THE OTAGO DAILY TIMES THURSDAY, APRIL 15, 1948. ECONOMIC TRUTHS

Otago Daily Times, Issue 26746, 15 April 1948, Page 4

THE OTAGO DAILY TIMES THURSDAY, APRIL 15, 1948. ECONOMIC TRUTHS

The dominant impression remaining after a study of Lord Beveridge’s lucid address on the economic crisis in Great Britain is that in describing the difficulties of the United Kingdom in its present crisis Lord Beveridge has unconsciously drawn a picture of conditions in New Zealand to-day. The details of the New Zealand picture are, of course, considerably less sombre than those of the British scene, but the general outline of a Labour Government struggling to combat inflation, to restrain its own adherents from making excessive demands, and to avert bankruptcy by restoring a balanced economy is being duplicated in this country at the present time; and the analogy emphasises—if any further emphasis were needed—the absolute dependence of New Zealand’s economy on that of the United Kingdom. And Lord Beveridge made no qualifications in stating that Great Britain was close to financial disaster, so close that only substantial help from the United States in the next few months will enable her to meet the problem of the balance of payments. Unless that help is given Great Britain will be unable to buy the raw materials of industry or the food for its workers. The threats of hunger and unemployment are very close. Financial assistance from America is, however, only one aid to recovery. The greatest effort must be made by the British people themselves and, as Lord Beveridge remarked, the problem of impressing this fact on the British workers at the present time is a difficult one. At a' time when unemployment is non-existent, when wages are high and easily won, the average worker tends to regard the whole position through rosecoloured spectacles, regardless of the dependence of prosperous internal conditions on a prosperous export trade. Generally the British worker receives little enlightenment from his unions, which pursue the single-minded ambition of higher wages, negligent of the effect of these demands on the national economy or of the eventual discomfiture of the worker himself when the inflationary bubble bursts —and it will inevitably burst if production costs, boosted by increases in wages, are permitted to mount to the point where prices are more than customers can afford to pay. In this country the workers for the export trade—farmers for the most part—are perhaps more conscious of the interdependence of internal and external trading conditions, because the farmer in New Zealand is in approximately the same predicament as the British exporter. Knowing the difficulty of marketing goods at high prices he is fully conscious of the implications of an uncontrolled cost structure. The way of increased wages, increased costs and increased prices is the way of inflation and certain bankruptcy: the way to stability is that prescribed by Lord Beveridge in his address. “We can only get back to the prosperity of our fathers by working much harder than our fathers, and working more effectively,” he said. . . . “ More money

without more goods means inflation.” The British Government is aware of the danger. In its wage-pegging agreement with the trade unions and in many other ways it has evinced a determination to bring the workers of the United Kingdom to an awareness of the desperate nature of the industrial crisis. Whether it can succeed without resort to compulsion, and whether it can stave off the distress that is threatened, time only will disclose, but it has set an example which the Government of this country would do well to heed.