ECONOMIC PROBLEMS.

Otago Daily Times, Issue 20800, 20 August 1929, Page 10

ECONOMIC PROBLEMS.

TO THE EDITOR. ' SlB, —It Was thought once that if the aim or purpose of Government could become influenced by the concentrated will of. the people then the end of all industrial despotism would be in sight. It was logical to assume that the majority had a better right to rule than the minority; and in the course of time the growth, expansion, and complete adaption of democratic government would become a realised fact. But the advent of democracy has not brought in sight the end of industrial strife. However good their intentions may be, the people do not possess the skill necessary to steer them through the shoals and hidden dangers that surround statesmanship, and it .is now gradually being recognised that the human ideal or aim is at fault, and that the. power to govern with justice depends entirely upon understanding the relation between the dynamic and static forces that control our industrial system. What are " dynamic and static forces,” asks democracy,, “ but technical terms invented by the educated to obscure the truth and deceive the public? Do the educated understand -Ahe difference between and importance of dynamic and static force? We see no evidence of it; let honesty and common sense rule and all will be well.” So says the impatient democrat, and with truth it can be said that the disquisitions and explanations of the high-browed scholar, are far more provoking than enlightening. Nevertheless, when allowance is made for all faults, we come hack to the dynamic and static forces that . govern our. industrial system and demand our patient attention. Unemployment and financial strain are at present two prominent evils that afflict the community. It would take some considerable space to explain in full that unemployment is the result of bad industrial organisation, combined with high finance, both of which are to blame. There is also a third, the moral perception of the community which plays a most important part both in assisting and in checking reform. The people see, or fancy they see. the cause of unemployment in the displacement of labour by machinery. No economist of any standing would support guoh a contention for a moment, yet the illusion has all the appearance of reality. Machinery without a doubt displaces labour, but with a distinct financial gain. Now, if the financial gain after it has been obtained withheld from circulation, then beyond all doubt it produces unemployment, but such an act is impossible in practice. A gain from the application of machinery becomes an increment that may be divided between . the consumer in the form of lower prices, profit to the employers, and taxation appropriated by the State, but arbitrary influences that are not always equitable. If, however, the bulk of the occuring increment is devoted to a reduction. in prices to the consumer, then a distinct rise in real wages takes place without any alteration in nominal wages being and this forms the only sound economic method by which an equitable distribution of wealth can be apportioned to the rank and file of the wage worker. Profit sharing has never been an acceptable form of remuneration to the enlightened trades unionist, and employers who favoured this plan are now diminishing in the same ratio that the margin of profits is diminishing. It is also becoming clearer to the wage-earner, the public, and the employer that all further monetary increases in wages are so impossible as they are futile in benefiting the working classes. The dynamic forceproduced by the application of machinery in displacing labour can only be corrected by the static forces of equity which deals with value, involving the fixation of prices based upon quality and volume in production. It is here we enter upon the most complicated part of the problem, which arises from financial manipulation of an arbitrary nature performed by promoters and bankers. If no improper interference took place, then the production accruing from the invention or machinery would correspondingly cause a fall in price as a result of the cheaper production, and this in turn would release an expenditure in one direction which would become available for expenditure in another direction, employing some form of labour to counterbalance the labour displaced. In the ordinary course of progress this displacement causes but slight inconvenience, but

with sudden discoveries on p, large scale the trouble becomes a serious menace. So far no direct connectioa is apparent to show arbitrary financial control. It is not apparent until we ask the question; If the application of machinery reduces the cost of production, then how does it happen that articles of common use to-day cost from 50 to 150 per cent, more than similar articles cost 30 years ago? To explain this riddle Would require considerable space, and would involve an exposure of the art of high nuance—a performance which properly lies within the duties of the paid politician and such exponents of public morals as the leaders of the Christian church. I shall therefore refrain from trespassing upon their. territory, as father inquiry can only arise from the side of the public when leaders arohse attention.—l am, etc., W. SIVERTSEN.