'Law of the jungle’ in economics

Press, 1 September 1977, Page 10

' Law of the jungle’ in economics

PA Wellington A law of the jungle economic philosophy has been initiated with the removal of controls on the prices of labour and money, says the Manufacturers* Federation in an economic survey.

“The imminent upheave! in wage demands wall spill into higher unemployment as the strong gain at the expense of the weak,’’ says the federation in the survey. “Market Intelligence Report No. 3.”

“For two years the recession has appeared as a mirage: now’ it is real. “The central objective of Government economic policy appears to be balance rather than growth. Economic balance should be a means to an end, and not an end in itself.

“Despite the fact that our economic aspirations far exceed our present capacity to produce and export. New Zealanders will not tolerate a zero growth philosophy. "Those who are mobile

will leave.” says the report. The federation says New Zealand must adopt a growth strategy, and requires a platform of rapid industrialisation as the platform for growth.

Industrialisation, however, must be accompanied by firmer control over imports and greater use of indigenous resources — especially skills and produce from the land.

“implicit in such a strategy is the belief that, in general, New Zealanders do respond positively to realistic productivity incentives.

“Higher productivity requires an urgent restructuring of the taxation system to reward skill and effort and enable manufacturers to replace and expand investment in productive assests.

,r We can no longer afford to continue as an agrarian economy.”

The , federation says when price changes and

population growth are taken into account, retail trade is now at the level of 1972 — about 10 per cent down on the peak levels of 1974. Consumers are in a buyers’ market — if they have the cash. The federation also says that manufacturers are having to fight hard to maintain sales volumes. In less that two years building activity has been cut by a third, and for the first time since the second world war New Zealand is a net exporter of people to the United Kingdom. Capital is drying up and interest rates are soaring, so companies are urged to look into new marketing strategies and forget old methods, it says. ‘‘Focus on what you do well and get things done ir . half the time,” it says.

Of the 1977 Budget, the federation notes “the failure to encourage investment, particularly equity investment, in the manufacturing sector."