MAN-MADE

Evening Post, Volume CXXVII, Issue 108, 10 May 1939, Page 10

MAN-MADE

A NEW DEPRESSION

LOSS IN REAL WAGE'S

(To the Editor.) /

Sir, —My reading and my e/xperience tell me that, just as Nature* abhors a vacuum, so economics abhor an unbalanced position. But w"/iat are .the factors that enter into the balance? In my view they are capital, labour, wages, costs, prices, production, enterprise, good government, and last but not least public confidence. If we could have all these elements or factors in correct balance, th ere would be a perfect economic situation and New Zealand would be thes Paradise of the Pacific —that Paradise that was proclaimed from the hustings last October as the objective of the Labour Party.

The economic ba'jiance is being constantly disturbed kjy the human factor, and just as constantly are the economic laws worki?ag to restore the balance. For success in this direction all the elements, or factors must be flexible and capable of adjustment in the balancing. For one factor to be rigid obstructs, the balancing process, but as economics abhor an unbalanced position, the rigidity or inflexibility of one factor m/ust be overcome by some other means,.

In replyir<g to a deputation of small retailers, for whom Mr. T. O. Bishop was the spokesman, the Prime Minister, Mr.. Sfuvage, said he would not consider any alternative involving a reduction ot wages. The small retailers had poirifced out that import restrictions were crippling their business, and they weare asked to suggest an alternative scheme for building up London funds. I have read many statements of the_ Prime Minister during the past three or four years, and he appears to be obsessed with some fantastic theory aborrt. wages. He confounds money wagjfes with real wages and assumes that/ by raising money wages the standard of living is raised. This view does not appear to be shared by the Minister of Finance, Mr. Nash, for, at a welcome home function tendered him in 1936 by the Wellington Chamber of Commerce, he stated that the standard of living of the people of /New Zealand depended upon their trade with the United Kingdom.

The Prime Minister talks money wages because that is what the workers appreciate. In every civilised country the greatest financiers and .the heaviest spenders are the housewives. Men earn the money and .women have the responsibility of spending. During the current ' week . some thousands of pounds will have been spent by the housewives of Wellington on consumer goods, and it is they who could tell the Prime Minister all about real wages. The Government has raised money wages and reduced real wages, for with the rise in wages there has followed a rise- in costs; this has resulted in the rise in prices of consumer goods, and the housewife finds that she cannot make a pound note stretch as far as it used to; say, in 1936, and therefore the family must go short of many things; in other words, the standard of living of the family is feduced. And the position is becoming worse through import restrictions. .■■;.,.

The export income has fallen by about 11 per cent., a large enough decline to-'Call for adjustments to restore a balanced position. This cannot be done because one of the factors — wages—cannot be touched* to. >. bring about that balance, and so there is economic trouble? I am told by many that a depression is coming. I do not agree. The depression has already started, and will increase in intensity week by week, and month by'month, until something yields or breaks, for economics will persist in restoring the balance.

The Forbes-Coates Government had to contend with the most severe economic depression, known to the country. That depression originated in New York in October, 1929, and spread with amazing rapidity throughout the civilised world. It was severe in this Dominion, but not so severe as In other countries. What I wish to stress here is that the great depression was an invasion that could not be resisted. Now we are facing another depression; perhaps it will not "be as severe as the last, but the annoying .and yet humiliating fact is that this new depression is made in New Zealand for New Zealanders by a Labour Government with a plan pointing towards an economic paradise. Was this in the mandate of October^ 1938?— I am, etc., ■ H. J, KEARNEY.