THE ECONOMIC QUESTION

Northern Advocate, 6 February 1936, Page 3

THE ECONOMIC QUESTION

(To the Editor)

Sir. —Your correspondent “Reform” says we have tried reducing costs as a remedy for the depression. If he is a farmer he knows that costs have not been reduced. Wages were slightly reduced, but the price of the produce of the wage-earners remained the same. Interest was reduced, but sales tax and other taxes offset any reduction of costs. Again, I claim that the miserable a'ttempt to reduce costs did not drive our wives and children into the sheds, nor did it drive our people to buy Japanese goods in preference to either New Zealannd or British goods. If that argument holds good, then we may also say it was'the high prices which ruled at the time that drove us to buy American cars, separators. etc, while the Americans had tariffs high enough to prevent our butter from entering their country. “Reform” says Japan has the lowest costs in the world and the lowest standard of living, and in your issue of January 10th, he says New Zealand has the lowest standard of living. He surely cannot have it both ways, and he has previously compared standards with the Asiatic. Yes, I did say Japan was the most progressive nation in the world, because of her low costs, but “Reform” cannot scoi’e off that, even if he thinks he can. If he would ask

me in a nice way to say something silly so that he could score off it, I may consider doing so. No, I would not reduce our own standard of living to that of Japan in an endeavour to compete on an overcrowded market, nor is it necessary for Japan’s standard of life to be so low. If she exchanged her surplus production for the necessaries of life, instead of on military and naval armaments, her standard of life would be very much higher. “Reform” substantiates my argument when he says their conditions are improving rapidly. Standards are not raised in a day. but Japan’s standards are rising almost as fast as her trade, despite “Reform’s” crude remark that the Japanese live on rice eaten three times a day. He says that Japan introduced a new monetary system, whereby their payouts are not based on overseas prices, simply to increase wages. Seeing that overseas prices are higher than her own, if she went off overseas prices, she would reduce wages. How crude “Reform’s” economics are! No, I would not give Britain cheap food at our expense, nor would I give the rest of this country cheap food at our expense if I could help it. Unfortunately, I can’t help it. I “Reform” probably does not know | that the dairy farmers’ produce sales in New Zealand are based on overseas prices. At the same time, I am aware that it is only right to buy from those who buy from us. “Reform’s” idea of withdrawing from the British market is just what our trade rivals are waiting for. The British market is glutted because Britain was paying ! more than the value of dairy produce 1 for some time, which drew production i from many countries that would not ! otherwise have developed their dairy j industries as they did. e Despite the } fact that these countries are not fav- | cured with such good climatic condi - tions as we, they can, and are, living as well as we are (“Reform” says better). Should we withdraw from the ! market, the market would gain its equilibrium, and prices would then be in accordance with values. We are in a position to carry on (or rather, should be. if internal costs were reduced), and, providing wise counsels prevail in New Zealand, the British market should prove to be a source of profit to the farmers of New Zealand again, if mass production is the cause of other countries underselling us, one would think our secondary industries would adopt that method. The primary industries do, and given a fair go, | could undersell any country in the world, and take our production to their I doorstep. Since mass production is j only modern mechanised production, i why cannot our secondary industries ! adopt that method of production? The i capital is at hand, the labour is at j hand. What, then, is preventing them? 1 It is not necessary to undersell British i goods to urge the people of this couni try to buy New Zealand goods. If (New Zealand goods retailed at ap- • proximately the same price as British I goods can be landed on the shores of j New Zealand, there would be no need Ito hawk New Zealand goods, and I j claim the freight is enough protection. _ | Regarding “Reform’s” policy of infla-

tion, or social credit, I would remind him that we have tried it in New Zealand in a small way, and the result is very disheartening. We find it encourages men to drift to cities. There are thousands out of work, and at the same time farmers cannot get labour. Why do not the Russians adopt this inflationary policy if it is a cure for depression? They have a workers’ government, but they prefer to borrow ■ money at 7 per cent. Before I say good-night to ’‘Reform,” I would like to give him a mathematical problem; Find what percentage of the necessi- ! ties of life the primary industries supj ply to this cpuntry, directly and indir- | ectly; take the figures supplied by the j Manufacturers’ Association as the percentage supplied by the secondary in- ! dustries; add both percentages, and I think you will agree with me that it is a difficult problem to make both percentages equal 100 per cent.—l am, etc., J. CROMPTON. i Ruakaka.