THE FALLACY OF HIGH COSTS

Dominion, Volume 31, Issue 22, 21 October 1937, Page 10

THE FALLACY OF HIGH COSTS

“It is just as well to admit,” said Mr. J. A. Lee in the House of Representatives on Tuesday, “that high costs form, part Ox the Government’s policy.”. What advantage can such d policy be to the individual citizen or to our industries? Consider the position ot the wage-earner or the salaried man whose income has actually been depreciated by the effect of increased costs on prices. Manufacturing costs, distributing costs, the costs of every phase of the handling of an article or a commodity from the producer to the consumer, in fact, have gone up. The result has been an all-round rise in prices. Thus what is gained in higher wages is lost in reduced purchasing power. This has led to demands for further wages increases, but as higher wages simply mean increased costs in industry, the result is very much as before. But there is the disconcerting further effect, only too plain to-day, that high costs are killing our local industnes which have to compete with imported goods. If with higher wages and shorter hours we could have had increased effort a better balance might have been possible. The Associated Chambers of Commerce, gravely concerned about the serious plight of many of our secondary industries,, have submitted three alternative means of restoring the position tariff adjustments against overseas imports, the licensing of imports, and reduction of costs. It prefers the third as being, the soundest. “We do not believe in low wages,” say the Associated Chambers in their statement published yesterday, “but we know quite well that to enable high wages to be paid, every penny of them must be earned —otherwise they cannot last, and the people are but living in a fool’s paradise. . . . The result of recent Labour legislation has been less work for more money, and that policy has brought New Zealand's industrial life to a crisis.” The Prime Minister declares that the present condition of certain industries is only a temporary phase, but against that we have, as above-quoted, the considered judgment of representative industrialists who should know what they are talking about. We cannot have a shorter working week and escape a drop in production unless the loss of time worked can be off-set by mechanical devices which will speed up output or extra effort by the operatives themselves. “Many manufacturers,” say the Associated Chambers, claim that since the enactment of recent Labour legislation their operatives have worked less willingly and intensively than before. Thus industry is working fewer hours a week and. at the same time accomplishing less work an hour.” All this means a tax on industry in addition to the heavy load of general taxation it is carrying. This treatment of New Zealand industry by the Socialist Government is in marked contrast to the attitude of the Leader of the Australian Labour Party, Mr. Curtin, who declared recently, as reported by Mr. F. W. Doidge in a news article published yesterday: “When a Government withdraws purchasing power through excessive taxation it is sterilising the resources of the nation ’ High costs simply arc an aggravation of taxation, and not a single member of the community can hope to escape from its effects. In Wellington we have dearer tramway transport, and to the suburbs dearer bus and ferry-boat transport. Food is dearer, clothes are dearer —everything is dearer. It is impossible to make them cheaper because the costs have been artificially fixed. These increases are equivalent to a reduction in wages and salaries. o . How can the Government justify such a policy? It has only to look around to see its effects. Mr.. Lee says that an increase in production should be reflected in an. increased standard of living. But if the costs of production are raised, and force tip prices, how is this new standard of living to be attained? Furthermore, on the evidence of many manufacturers, the effect of the 40-hour week has been to lessen production. Thus from two aspects, higher costs and lower production, the Government’s policy may have effects on the standard of living altogether different from what Mr. Lee so confidently anticipates.