The economy

Press, 6 May 1983, Page 12

The economy

Sir,—When I supported the wage-price freeze soon after it began, I said that my final judgment on the Government’s policy would depend on whether the Government had the guts to raise taxes again when that became desirable. Kiwi Savings Stock, taking money out of circulation at 15 per cent interest, may be justifiable until the Budget but will compound the internal deficit if it is continued after that. According to the Statis-

tics Department, the richest fifth are now 14 per cent richer as a result of tax cuts. That 14 per cent should be taken away in the forthcoming Budget. If it is not we will know that the Government’s main aim is to stay in power at whatever cost to the future welfare of the country. Battles against inflation . cannot be won in the long term by governments which create money with one hand and remove it at 15 per cent interest with the other.—Yours, etc., MARK D. SADLER. May 3, 1983.

Sir,—l observe in the letters of many of your correspondents a general concern that the Government is becoming too involved with the Operation of the economy. This is deemed to be undesirable, yet each administration that gets elected seems to feel that it has a mandate to maintain and expand this particular role of the State. Although our politicians pay lip service to the “problem” of increasing State interference, their actions seem to indicate that the alternative policy and course of action is even more undesirable. If one examines the history of capitalist societies one finds without exception an increasing State economic involvement. Perhaps the continued smooth functioning of capitalism is predicated upon an increasing involvement of the State in the economy, and our politicians, maybe unconsciously, realise this. Many of them would vigorously deny this, of course, but their actions speak louder than their words in my book. — Yours, etc.,

PAUL DOUGLAS. May 3, 1983.