UPSIDE DOWN

Evening Post, Volume CXXVII, Issue 117, 20 May 1939, Page 8

UPSIDE DOWN

BUILDING NEW ZEALAND

(To the Editor.)

Sir, —Your leading article in Wednesday's issue, in which you comment on the speech of Mr. Mulholland at the Farmers' Union Conference, should be read and reread by all citizens who have the ultimate welfare of this coun- j try at heart. It is pathetic to read many of the letters you publish, and to realise that these voice the. opinions of so many, who, seeing that at the present moment they have a few shillings more in. their purse at the begyining of the week, conclude that they must be better off than they were in previous years. It is unfortunate that so few have the ability to analyse the position of the country—this talk about sterling exchange depletion has no meaning whatever to 50 per cent, of the , population. They accept without question the statements .of our bland and ever-smiling Prime Minister that all is well, that "Labour has a plan," and cannot see that he is being forced by circumstances (not by "financial gangsters") to return to something like orthodoxy in his treatment of financial matters. A few months ago—before the General Election —he proclaimed that orthodox economy was only for the "haves," but that the "have-nots" would wax prosperous by unorthodox methods. Labour's plan of forcing hothouse industries in this small country is smashed in the beginning by Mr. Mulholland's analysis. Without our export industries we cannot buy many necessities of life; we cannot- purchase machinery or raw materials for our manufactures.

The whole conception of the Labour Government has been wrong from the beginning. Instead of reading Karl Marx, they should read and digest (Marx is indigestible, and, not 1 per cent, of those who read him can understand him) Adam Smith's "Wealth of Nations." He uses an illustration with regard to international trade that is worthy of memorising. Oranges, he says, can be grown in Scotland, in hothouses, with the expendiutre of sufficient capital and labour. |But with the same capital and the same amount of labour sufficient machinery or other products of industry can be produced to purchase a hundred oranges for every one that can be grown. Apply this- to New Zealand, which with a given capital and labour can produce farm' produce for export to purchase, say, two motor-cars for every one that can be produced in New Zealand. The Labour Government, in its desire to secure* power, began at the wrong end. Its proclamation of a new standard of living by what it called putting more purchasing power into the hands of the masses inverted the pyramid. It put the labourer and his purchasing power at the base of the pyramid and the farmer at the top, thus: —

o o o o o o farmer 000 o o manufacturer o o o professional man o o trader o working man

The structure was top-heavy, and is becoming more top-heavy every day. For a stable economy the pyramid should be reversed, thus:—

o working man o o trader o o o'" professional man 000 o o manufacturer 000000 farmer

Wages should not have been increased arbitrarily, but after an investigation into farmers' costs. Recently I asked an accountant who keeps the books of a large number of representative farmers whether he could give any idea of the increase in farmers' costs. The reply was that a few years ago it cost on an average six shillings and threepence to keep a sheep for a year; today the cost is nearly ten shillings. This must mean that farmf rs on land which in the past it just paid to cultivate cannot keep the carrying capacity of their land up; but gradually it will revert to weeds—the farmer will be living on his capital and will gradually be starved out. A recent arrival from East Africa, whose forbears were New Zealanders, came to study New Zealand methods of farming, but declared that on no account would he take up land in New Zealand since the Government seemed to be doing its best to make conditions impossible for the farmer. The guaranteed price, carried to Its logical conclusion, the guarantee of a fixed price in every industry or calling, will make New Zealand very like that village whose members existed by taking in each other's washing. Applied to some industries it guarantees those engaged in them something at the expense of the rest. When universally applied it means that Smith hands over money to Jones, and Jones hands back a similar amount to Smith, and neither is any better off. What is needed in this country is a series of simple articles to be published in every newspaper showing that orthodox economics is simply a statement of cause and effect in economic matters; that it is not an instrument of Capitalism, but merely a guide to those who think.—l am, etc..

NEW ZEALANDER.

Paraparaumu, May 17, 1939.