THE New Zealand Herald AND DAILY SOUTHERN CROSS FRIDAY, AUGUST 27, 1937 DOMINION'S DEPENDENCE

New Zealand Herald, Volume LXXIV, Issue 22818, 27 August 1937, Page 10

THE New Zealand Herald AND DAILY SOUTHERN CROSS FRIDAY, AUGUST 27, 1937 DOMINION'S DEPENDENCE

Some points of considerable practical importance were made by the Minister of Finance and Marketing, speaking at a Chamber of Commerce luncheon in Wellington. One of his conclusions from his observations abroad was that "the standard of life that could be experienced by the people of New Zealand would be higher or lower in proportion to the trade the Dominion had with the United Kingdom." Most people will be "satisfied," as Mr. Nash is, that such is indeed the case. No room would appear to be left for argument when it is remembered that New Zealand exports 70 per cent of her farm produce (including 94 per cent of her wool clip and 95 per cent of her cheese) and that most of this huge surplus, at present worth about £60,000,000 annually, is purchased by Britain. Practical people will agree with Mr. Nash that general prosperity here largely depends on that of the Dominion's best customer. Some Labour theorists dissent. They believe that we in New Zealand can insulate ourselves from'the weal or woe of the outside world, that we can make and keep a little heaven-on-earth all to ourselves. They have not been taught by the experience of Russia, one of the most self-sufficient countries in the world with complete State control of trade, exchange and currency, a country which nevertheless suffered in the depression like all its neighbours. And, at the very same luncheon at which Mr. Nash registered his conclusion on New Zealand's economic dependency, these Labour theorists found a spokesman in no less a person than the Prime Minister. "I have always felt," Mr. Savage said, "that it is not necessary to get down to the living standards of other nations. I think we can build, I am sure we are building, a comparative paradise in the Pacific." i

Leaving aside the smug selfishness of the remark, citizens will recognise its meaning as denying Mr. Nash's conclusion. The Prime Minister implies that New Zealand can prosper regardless of the rest of the world; the Minister of Finance is satisfied the people's standard of living must depend on the amount of business the country can do with its best customer. Outside the rank of Labour planners, few people will question Mr. Nash's good sense. His conclusion will stand so long as New Zealand must quit the bulk of her production abroad, or even a considerable part of it. It follows, therefore, that New Zealand should cultivate her trade with Britain and of this Mr. Nash is fully persuaded. He went on to say that there are three factors in trade to-day—unused resources, unsatisfied demands and the price level in between. That is a very good statement and the problem is how to fix the prices at a level will end the separation of unused resources and unsatisfied demands. The solution is largely a matter of costs, of producing goods at prices people can afford to pay. Perhaps it was natural Mr. Nash should ignore this factor, being a member of a Government whose policies increase prices and raise higher the barrier divorcing supply from demand. Unused resources are placed beyond the reach of the masses. Take the case of butter—so long as New Zealand farmers can sell at Is a pound, the British people can afford to buy all that is exported. Raise the price to Is 6d, to match the artificial cost level being built up in New Zealand, and the mass demand is reduced. Millions are compelled to turn to margai'ine. But, whether at Is 6d or Is, there is still an unsatisfied demand, which might be completely met at lOd or Bd. Now, if New Zealand wants an expanding market in Britain for butter or anything else, she will not obtain it by raising costs and therefore prices; her only chance is to meet her market by lowering costs and prices to the mass demand level. Still another assertion by Mr. Nash warrants examination, because it has been made many times by him and Mr. Savage, both here and abroad. While there are people in Britain not getting the primary produce they require, it is not right, he asserts, that New Zealand -should stop producing those goods. Unfortunately it is not a question of ethics—of right—but a question of economics. The British masses might just as well declare it is not right for New Zealand butter to cost Is 3d when they can only afford to pay lid. Or the spinners of Lancashire and the shoemakers of Nottingham might cry out that it was not right they should be unemployed while New Zealanders could use more dress goods or footwear. In similar strain Australian citrus growers might declaim concerning New Zealand's orange quotas. Here is a perfect instance of unused resources being separated from unsatisfied demand by prices, plus Government regulation. The Government even goes so far as to restrict production by licensing producers, the fishing industry offering a case in point. The idea is to raise, not to lower, the price barrier between the unused resources of the sea and the unsatisfied demand for fish. Other instances might be quoted in plenty to show that the New Zealand Government is practising policies which Mr. Nash and Mr. Savage inform Britain she has no right to apply. Instead of preaching to others, New Zealand, if she aspires to feed the British masses, should concentrate on producing at prices they can pay instead of raising costs against them and, ultimately, against herself. She cannot live to herself alone.