WAGES AND BUYING POWER

New Zealand Herald, Volume LXXII, Issue 22240, 15 October 1935, Page 13

WAGES AND BUYING POWER

Sir, —As is very common in loose thinking, "C.H.N." confuses cause and effect. The fact is, of course, that high ■wages do not cause prosperity, but prosperity causes high wages. Anyone sufficiently interested may refer to my original letter appearing in your issue of September 11, in which I demonstrated the fatuity of the Labour Party's claim that rising wages would ipso facto increase purchasing power. Neither "C.H.N." nor anyone else has supported, or can successfully support, this curious misconception. The application of Mills' famous dictum, "Principles aro but tested by extreme cases" at once makes the matter plain. If tho mere raising of wages creates prosperity why stop at £4 per week? Why not raiso wages to £l4 or £4O? "C.H.N." is silent. Moreover, as the cost of everything made with hands is based on wages, high wages must mean high prices—or bankruptcy. Nothing is more certain. However, the fact is that the money price level does not matter much. That prices shall be level is tho essential thing. Our trouble in New Zealand is that the agricultural worker receives about 6d per hour while the town worker gets 2s. The result is that the sixpenny man cannot buy from the 2s man, anci the 2s man cannot sell his goods and becomes unemployed. To remedy this state of affairs vote-catch-ing political parties propose to increase the disparity! I must again compliment "C.H.N." on his vivid imagination about "Mr. Vaile sensing his error," "emergency exit," etc. But these little pleasantries do not help to elucidate the serious matter under discussion. They are neither statements of fact nor arguments. E. Earle Yaile.