SMOOTHING THE CURVES

Evening Post, Volume CXV, Issue 130, 5 June 1933, Page 8

SMOOTHING THE CURVES

A problem which is beginning to perplex people who can see an improvement in the economic position is: how may returning prosperity be controlled? We have been drawn to the depths and we do not want to shoot up to the top of the graph curve, with all the sensations of a rider on a switchback railway. To change the metaphor: after his twenty-one days' fast Gandhi began again on a slimming diet—orange juice and goat's milk. After our economic fast we also must take food moderately. There is a real danger of much of the . good of' recovery being lost by excess. Consideration of this point is prompted by recent references to housing shortages. In particular a paragraph reprinted on Friday from the "Taranaki Daily News" referred to the possibility of a shortage in New Plymouth, even if econbmicconditions did riot improve soon. Of course, the marked decline in house-building is due in great measure to a reduced demand through house-sharing. When the economic position improves this will become less and I less, and the demand for houses will rise accordingly. If the houses are not available, building activity will increase with a rush. Hence there is the prospective problem of spreading the improvement. Cannot this possible future boom be made to contribute something to ease the present slump? • The problem is not one for the building trade alone. It applies to many services and commodities forwhich demand may be expected to revive as soon as people have a little more money to spend. One method of correction which at once suggests itself is to mortgage the future demand by subsidising construction now—to borrow and trust to repay when the demand makes a market. This is already being done in a limited way by the Unemployment Board's building subsidy. This gives an inducement to build now by making the cost less. It is doubtful if prudence would recommend more extensive measures on the same lines, remembering the false prosperity of State loan expansion which deferred the depression for a while, but made it much worse when it came. Anything which tends to bring a repetition of that painful experience should be avoided. There is, however, another measure which should be carefully considered. People who haVe the means and do not lack enterprise would possibly be willing to invest in houses if they were assured that irksome restrictions would not rob them of a return. Under the present law rent restriction does not apply to new houses, or to letting contracts made since May 10, 1932; But investors have been once bit and they are twice shy. Cannot some assurance be given theni that they will not be the target for one-sided control? Repeal of the present law is not immediately feasible; but the nearer we can attain to renewed freedom of contract the better it will be. Those who protest that such freedom will involve hardship to tenants should [remember that eventually the tenant —or any user of goods or servicesmust pay the price of artificial interference with 'the supplier. It is to the buyer's advantage that suppliers should not be discouraged from providing what he requires.