PITFALLS OF CONTROL

Evening Post, Issue 87, 9 October 1936, Page 8

PITFALLS OF CONTROL

It is surprising that the far-reach-ing proposals for control of industry, as contained in the Industrial Efficiency Bill, should come from a Labour Government, since, if we exclude Russia, the outstanding models for such regimentation are to - he found in countries with political systems to which Labour is unsympathetic. Germany has a licensing plan which permits even greater control than may emerge from the Industrial Efficiency Bill. Moreover, some of these plans are the product of the {economic nationalism policies which | have been largely responsible for the I depressed state of world trade. Control, with still more control, has | been forced upon industry. Before New Zealand follows a similar course alt the people affected—not only, a section of manufacturers—should be j allowed to study fully the effect of, the first step. As we have pointed; out previously the results of licensing1 applied to various branches of industry and commerce are not so completely satisfactory that the country can, without misgivings, authorise an extended application of. the system. The first and most probable effect of licensing is to build up a goodwill value attaching to original licences. This will be entirely different from the goodwill now attaching to an efficient business. The latter goodwill depends on efficiency and may be diminished and disappear if efficiency is reduced. Thus the public interest is safeguarded. But the goodwill attaching to. a licensed share in a limited business is.not equally subject to depreciation, because competition (the test of efficiency) is restricted.' The fact that a goodwill is built up and sustained by profits under such circumstances is a prima facie indication that the consuming public are-being charged too much for the service. The Government may intend not to restrict competition so far as to.pheck progress. It may think to exercise supervision over industry to maintain efficiency and regulate profits. But we do not think this fan be done without carrying supervision so far—in prices, wages, work conditions, profits, and all other matters —that it becomes control. Without this far-reaching control (which would be only a shoVt step away from" socialising industry) licensing could not be adopted without risk of both stagnation and excessive cost to the public. Does the manufacturers' approval, of which the Government nas spoken, include approval of this public safeguard or is it approval only of an opportunity to make close corporations of their respective branches of industry?