A VICIOUS CIRCLE.

Otago Daily Times, Issue 17483, 27 November 1918, Page 4

A VICIOUS CIRCLE.

The Arbitration Court is entitled to sympathy in its endeavour to adjust wages to the cost of living. It labours under no delusions respecting the system to which it finds itself obliged to subscribe of granting war bonuses to meet the reduction in the purchasing power of the sovereign. As Mr Justice Stringer justly observed, it is a system which, so far from touching the real problem, merely contributes to the creation of a vicious circle in which cause and effect so act and react that finality in equitable adjustment becomes a veritable Jack o . Lantern. The court does not disguise the fact that it is merely a palliative and by no means a remedy that is applied by it, since every increase in wages and therefore in the cost of production is followed by a further increase in the cost- of living, so that at the end of twelve months the position of the wage-earner is no better lut probably worse than before. For this the court inferentially blames the Government. The only point, however, upon which the Goverume can be attacked with much show ->f reason is in respect to the increase in the cost to the local consumer of the food products of this country. Local prices of these products are regulated by the prices obtainable in the world's markets. In normal times the operation of the economic law went .unchallenged. It is contended, however, that in times such as have prevailed for the last four years, during which the war has given N«w Zealand products an artificially high j value, the ordinary economic law should not obtain, and that the products of the dominion should be procurable lccally at much lower prices than they realise on the Home market. This argument may seem to possess a certain plausibility. Those who employ it, however, would probably be averse from applying in their own case, whpther in the supply of labour or of commodities, the principle which they insist should be applied to the prices of the main products of the country. Moreover, tboy aro disposed to shirk tho questd/m

whether it is entirely just- that the- principle should bo applied to certain classes of the community only, even though those classes are securing very profitable return for their produce. In justice to the producing classes it should be remembered, also, that they have had to pay war prices for everything they have had to purchase in connection with the maintenance of their industry. Those who urge the application of the principle of artificial regulation of prices of primary products have not suggested, either, how it is to be made effectively operative. The only practical suggestion which has been offered is that there should be a tax on exports, the argumonfc being that the price of the nonexportod products would be reduced to the local consumer by the amount of the tax. The suggestion is clearly open to the objection that the adoption of it would involve a penalising of the industries that are the real sources of the prosperity of the dominion while the effects of it would be doubtful. Any measure fixing the price of an article is liable, indeed, to produce effects quite different from, and even contrary to, those aimed at. A recent illustration in point is the fixing by the Government of the price of lemons and oranges, with the result that these are unprocurable locally, its it is impossible, owing to the freight charges, to place them on the local market at a cost that is not in excess of that fixed as the maximum that may be charged to the public. It is to be feared that the discussion in the Arbitration Court throws no helpful light upon the solution of the problem of the cost of living. The best that we can hope for would seem to be that the termination of the war may be followed by the restoration, within a reasonable period, of pre-war conditions.