THE VICIOUS CIRCLE

Evening Post, Volume CX, Issue 35, 9 August 1930, Page 13

THE VICIOUS CIRCLE

HOW IT IS WORKING

The Welfare League writes:— Great Britain sconis to be in the grip of a vicious circle, since she instituted her ni'ithod of unemployment relief, which necessitated high taxation, which in its turn not only takes much needed money . from industry and makes its development more difficult, but also adds to the cost of the article produced; this added cost again handicaps her in tho world's markets, and prevents her from securing orders and the loss of orders throws a lot of won out of work, who go on relief, and so wo come round to the starting point. These difficulties are intensified by the tendency to try and base wages and hours of work on the cost of living rather than on production, a practice which results in greater cost of the article produced—which means that England works fewer hours per week, pays far higher wages and enormously higher taxes for social services than any of her Euorpoan competitors. Tho result of this vicious eirelo was recently shown when Germany secured orders from' the Indian Railways, amounting to £1^077,500. The German price was £898,000, or 16 2-3 per. cent, below tho British —this is explained by the fact the German wages are 20 per cent, lower than the British. But tho significant feature of this case, and one which shows the working of the "vicious circle," is the fact that on the ono hand German firms obtained tho orders at £179,500 below the British prices, and on tho other hand the loss of those orders cost the Unemployment Fund .£184,000 for the men who would have been working had England secured the orders. If these orders had come to England it is stated that at least £348,000 would have gone out in wages, and the Unemployment Fund been saved £184,000.

Taking the above figures as correct, and our authority for them seems to be undoubted, it would seem that had some provision been made which would permit the "Unemployment Fund to be used by way of subsidy, a grant of £180,000 to the firms concerned would havo'enabled them to secure the orders in question, and British workers would have been able to.earn £.348,000 in wa^'es —-an economic gain to the community. • There is a lesson to us-in this, for wo are going slowly but surely towards the same dead end. Taxation is becoming a dangerous burden to industry, the artificial fixation of wages regardless of production is increasing our cost of production above the world's prices, and it is now proposed to introduce unemployment benefits where no work is done. Surely some scheme could bo dovised by which such waste, as above, could be avoided? We urge our leaders to endeavour to find a means by which money available for unemployment relief could be used as a subsidy to enable our producers to reduce their cost of production, and thus be able to meet world competition. If the money has to be spent, such a schemo would at least ensure some return-for the benefit of the community as a whole.