WAGES AND BUYING POWER

New Zealand Herald, Volume LXXII, Issue 22211, 11 September 1935, Page 17

WAGES AND BUYING POWER

Sir, —Many letters recently published in your columns indicate the extent to which the false doctrine of the Labour Party and their friends the Douglas Credit Socialists has taken root among the unthinking. This beautifully simple and simply beautiful idea of just raising wages* and thereby increasing purchasing power is most alluring; but, like many other delightful illusions, it has no substance in fact. If any genius could devise a method of raising wages without increasing the price of goods, of course, all would be well. But this has never been done and in the nature of things never can be done. What shall it profit a man if his wages be raised 20 per cent and the price of all that he buys is increased to the same extent? At first there may be a temporary stimulation while goods produced at the old cost aro still on the market, but this will soon pass away. Another simple test will expose the utter falsity of the proposition. If raising wages is so effective, why stop at "standard" wages? Why not double them, or treble them, or, indeed, raise them forty times to create a perfectly delirious boom? Your correspondent "Struggling" asks how anyone would like to be cut a fifth of his wages. Certainly no one enjoys deprivation. But what of those who pay the wages? The farmer employer has suffered a cut of nearer four-fifths of his income and almost any city employer would consider himself remarkably lucky were his income reduced by only a. fifth. Wages must be paid out of the profits of industry, otherwise bankruptcy will inevitablv ensue. E. Earle Vaile.