PROFESSOR TOCKER CROSS-EXAMINED

Northern Advocate, 23 October 1936, Page 6

PROFESSOR TOCKER CROSS-EXAMINED

BASIC WAGE

WHY HE CHANGED HIS VIEWS [Per Press Association.—Covyriyht.l WELLINGTON, This Day. The Arbitration Court, presided over by Mr Justice Page, continued the basic wage inquiry yesterday, Professor A. H. Tocker, professor of economics at Canterbury University College, being cross-examined by Mr J. Roberts.

Dealing with the raising of the exchange rate. New Zealand on London, Mr Roberts asked Professor Tocker whether it was not a fact that some six years ago he had been opposed to such action. Professor Tocker said that in the early stages of the depression he did not want to see any alteration. It was a matter that might become necessary if the emergency became sufficiently serious. Mr Roberts: Let me refresh your memory. In 1930, you remember, we had a heated debate on the subject. You were opposed to What you called the devaluation of money? Professor Tocker: Quite possible. Mr Roberts: Later, I notice you were in full agreement? *-

Change Justified.

Professor Tocker said He thought that the events which occurred in the intervening period were justification for his change of viewpoint, because conditions had changed entirely, v.

Mr Roberts: So, therefore, the econamic prophecies of all the economists throughout the world have been false since 1928? •• -"j y T ' 'Professor Tocker; One of the first rules of economics is to avoid making prophecies. ;;;■ Mr Roberts: But you made a prophecy in 1928.

Professor Tocker said he had suggested then that conditions were such that they were likely to lead to more serious trouble. No responsible person'’knowing'the,'facts ' of industry could accept for one minute the figure the workers suggested as the basic wage. \. Unbiassed Report. Questioned about his report, Professor Tocker said he had prepared it at the request of Mr T O. Bishop, who had asked him if he would, as an economist, prepare an impartial and unbiassed report on the main economic features of the country over the past 10 years.. He had prepared this, as he would have done had he been asked by Mr Roberts. Mr Roberts asked whether, if the workers had sought his assistance, Professor Tocker would have presented a report in the same way. Professor Tocker said he was not going to bias himself either way for the worker or anyone else. In his report he had expressed his opinion.; Mr. Roberts: Because you are paid for it. %■ ..

Mr Bishop: You came here to give evidence at my invitation?

Professor Tocker: Yes. It was

Mr Bishop: You prepared your paper by yourself without any suggestions from me?

Obvious Suggestion.

Professor Tocker: There was only one suggestion made—an obvious one —that I should take the period before the depression and the period since. There was no discussion about anything else.

>; Mr. A. I/. Monteith, employees’ assessor, asked whether the first international movement in, the fall of price was due to wage reductions. Professor Tocker said he did not thiink so.

Mr Monteith: What was it? Professor Tocker: The Stock Exchange collapsed in New York. Mr Monteith: When the exchange collapsed there it made the price for our butter on the English market decline?

Professor Tocker: It did. The volume of exports from New Zealand has gone up considerably, but. as far as I can judge from the Government statistician’s figures, the volume of production per head remains much the same, ■ Four Factors, Further evidence on behalf of employers was given by Mr W. Machin, Of Christchurch, who said that, in the long run, New Zealand’s economic financial condition depended on four factors, viz. the volume of production in New Zealand, the ability of New Zealand to find markets overseas for her surplus products at prices which left a margin over cost, the relationship between costs and prices in New Zealand and the weight of the burden of servicing overseas debt.

Mr Machin proceeded to deal, with frequent reference to stastitics, with New Zealand pi’oduction and export, and made the following submission as to the fixing of the basic wage. (1) Any basic wage must be sufficiently in balance with the level of export prices so as not to put up farm costs to the point where production becomes unprofitable, otherwise export income will suffer, the economic position of New Zealand will weaken and the repercussion on all classes, especially wage-earners will be unpleasant and severe.

(2) Any basic wage must he at a level proportionate to the ‘efforts of the least enterprising section of the wage earners, otherwise the returns frofh production will be insufficient to bear the addition to the basic wage of the amount actually ehrned l; -by the most enterprising wage-earner and efficiency will suffer, with consequent detriment to 1 the general economic position of New Zealand in competition with other nations in the world markets. .. .

(3) Any basic wage level must be dictated by the actual conditions resulting from overseas markets, prices. No internal guaranteed prices by subsidy at higher than the market level can continue to maintain correspondingly higher basic wage level, as such subsidies must necessitate increased costs, which will, in turn, react unfavourably on production and industry, and fall back injuriously on the wage-earners. Economically Unsound. (4) The suggestion that a high basic wage; fixed for social reasons and without regard to the uncontrolled prices obtainable for 65 per cent, of the production of New Zealand would not impoverish, but would enrich. New Zealand, because it would increase the purchasing power of those who received it is economically unsound, as it assumes erroneously that the turnover resulting from the spending of 'wages is sufficient to compensate the vendor for his extra expense in paying these wages; in other words, part (wages) is as great as whole (turnover), instead of being but a proportion only of turnover.

Wages must bear a proper relationship to costs and prices, otherwise, if they are disproportionately high, they increase costs, and, where prices cannot be raised (externally), consequently will reduce the earnings of the producer or where they raise prices (internally), the result is to reduce the purchasing power of those consumers whose incomes have not been increased.