THE COST OF LIVING

Otago Daily Times, Issue 21627, 23 April 1932, Page 14

THE COST OF LIVING

Written for the Otago Daily Times. By Li/n'i) Ross.

Suppose an automobile worker wore offered a position in any one of the Ford factories in Berlin, Frankfurt, Stockholm, Helsingfors, Baris, Marseilles, Antwerp, Rotterdam, Manchester, Cork, Warsaw, Barcelona, or Stamboul, where would he select to live? Family considerations would limit his of choice, but if he were free he would certainly want to know the value of the wages in the different. cities. Suppose that ho earned six dollars a day in Detroit, what would he need in Turkey, Sweden, or Berlin to keep up the same standard? If he multiplied the, number of national units to the dollar by six dollars and concluded that he would he satisfied with I!)(i francs in Antwerp, 12.72 pounds in Stamboul or 53.56 zloty in Warsaw, he would make an unfortunate mistake, for he would soon find that the prices of the particular things that he was accustomed to in Detroit would be very different in every other country. What, wage would he neell in the other cities to provide him with the Dcti-oit standard of living? Such a question the International Labour Office has answered for Henry Ford. Wishing to give the workers in his 14 European plants the same standard of living as his workers in Detroit, Ford asked the International Labour Office to find “ how much would be spent by employees in certain European cities in order that these employees might have a standard of living approximately equivalent to that of a Detroit employee whose expenditure in 1920 was about 1720 dollars,” or £344. The result indicates how local, conventional and changeable is the idea of “ the cost of living.”

Out of 100 families at Detroit, 47 had automobiles, 36 had radio sets, 80 had sewing machines, 45 had phonographs, 51 had washing machines and 21 had vacuum cleaners, while the predominant type of house was described as a detached house, equipped with electricity, gas, central heating, and a bathroom. The typical family consumed per year 51b of tea, 321 b of coffee, 12031 b of ice, and so on. How was it possible to make a comparison if the workers elsewhere could not get, or did not want, the things of the Detroit worker? It was quickly found impossible in any of the Europan cities to buy exactly the same tilings as in Detroit. Few European workers bought apples, peaches, grape fruits, water melons, canned soup and corn, of which the Detroit family purchased annually 1801 b, 231 b, 0.31 b, 30.31 b, 11.811), and 10.91 b respectively. But would they want to, since the Spaniard can get rabbit which seems unknown at Detroit, or is probably reserved as a luxury for the manager’s table, and the Dane can get fish, which is not nearly as popular in Detroit? If we regard the standard of living as the sum of the economic satisfactions which the individual derives from the consumption of the goods and services which he is able to obtain with his income, we will find that the same amount of satisfaction could be obtained from a very varied range of purchases. Who is to weigh beef against canned beans, macaroni against potatoes, eggs against grape fruit? Within a week the American worker would have to adapt himself to local conditions or make himself thoroughly disliked by landlady, shopkeeper, and wife. It may be healthy for a Detroit worker to wear an overall, but who would dare to walk down Turkish streets garmented so strangely? Who wants central heating in Turkey? One important point of comparison is that the proportion of the American budget devoted to food was 32.3 per cent., contrasted with a much higher proportion in European countries, thus indicating probably a higher standard of living in America, but in general the different articles consumed or used made a comparison very difficult.

Tlio Barcelona worker wants less fuel and fewer thick clothes than the Detroit

worker. He' eats less meat. Even in Manchester it was found impossible to obtain prices for approximate comparable garments to those of Detroit, while the Turkish investigators gav e up the job as hopeless. The experiment was tried of sending typical articles of clothing from Detroit to the other cities to obtain comparative prices, but would a Pole know what was a “ sweater or lumberjack,” and if a Turk had seen more intimate articles of clothing at the American moving pictures, can we be sure that he really had these for sale in his shops? We can be thankful that, after all the talk of the monotony and regularity of life in th/3 machine age, mankind still shows such variety in dress and food!

Corn is essentially American, and few Europeans had tasted sweet potatoes and peanut butter. European workers generally had to go without bathrooms, though the living rooms might be larger. 'The Belgian Ministry of Labour stated that Belgian worker? would not be prepared to spend any extra money for the advantage of possessing a • bathroom in their homes, so that, if our benevolent Henry Ford decided to increase the wages of his Belgian workers to permit them to rent houses with a bath, he would probably find that they would prefer to spend these sums in a different way. The Belgian ’ Ford works installed shower baths which were seldom used, but who can blame the workers, since the general scarcity of water has made impossible the development of clean habits? A case in point is the Dam district, where for three days in the week it is impossible to obtain water before midnight in sufficient quantity for a bath because the slaughter-houses have to bo supplied first. Where people live in a district in which they have to wait 20 minutes before they can fill one pail of water it will be difficult to compare their standard of enjoyment with societies where it is possible to turn on. a tap and get as much fresh water as the state of the reservoir permits. The investigators were quite aware of such difficulties and were content with a rough estimate. The Stamboul report, for example, gives a definite price for a man’s haircut, but can get no nearer than an estimate for a shave or a child’s haircut. If we take Detroit expenditure as 100 the summary of the results as at January, 1931, necessary to provide the Detroit standard, expressed in a common currency is as follows:

So our worker, who was solely governed by the cost of living, would go to Barcelona, only if he understood that ■he could live cheaply there if he lived as did the Spaniards. He would probably find that Manchester would suit him best as having a very low cost of living and as being most like Detroit. The comparison is' only a rough one, for the reasons indicated, and if the International Labour Office had set out to compare all countries in terms of the articles bought in New Zealand the result might have been different again. The result shows that probably real wages are much lower in Manchester than in Detroit, and a good deal higher than in .Berlin, Paris or Warsaw. There is not much difference in real wages between Great Britain and Scandinavia.

The inquiry, however, was not aimed at comparing wages in different places or comparing costs of production. Here there is an important point for Henry Ford to consider. Is there anything in the argument that he has been able to get the best out of his workers because the standard of Detroit is best fitted for the type of work done? That is. Are the baths, the radios, the bread, fruit and canned soup essential for the industrial worker? If so, Ford would not have to be satisfied merely with giving them the wages that would permit them to buy an equivalent standard of living as the Detroit worker, hut would have to see that they used the wages in the way that could promote their best efficiency, as for a time he tried to do

at Detroit. Must he compel them' to take baths and eat beef? On the other hand, if it is possible to obtain the same efficiency from different diets and clothing, the job of comparing standards of living becomes almost impossible unless wc can estimate all' food values in terms of a common unit of energy. It may, in fact, be that the standard of living is merely a matter of convention once we. have satisfied the primary needs. It may bo, on the other hand, that the march of machine production will demand a fairly general standard of consumption and habitation, and that, if such an inquiry were carried on 20 years hence, all workers would be having baths and fresh fruit and nuts, not merely because they could afford them, but because machine production demanded them. It is unfortunate that the depression has delayed the application of the Ford experiment. If Ford had decided to grant a decent standard to all his workers in Europe independent of the general wage level prevailing in the countries concerned, then we would see a new system of wage fixation dependent not on the national level or national prosperity, but on the prosperity of a particular industry which was international. Would it have been possible for Ford to have granted his Detroit standard in Poland if another manufacturer had given the prevailing low wages? The answer would depend on the relation of the wages paid to the efficiency of labour, and of the use made of labour by the employer. If one result of the increased Ford wage were that efficiency were increased, as it undoubtedly was in Detroit, then other employers would be compelled to raise their wages in order to compete successfully with Ford.. That also happened in America, where Ford undoubtedly was an important influence in raising American standards of wages and efficiency, and it may well be that the carrying out of his scheme would bo an important factor in achieving some generally high wage level throughout the world. For a while our Ford worker, living on the Detroit, standard in Poland, would live as a prince contrasted with his neighbours. His standard would in fact be much higher than if he had remained in Detroit, where the general standard was a high one, until the force of competition would drive up all wages,

Stockholm 99-104 Marseilles 75-81 Frankfurt 85-93 Manchester 71-74 Cork .. .. 85 Warsaw 67 Copenhagen 83-91 Rotterdam (55-08 Berlin 83-90 Stainboul 65 Helsingfors 83 Barcelona 58 Paris .. • • 80-87