PROFIT-SHARING AND LABOUR PROBLEMS.

Otago Daily Times, Issue 17711, 23 August 1919, Page 7

PROFIT-SHARING AND LABOUR PROBLEMS.

TO THE EDITOR. Sir, -In my opinion Mr -Hyam Brasch is uitiiur m his attack on Mr Sivertsen, who sticks to his subject and avoids personalities. Whether on© subscribes to all Mr Sivertswi s views or not, his welWwianoed, able, and temperate presentations of his subject compel admiration. It is improbable that any arm initiating jxrolit-ahamig would claim more for it than that it was palliative or a recognition on their part that the individualist system had reached a point whore it was good business to share. 'Iho idea of philanthropy zoay be dismissed; it does not exist in business under the present system, and the pretence only excites scorn. Kixcess profits, however, do -undoubtedly often lead to public and private philanthropy. On tho ground, which Mr Sivcrtsen consistently occupies—namely, tho welfare of the wliolo social 'body, his argument that excess profits can come only by way of increased prices is unanswerable. Mr Brasch is evidently unaware that there exists a New Zealand Woollen Manufacturers' Association, formed, if memory serves aright, some 15 years ago for " regulation" of prices in the general interests of the industry. A reference to balance sheets (those available) of these concerns for some years prior to that date will show they were not in danger of having to pay excess profits tax. " Cutting" had been general, and it was felt that in tho interests of all concerned an agreement to "regulate" prices on . & payable basis was desirable and requisite to save possiblo trouble to some of the less strong concerns. Such/ arrangements are as legitimate as labour unions, and so long a 6 they confine their action to these limits axe benoficial; ibut the senße of power which is soon acquired by such oombines, and the vista that is opened up, often makes the descent to Avemus easy and swift. Many firms will acquiesce in a policy of a combine of which tney are a member while individually they would refrain from pursuing it. Whether prices have been '"regulated" so far as to be classed as profiteering the excess profits tax of the past two years would partially disclose. I am of opinion that the entiro stocks of the larger businesses in New Zealand have, with few exceptions, written down to an extent that has enabled them to escape half their taxation. In this connection it must not be overlooked that holders of stock at the present time carry the risk of a fall in prices. At present there is no sign of this, but when it comes there will bo no escape from it, and probahlv there may be few profits to share for a year or two. As the total output of the woollen mills in New Zealand represented only about 25 per cent, of the consumption, the balance being represented by importations which acted as a competitive and restricting factor on prices and which during the past three years havo been a negligible quantity, it will readily bo seen that there was nothing to restrict profiteering here except the 6weet will of the producer and tho National Government.

Our oornraercial 6ystem has reached a highly scientific stage, duo in great measure to the tyrannical power of finance and banking. It is doubtful if the general body of the public has any grasp of it; but the average man takes a short cut to judgment by using his native wit and pointing to results. He will admit that the scientific part is beyond him, but he adds that it scientifically absorbs the substance, leaving him with the shadow. The workers say their organisation has resulted in their obtaining Is 6d and being scientifically made to pay out 3s. The preponderance of this feeling undoubtedly acoounts for the present industrial unrest, and it is useless shuttingone's eyes to it. Such, however, is the tyranny of finance and the banking institutions that any concern which does not show excess profits is continually hampered by want of sufficient financo to provide for expansion of trade; and before reformers commence they had better figure out where this is to come from in any schemes for production for use at the bare cost of production, plus 6 per cent. What would happen to .a concern withdrawing all its profits every year in the event of a few bad years and a falling market? Mr Sivert-sen has hit the real difficulty in stating that the prime necessity of the moment is the dissemination of sound economic knowledge. Traders and workers alike in every section vie with each other in their demands for increased prices and increased wages from an enraged public, which they seem childishly to regard as an abstract body that mav be bled indefinitely for their benefit. In this profiteering battle each blow from one side has been met by a counter-blow from the other, and the merry game has been spun gaih- round in a circle, the net result being that Labour finds it has fought for and secured halfcrowns that are only worth fifteenpence. Both parties a.pr>ear to be stripping for the final round, and it is generaflv agreed that some change has got to come. A change from w;thin would do good—a general recognition that all alike are members of o:ie social body, and that the action of each individual and class acts and reacts on the others, and that the sum total of all the action constitutes the state of the social body, which at the present time is generally admitted tji be, like the one-time historical State ot Denmark, "absolutely rot ten."

Before justice or common honesty can prevail in the Labour world the workers will have to recast their ideals. Remunera-t.-on will have to be according to service. Representatives of Capital in general should not be without knowledge of how to act justly towards the social body if they have the will. Sometimes power "exists without the will, b\:t in the history of the British nice there has hitherto always been sufficient balar.ee in favour of the right to maintain pewcr. Mr Sivertsen's statement that "before a remedy can be effected it is obvious that those who now control production and finance must give their approval," jjets at the kernel of the subject. Capital cai; always take back what (or more than) it. gives, and if Labour could understand this it would make peace and work in harmony. But the present charge against Capital and its representatives is that they are devoid of a sense of fairness, and use their strength for exploitation or profiteering. This belief is firmly and extensively held by a majority of the public extending beyond what is usually termed the workers. 'I he conclusion to be arrived at after a comprehensive review of all shades of the present position is that the representatives of 'Capital unci Labour are animated by the same base mot .vc of greed, and that what they seek is nst profit-sharing, but profiteering at the expense of a hypothetical public, which they ar„> cqualy eager to fleece, while they snarl and quarrel over the spoils. This. Mr Sivertscn truly points out, is a financial absurdity, sintx: in the ultimate all are members of that public or social body. A large section of Labour in Britain, Australia, and New Zealand favours nationalising tho jccsins of production. I have seen no oetailcd scheme, but it might be gradually acomplished by the State simply acquiring the primary industries, such as coal mines, tlourmills, woollen mills, etc., allotting Government debentures to the owners to the current value of their interests, and leaving the owners to remain and administer ior the State at a salary. They would, c." course, draw dividends on their debentures at a lair rate of interest, which would bo 4 to per cent., since they would be freed lrom the trading ri.;k. To usher in tho new world which has been predicted by the prophets and press other reforms are required. The present vicious system of iaxu.ic-ii should be abolished, especially ('i.tt :111s duties. It. is a deplorable thin;; I;: collict 25 per cent, duty on an am:-. . v. in.-n passes through two or three u-.-uir-' ii.ti.d* before reaching the public. Knen t-.cy.v ai.ds his 25, 51), oi10D per cent, to the d..ty. which finally represents a payment !:v tie public, of JJcO to £100 for a in n; fit o: £ids to the State, l.and taxation s.lv.>.i!d be on the unimproved value. an;t no taxes should lie imposed on i;n;:i'o.e:nents, as such taxes only ■lenalise and prevent development, and d.s- ---•; >i:rage investment of capital in new industries. Taxes should be simple and direct, and levied in proport.on to the ability to bei.r tiem. Income tax on a graduated sealo, commencing low enough to catch tho worker who is earning £2(>o per annum, and gradually st.fS'ening until £5000 per annum Ls reached, when the balance should be expropriated in the interests of the Sta"?, would be equitable taxation. To meet this, companies' dividends would not I>e taxable, but the receiver of the dividend would pay. All "watered" shares now distributed by wuy of bonus, unless paid out to shareholders, should be expropriated by the State, which would thereby 'become the sole profiteer.

Our present school of politicians is inept and deficient in 'knowledge of economics, and before any real reform can come a clean sweep will have to be made, and a real national party formed, with definite views and vital principles for which it is prepar, d to fcht for, irrcspoetivo of consequences to the popularity or position of its members. At the moment the political horizon does not diseloso throe men to fill the bill, but there are always as good fish in the soa as have ever been caught.—l am et= -. Ex-Emplotee. August 20.