor and the middle class. Earlier IMF work has shown that income inequality matters for growth and its sustainability. Our analysis suggests that the income distribution itself matters for growth as well. Specifically, if the income share of the top 20 percent (the rich) increases, then GDP growth actually declines over the medium term, suggesting that the benefits do not trickle down. In contrast, an increase in the income share of the bottom 20 percent (the poor) is associated with higher GDP growth. The poor and the middle class matter the most for growth via a number of interrelated economic, social, and political channels.

5. The 'Posh Test' - We tend not to think about 'class' as a factor in job appointments in New Zealand, but it's certainly a factor in other markets. I worked in Britain for a few years and saw it up close and personal.

Now a new survey has found it's still very real in the UK, the FT reports.

The UK’s most elite financial services and legal firms operate a “poshness test” that systematically locks talented working-class people out of high-flying jobs, an official report has found.

Recruiters use criteria skewed towards those from privileged backgrounds such as whether candidates have travelled extensively or display “polish” and confidence, the government-appointed Social Mobility and Child Poverty Commission reports on Monday.

Data collected for the inquiry showed that last year as many as 70 per cent of job offers were made to graduates who had been educated at a selective state or fee-paying school, although they made up only 4 per cent and 7 per cent of the population as a whole.

6. How elite students get elite jobs - This FT piece also looks at how Wall St investment banks, law firms and management consultancies recruit graduates, citing a study by sociologist and former management consultant Lauren Rivera:

Her study into the hiring practices of what she calls “elite professional services” companies finds that nearly all the recruits at places such Goldman Sachs, McKinsey or Cravath come from a handful of ultra-prestigious institutions. But her contention is deeper: that these EPS firms are employing a double-filter. She writes: “Firms define talent in a manner that excludes high-performing students from less privileged backgrounds.”

Rivera interviewed 32 students who were gunning for consulting, banking, and law jobs along with 120 interviewers at various firms who shared their thoughts on the basis of anonymity. Most interestingly, she embeds herself in the human resources team at a consulting firm (given the alias “Holt Halliday”) while it is recruiting at a top university.

The first cut in EPS interviewing is effectively completed four years in advance by school admissions committees who decide who is worthy of the Ivy League or a similar education. Without attending one of a short list of targeted schools it is virtually impossible to secure an EPS job. One of the lawyers conducting candidate interviews summed up the attitude as: “Number one people go to number one schools.”

Once the pool of applicants has been narrowed based on candidates’ college choice, the interview process tends to emphasise the fuzzy idea of “fit”. But a fit with what or whom? Rivera finds that the concept often reflects the implicit comfort that comes from meeting someone with a similar upbringing, hobbies and interests. That focus on “fit”, she contends, is what pushes down the recruitment rates for female applicants and anyone from non-wealthy and non-white backgrounds who has not done the “right” extracurricular activities.

7. Has it already scared the foreign buyers off? - Michael Coote wrote an interesting piece at the NBR over the weekend that cited an unnamed Auckland conveyancing solicitor as saying Chinese buyers of apartments off the plan were already pulling out because of fears the Government would disclose the details of their buying to Chinese Government.

She’s heard from Chinese investors, “who bought apartments off the plan who are now trying to sell as they don’t settle until after October and the developer’s solicitor is asking for proof of New Zealand residence and identity now.”

“This may be a bigger problem than I realised as I’m told that all the new apartment blocks that are selling off the plans have a heavy Chinese demand. What the Chinese are apparently concerned about, I’m told by a Chinese contact, is information sharing with China.”

“Once they have to provide IRD numbers and bank account details, then that can be given to China and apparently there’s a lot of naughty money sloshing around here. It’s the information sharing that’s worrying the ones I’ve spoken to.”

8. The rise of the Machines - NPR has done a great interactive graphic showing which jobs are most vulnerable in the Age of the Robots.

Bookkeepers, for example, have a 97.6% chance of their jobs being automated.

9. Totally light relief from John Oliver on America's torture programme...

10. Totally light relief from Clarke and Dawe on the tactics used in Australian politics.