Wednesday's Top 10 with NZ Mint: Why has productivity growth broken from employment growth?; The letter U that cost US$200,000; Tim Shadbolt and the (desperate) fake housewife; A video to warm Bernard's heart; Dilbert

Here's my Top 10 links from around the Internet at 1 pm am in association with NZ Mint.

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

See all previous Top 10s here.

My must read is #1. Made me think about automation.

1. The Great Decoupling - MIT professors Erik Brynjolfsson and Andrew McAfee write in this New York Times Op-Ed about the great decoupling between productivity growth and employment growth in America after the 2000s.

They focus on how companies are increasingly using computers instead of people.

I'm not sure how this would be addressed.

And we've only just started the mobile digital revolution.

How many tellers and shop assistants and accounting clerks will lose their jobs in the coming decades?

They also have a great line: "Offshoring is only the waystation to automation."

We are creating jobs, but not enough of them. The employment-to-population ratio, or percentage of working-age people that have work, dropped over 5 points during the Great Recession, and has improved only half a point in the three and a half years since it ended [pdf].

As the jaws of the snake opened, wages suffered even more than job growth. Adjusted for inflation, the average U.S. household now has lower income than it did in 1997. Wages as a share of G.D.P. are now at an all-time low, even as corporate profits are at an all-time high. The implicit bargain that gave workers a steady share of the productivity gains has unraveled.

What’s going on? Why have job volumes and wages become decoupled from the rest of the train of economic progress? There are several explanations, including tax and policy changes and the effects of globalization and off-shoring. We agree that these matter but want to stress another driver of the “Great Decoupling” — the changing nature of technological progress.

As digital devices like computers and robots get more capable thanks to Moore’s Law (the proposition that the number of transistors on a semiconductor can be inexpensively doubled about every two years), they can do more of the work that people used to do. Digital labor, in short, substitutes for human labor. This happens first with more routine tasks, which is a big part of the reason why less-educated workers have seen their wages fall the most as we moved deeper into the computer age.

2. The next wave - The New York Times reports the Too Big To Fail banks in America face a wave of lawsuits that could cost another US$300 billion.

Estimates of potential costs from these cases vary widely, but some in the banking industry fear they could reach $300 billion if the institutions lose all of the litigation. Depending on the final price tag, the costs could lower profits and slow the economic recovery by weakening the banks’ ability to lend just as the housing market is showing signs of life.

The banks are battling on three fronts: with prosecutors who accuse them of fraud, with regulators who claim that they duped investors into buying bad mortgage securities, and with investors seeking to force them to buy back the soured loans.

3. How bizarre - Environment Southland's Chairwoman Ali Timms last week pretended to be a out of work Bluff worker's wife and rang up a live television chat show in Invercargill to harangue Tim Shadbolt.

Timms appears to have tried to disguise her voice during the phone-in, by blocking her nose, and almost gave the game away at the start of her call when the receptionist asked for the phone number she was calling from for the show's records. Timms read out all the correct numbers on her cellphone except the final digit.

When The Times confronted Timms yesterday she said she had done it as a "bit of a practical joke, that was all". "I could tell Tim knew who it was because he called me by my name, so end of story."

When asked if she had two children and a partner who had been laid off at Tiwai, she reiterated it had been a practical joke and a "few laughs".

4. Fantastic global resources flow chart - This interactive graphic from the FT showing where commodities such as copper and coal flow is great fun to play with.

Note to self: must get out more...

Here's the FT story on the threat of global resource nationalism to go with it.

Resource nationalism is making commodity prices more volatile and threatens global security, warns Chatham House, the think-tank, in a report.

Based on new data concerning commodity trade flows, the report highlights how international politics have come to dominate resource markets.  It says “every country for itself” resource grabs mean that markets do not respond properly to higher prices, threatening trade wars, environmental degradation and famine in poorer countries unless the world finds new ways to govern resources.

5. Art bubble - Here's Felix Salmon at Reuters with a report on the crazy, crazy art market. A letter U from a large inkjet printer recently sold for US$200,000. This is what the explosion of the wealth of the 0.1% is doing.

The real forces driving the seven- and eight-figure prices in the contemporary market are not art-historical importance, so much as what Gopnik characterizes as the souk-like atmosphere surrounding both fairs and auction houses — the places where most big-ticket contemporary art is now sold, and places where the act of spending money is more important than the art it’s being spent on. Maneker is absolutely right about this: “Of course it’s not about the art,” he writes. “An auction is an event about the buyers, not the art.” And exactly the same thing can be said about an event like Art Basel Miami Beach — an event where Kelly Crow’s curtain-raiser can include this photo caption:

New York artist Wade Guyton earned a reputation for using a large inkjet printer to create images of the letter ‘U.’

Those “U” panels now sell for upwards of $200,000 apiece, brand new, and one early X painting recently sold for $782,500.

6. What America's stockbrokers do when few are watching - Here's Thomas Brown from Bankstocks.com with a report on how a small broker's managers worked to rip off their shareholders as well as their customers.

By dint of its hard-headed negotiating, KBW’s board was able to get Stifel to raise its offer by $20.8 million. But of that, only $3.8 million will go to shareholders, while the rest—the $17 million boost in the retention pool—will go to KBW employees. Of course! I believe the company has been screwing its commission-paying customers for years, so it’s only natural that the firm’s management is going out with a bang by apparently screwing its shareholders, too.

I’m having trouble coming up with quite as stark an example of self-dealing by the management of a public company. Under what fiduciary laws of the universe, for example, should KBW’s board even care about the size of Stifel’s retention pool at all? Employee retention is Stifel’s problem, not KBW’s. The first, last and only concern KBW’s board should have had in negotiating was maximizing value for KBW shareholders. This the board manifestly did not do. Actually, it did the opposite. The board agreed to a deal that included an extra $57 million in cash that Stifel was willing to part with that was funneled away from shareholders, to employees. This is outrageous!

7. Totally a heart warming video about landfill scavengers building their own instruments and forming their own orchestra using rubbish from the tip.

Landfill Harmonic film teaser from Landfill Harmonic on Vimeo.

8. Where'd the money go - Here's a chart courtesy of Paul Krugman on the wage share of the US economy. Sigh.

If you want to understand what’s happening to income distribution in the 21st century economy, you need to stop talking so much about skills, and start talking much more about profits and who owns the capital.

9. China's war on corruption - Here's the New Yorker with a good read, which may explain why so many rich Chinese officials are trying to get their money out of China...

And where is it going?

10. Totally Jon Stewart on American football and guns. I have no idea why.