IS IT GENUINE?

Evening Post, Volume CXXIII, Issue 143, 18 June 1937, Page 12

IS IT GENUINE?

WORLD RECOVERY

INTERNATIONAL BASIS

NEEDED

1.L.0. DIRECTOR'S ANALYSE

(By Professor F. L. W. Wood!)

New Zealanders who are interested in politics and economics are '.having a busy time trying to grasp the principles and forecast the consequences of Labour's "New. Deal." As we wrestle with these problems, it is perhaps encouraging to know, that other countries throughout the world are faced with difficulties similar to ours, and that some other Governments are trying drastic experiments in State interference. These facts are brought out in a stimulating way by Mr. Harold Butler hi his annual report as Director of the International Labour Organisation. Mr. Butler's annual reports are indeed something of an institution. Year by year they give a concise survey of world economic conditions, often with some bold constructive criticism, and even with prophecy as to the future. For Mr. Butler does not allow himself to be unduly cramped by that professional caution which bids so many economists be obscure or dull in public pronouncements. He wields a vigorous pen, and the institution of which he is head has a tradition of energy and optirriism. This tradition was moulded by the volcanic energy of Albert Thomas, which has-been described for us by, Mr. Phelan's book, "Yes and Albert Thomas." The title is surprising: so is the book and the personality it describes. And those who have read the book will expect Mr. Butler (Thomas's collaborator and successor) to take economics by the forelock and face boldly the intricate problems of the modern world. This report justifies all expectations. MEASURING RECOVERY. First, Mr. Butler asks, has there been a genuine recovery in world affairs? The answer is Yes. Taking the world as a whole, industrial production has recovered steadily since the depth of the slump in 1932, and is now greater than in the boom year of 1929. Unemployment, though still greater than in 1929, is not much more, than a third of what it was in January, 1933. Again, if one considers the main countries individually, the conclusion is the same. Recovery has gone further in some countries than in others, but it is shared by almost all. The Same reassuring tendency is shown- in all the little graphs with, which Mr. Butler strikingly illustrates his argument. So far so good, but there is another question in all our minds, namely, what kind of a recovery has the world made, and how long is it likely to last? Here again Mr. Butler has some interesting remarks to make. As he points out, all through the slump we were looking forward to a return to "normality." By this most people meant a stability in the. affairs of men. They hoped for the return of the "good old days" when one could calculate and plan ahead, without the fear of sudden ruin through a collapse of prices, or devaluation of currency, or some other economic cataclysm. Now, it is possible that the 'Jgood old days" were not really so rosy as they appeared m. restrospect; but whether the desired stability ever existed or not, it certainly has not been achieved by our present. degree of recovery. In Mr. Butler's "phrase,: the economic machine had a serious breakdown, and has_at last been put in motion again. But though the machine is moving faster and faster, we are still alert, expectant, and not a little anxious. While very willing to take full advantage ot present conditions, we lack that serene confidence in the permanency of good times which everyone hoped would be the soothing result ol genuine recovery. INTERNATIONAL TRADE LAGS. There is good reason, says Mr. Butler, for a certain amount of nervousness, j For one thing, with the'example before our eyes of the terrible collapse of thel last few years, it is inevitable that one should fear further collapses in a system which is not radically different from that of 1929. Again, there are definite signs of weakness in the present situation. For example, international trade has recovered relatively little, if at all, for recovery has been mainly internal, but, says Mr. Butler, even the amount of recovery already achieved can not be secure until "buttressed on a firm international foundation." Mr. Butler even suggests that we have reached a* parting of the ways. We must now start building on an international basis, which will bring "untold benefit"; but if we fail.i to do this we will sink back into the, trough once more. In this connection .he hails as a thing full of promise the currency agreement of last September, when Britain, France, and U.S:A. "at least agreed on what they are trying to do," and one can imagine with what 'anxiety he will be following the recent negotiations between Britain and the United States. EFFECT OF RE-ARMAMENT. A further element of weakness in the present situation is the world-wide movement towards re-armament. Mr. Butler deplores this not only, because it is a sign of political tension, but also on purely economic grounds. In times of depression, he argues, an armaments programme may serve a useful economic purpose, or.at least "not greatly injure the national economy, provided that, as in the case of public works, a halt is called Jas soon as signs of better times appear." Bu. in good times he regards armaments expenditure as an unmixed evil for a nation's economy. He quotes an armament manufacturer's searching analysis of the manner in which labour, capital, and raw materials are diverted from useful purposes to ends which are not only destructive in the crude material sense, but which also permanently dislocate and weaken a nation's economic structure. Mr. Butler produces proof that these facts are realised by prominent statesmen who are engaged in re-arming their peoples. He adds'that "the general realisation of the economic dangers of extravagant re-armament programmes, coupled with the political inability to arrest them, is a true measure of the eclipse of reason in- international affairs." This eclipse of reason is perhaps the most serious among the causes for anxiety which Mr. Butler mentions. Yet the reader is left with tlie impression that in Mr. Butler's view the eclipse is not a total one, and that as the result of the past few years' experience, peoples and Governments now for the first time have knowledge which, if intelligently, applied, will mitigate "the next depression," or even j entirely prevent it.