The Press TUESDAY, MARCH 1, 1938. Depressing Optimism

Press, Volume LXXIV, Issue 22339, 1 March 1938, Page 8

The Press TUESDAY, MARCH 1, 1938. Depressing Optimism

Nobody would like it if the Prime Minister were too stolid to rise to a sandwiches-and-lemonade occasion with the sky for a roof; but Mr Savage, at the Wairarapa Labour Party picnic on Saturday, made optimism tiresome and party triumph petty. “ A few years ago crowds gath- “ ered to demand more food and work, and they “ were given the charity that is as hard as a “ stone. This year the greatest assemblages all “ over the Dominion have been for pleasure, “ every form of holidaying having been a re- “ cord. This is the difference between having a “ Labour Government in power and a National “ Conservative Government in a panic.” If it is, Mr Savage will be at a loss to explain why Australia suffered severely under Mr Lang, Mr Scullin/Mr Theodore, and has put its distresses behind it under Mr Lyons and Mr Stevens. But Mr Savage* may be forgetful and boastful in his references to the economic change that has relieved the Dominion; he may be unfair and ungenerous in his references to “ the men “who wasted four years trying to turn the “ corner ” and to those who “ had helped most “ to create the economic mess which the Gov- “ ernment had had to clean up ”; and he will cut no worse figure than the average politician talking for applause at an informal party gathering. It is rather different, however, when .the Prime Minister turns to serious economic issues and pretends to declare a policy. He is no longer talking to a few hundred jolly picnickers, all wearing the same coloured ribbon in their hats; he is talking to the nation then, and no excuse will cover irresponsibility or ignorance.

Let there be no mistake or misunderstanding about it. Even if there is any recession overseas, Labour’s policy is being framed to avert the effects from being imposed on the people of this country. It is largely a money problem. And Mr Savage went bn to explain that the Labour Party would protect standards of living by maintaining wage rates and employment, by protecting the farmers’ income, and by “ no cutting of public works on the score of “economy.” The Prime Minister has no right to speak, on any occasion, as if the cardinal fact about this country’s economic structure were the fancy of fools or the lie of rogues. The cardinal fact is that New Zealand exports an immense volume of primary produce, with the price of which, oversea, varies the return in finished goods and services imported. If the price of wool, butter, cheese, and meat sinks relatively to the price of machinery, clothes, hardware, sea freight charges, and so on, New Zealand’s return must diminish. Effective demand will fall away, and the volume of internal trade will diminish with diminishing imports. It is the inflexible truth that, when a given volume of New Zealand’s exports is revalued and its equivalent in import volume is reduced accordingly, New Zealand’s standard of living falls. To “ avert the effects ” is impossible. This is not “ largely a money problem.” Nothing that manipulation of New Zealand currency can do affects a change in the rate at which New Zealand butter can buy English bicycles. If a cargo of New Zealand lamb will buy a return cargo of English china, one season, but in the next season will pay only for enough china to fill three holds out of four, obviously no management of the New Zealand pound will convert three cups and saucers into four. If Mr Sayage were content to claim that the effects of such an oversea price fall may be mitigated in New Zealand by monetary and other controls, he would net be making an absurd claim. The absurdity would be in his sketch of the Government’s method. For example, there would be “ no cuts ” in public works expenditure; but that will not do. The situation would demand an expansion of public works. It is amusing to see Mr Savage blenching at the thought of increasing expenditure which already reaches £17,000,000 a year, and leaving it undared and unexpressed. But when he claims that his party knows how to insulate New Zealand’s prosperity, no matter how oversea trade goes, he has sunk the Prime Minister in the political quack.