The Dominion. WEDNESDAY, MAY 20, 1936. PRICE FIXATION

Dominion, Volume 29, Issue 199, 20 May 1936, Page 10

The Dominion. WEDNESDAY, MAY 20, 1936. PRICE FIXATION

In Parliament yesterday the Minister of Labour indicated that the Government was considering fixing prices. We are firmly of the opinion,” said Mr. Armstrong, ‘ that price fixation is just as necessary as wage fixation.” He. did not give reasons , but presumably the Government’s reasoning is that the wages, level should be based on a pre-determined standard of living, to maintain which it is hoped to establish a fixed relationship between wages and prices. When prices rise, wages rise; when prices.fall, wages fall. But there is always a lag between the two, both in the ascending and the descending movements. Prices are quicker, to respond to general economic conditions. Thus th« wage-earner is disadvantaged in a time of rising prices, but placed in a favoured position when prices are falling—unless, of course, wages be fixed without regard to general conditions. The employer of labour is similarly affected. When prices are climbing faster than wages, profits tend to increase; when prices are falling faster than wages, profits dwindle and. disappear. If it were possible to fix other costs as easily as it is to fix wages, then perhaps prices could be fixed, too, and the cost of living would remain constant. So would the standard of living, for all-round fixation would induce industrial paralysis, and the world would have to resign itself to the loss of all further progress. Mr. Armstrong’s dreams of living like an American millionaire would then go unrealised, and he would find himself economically becalmed on a rice-pudding standard. Whether it were better to be statutorily assured of rice pudding for dinner to-morrow and to-morrow and to-morrow to the last syllable of recorded time, or to be able to hope for occasional plum-duff and fruit salad, is a question which the Minister may not care to answer until he has consulted caucus. For immediate practical purposes, however, the relevant issue is not the relationship of the standard of living to prices, but the relationship of costs to prices. If costs go up and prices remain fixed, trade and industry will be hobbled, and the public will be denied the benefits which, in a free economy, attend the normal expansion of business enterprise. Attempts to fix prices have never been successful from the point of view of the larger community. They may have benefited a section, but the general interest has suffered through the disturbance of economic equilibrium. In hope of restoring the balance thus lost, Governments have tinkered here and there with the economic structure; but each piece of tinkering necessitates a little bit more somewhere else, and in the end nobody is satisfied.