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Who wants to be a billionaire?

Mai Chen and the multiplier | What's happened to climate change? | Tweeting with the Kims.

Fri, 08 Mar 2013

Last week this column coined the Mai Chen Effect to display the link between rapid growth of employment and house prices in Auckland and Wellington, an idea prompted by economist Shamubeel Eaqub.

This week that effect was further confirmed by events on the stock exchange, which created a new billion-dollar company, reached an all-time high and saw its first listing of what looks like a busy year.

For once the bulls were trampling the bears who have inhabited the media and given most of their coverage to opposition claims the country is going down the gurgler because of government policies.

These elements, naturally, also oppose the selldowns of state-owned power stations, which have been widely welcomed by the public, with more than 100,000 potential investors registering their interest.

This nearly double those who registered for the last big government sale, Auckland International Airport back in 1998.

But more attention should be paid to another stock exchange milestone, Rod Drury’s Xero going past the $1 billion mark after less than five years as a listed company.

As NXZ chief executive Tim Bennett observed at the launch of Snakk Media, these are the companies of the future and have global prospects. It’s also these companies that will in future dictate the nature of jobs and employment patterns.

The theoretical backing for this comes from an American economist, Enrico Moretti, in his book The New Geography of Jobs.

Mai Chen and the multiplier
In an interview on Amazon, Moretti outlines some of his findings that back up the Mai Chen Effect of mobile and high earners.

The jobs are being created by innovative companies and entrepreneurs while they are declining in most areas of manufacturing.

“…attracting an internet company or a biotech company to a city results in significant job gains for workers in the local service sector – occupations like waiters, carpenters, doctors and teachers.

“My research shows that for each new high tech job in a city, five additional jobs are created outside high tech in that city. In essence, from the point of view of a city, a high-tech job is much more than a job.”

Apple Computer, for example, employs 13,000 workers directly at its base in Cupertino, California, but also generates 70,000 additional jobs outside.

Moretti says while most sectors of the economy have a multiplier effect, the innovation sector generates three times fore jobs than traditional manufacturing. 

He goes on to explain how human capital is the biggest predictor of a city’s success:

"A large number of highly educated workers in a city is associated with more creativity and a better ability to invent new ways of working. Economic research shows that cities with many college[university]-educated workers tend to develop an innovation-based economy; and this brings even more well-educated workers there, further reinforcing their edge.

“It is a tipping point dynamic. By contrast, cities with few well-educated workers miss out on the growth of high tech, and this further reduces their appeal. These self-reinforcing dynamics magnify the differences between winners and losers in an innovation-driven economy.”

But the greater connectivity of the world through globalisation doesn’t mean people will live and work in remote places.

“Our best ideas still reflect the daily, unpredictable stimuli that we receive from the people we come across and our immediate social environment. Most of our crucial interactions are still face-to-face, and most of what we learn that is valuable comes from the people we know, not from Wikipedia.

“At the same time that goods and information travel at faster and faster speeds to all corners of the globe, we are witnessing an inverse gravitational pull toward certain key urban centres.”

What’s happened to climate change?
The weather is never far from the news with droughts in the northern hemisphere last summer being repeated here.

Of course, this brings both good and bad. The summer has been great for city folk and businesses, wine growers, tourists and others who like long, hot summers.

Not so good for dairy and pastoral farmers who need grass for livestock.

But you don’t hear much these days about politically-driven climate change, largely because extreme weather events are much more interesting.

But thanks to Lawrence Solomon, of Canadian anti-nuclear researcher Energy Probe and National Post columnist, we have an update on latest developments: 

"Arctic ice has made a comeback, advancing so rapidly that the previous decade saw less ice at this time of the year than exists today. And previously balmy Arctic temperatures just nose-dived, according to the Danish Meteorological Institute,

"Antarctica: There the sea ice extent started growing early this year, and the ice cover remains stubbornly above average. All told, the global sea ice – including both polar caps – now exceeds the average recorded since 1979, when satellites began their measurements."

Solomon goes on to quote leading American meteorologist Roger A Pielke:

“Flooding has not increased over the past century, nor have landfalling hurricanes. Remarkably, the US is currently experiencing the longest-ever recorded period with no strikes of a Category 3 or stronger hurricane.

“Over the past six decades, tornado damage has declined after accounting for development that has put more property into harm’s way.”

Similar conclusions apply to typhoons in China, bushfires in Australia and windstorms in Europe. In fact, solar power and wind energy in Europe have failed to generate much electricity due to the lack of sun and wind.

Tweeting with the Kims
The enigmatic “hermit kingdom” of North Korea is obvious a believer in the Hollywood dictum that any publicity is better than none.

While one arm of the government is busy on the diplomatic front as the Security Council imposes sanctions over nuclear weapons, another is welcoming US basketball star Dennis Rodman and rewriting the sport's scoring rules

And as has been mentioned previously in this column, North Korea also commits the worst crimes against humanity of any country.

But it is rapidly losing its reputation as the world’s most cut-off place. The latest move is to open up its mobile telephone network to foreigners. Tweets and Instagram photos from foreign journalists are popping up on the web for the first time.

The BBC host of Boston Calling, Marco Werman, has interviewed one of these journalists, Jean H Lee, the Associated Press bureau head in Korea.

In it, which has been transcribed by BBC affiliate station PRI, she describes how the bureau gathers and sends news out of Pyongyang.

Ms Lee’s Twitter page is here while the latest on the  UN and nuclear front is here, with new sanctions being approved and North Korea responding by cancelling a hotline and a non-aggression pact with South Korea.

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Who wants to be a billionaire?