Economic Councils

Press, Volume LXX, Issue 21225, 25 July 1934, Page 8

Economic Councils

Included in the political programme of the New Zealand Legion, which was announced yesterday, is a proposal for the establishment of an economic council. Most party divisions, the Legion argues, are on economic issues, so that one way of diminishing party strife is to refer all economic questions in the first instance to an economic council v/hi.h will report; upon them to Parliament. The argument is, of course, hopelessly wea::. issues 'vill not be debated and voted upon ey i a. in a less pariba:; spirit merely because they have b .en previously examined by ar.nV.ier body. Nevertheless, the Legion's proposal is worth examination even though the motives which prompt it are muddled and mistaken. Since the war all governments have felt the need for expert economic advice; and most of them have experimented with economic councils in one form or another. In

general, two types of council have been tried. The first, which is favoured by the Legion, is a sort of " parliament of industry," consisting of representatives of employers and employees in each industry and of the professions. Experience seems to show that these functional councils are successful only when they have full legislative powers. The Italian Council of Corporations is. in all industrial matters, the supreme legislative authority; and it has worked well. On the other hand, the National Economic Council established in Germany by the Weimar Constitution was a dismal failure. On paper, it had the right to be consultea on all economic legislation and to initiate legislation in the Reichstag on us own account. In practice, it became merely an advisory body, completely dominated by the government. The result was that the industrial groups rapidly lost interest in it and, when they had a case to present, went direct to the real source of power. By 1923 the National Economic Council had ceased to exist and was urvived by only a few of its committees. A similar fate has overtaken similar bodies in France and Czechoslovakia. The truth is, perhaps, that any representative body without effective cower inevitably loses the support and the interest of its constituents. The second type of economic council, of which the Economic Advisory Council to the British Government and possibly Mr Roosevelt's " brain trust" are examples, consists of men chosen because they are experts and nol because thev represent any economic interest. On the assumption that Pnrliiment is supreme and ought to be supreme, and that therefore an economic council cannot be vested with 1' ;!ative powers, this type of council is the most sui'able. And in New Zealand it is badly needed. Since the depression began the government has. at irregular intervals, called upon the professional economists of the country to extricate it from difficulties. Such a procedure is unfair and unwise. It is unfair because the economists, who are university teachers, are required to familiarise themselves at short notice with intricate details of government business. It is unwise because it means that the econo- " i t - arc usiinilv <-.llrd in t'-> rona<blunders which Ihey could easily have prevented. C'early. if economists must be consulted they shouL"! be keot in constant touch with government business. And the best way to keep them in touch with government husint'---; is to five th"m a permanent place in the governmental machine.