THE NATIONAL INCOME.

Otago Witness, Issue 3403, 4 June 1919, Page 59

THE NATIONAL INCOME.

PROFESSOR BOWLEY SAYS THAT £260,000,000 IS AN OUTSIDE ESTIMATE. The '-National Incom-e is not &c very big, and if it were* divided out among all our families it would not seem big at iall. Such seems to be the conclusion of Professor Arthur L. Bowley, Professor of Statistics in the University of London, in a valuable document on " The Division of the Products of Industry" (Clarendon Press, 2s 6d net). Two Conflicting Claims.— He sets out to examine these two statements : " Two-thirds of (the popxilation)—that is to say, the manual working class, obtain for all their needs only one-third of the produce of each year'.s work.'' — "The Principles of the Labour Party," Sidney and Beatrice Webb. 1918. " Let a close examination be made of the whole industry of any country, and I am much mistaken if the result will not be aproximately as follows : —-Seventyfive per cent, of the total sale value of the commodities produced will have gone to pay the persons engaged in producing them.'"- t -" Tha» Rights and Responsibilities of Capital," Sir Huah Bell, Manchester Statistical Society, 1918. The National Income. — " The national income," says Dr Bowley, "as the total of the individual income is generally designated, is estimated as amounting ' to nearly £2,100,000,000 in 1911. Of this total about £800,000,000 was received as wages, and approximately £260,000,000 was received as salaries or earned by independent workers, farmers on a moderate scale, small-holders, and other small employers. was received by about 1,100,000 income tax payers. The remainder is made up of various small items. "Of the income tax -payers' income, about £190,000,000 was derived from, investments abroad, and was in no sense the product of the manual work at home in the year 1911, whatever may have been its origin in the oast. By now a considerable part of the capital from which this was derived has been brought home in the form of munitions and food, and the former owners have received warstock in exchange. The income from this part is now replaced by a debt from the nation to the holders of the war-stock. The Nation's Wages.— "The income derived from 'the produce of the year's work,' with which alone we are concerned in the sequel, is approximately £1,900,000,000, of which over £1,000,000,000 is received by manual wage-earners and other workers whose earnings are less than £l6O per annum. " We will first examine from a general point of view what is the maximum sum that can, even on extreme hypotheses, be regarded as luxuriously or unnecessarily spent by persons with incomes of £l6O or more, and is the broadest target for attack by those wEo wish to obtain a less unequal distribution of income. The Income Tax Payers.—

" The home income of income tax payers was about £742,000,000. Of this £17,000,000 is estimated as evading tax; about £475,000,000 was taxed at the rate for unearned income; of farmers' income was not taxable: the remaining £240,000,000 was taxed at one of the rates for earned incomes.

"In estimating the maximum open to attack it is assumed for the purposes of argument that the whole of rent and interest could be transferred from its present owners to the nation; but the £50,000,000 in the possession of people with less than £l6O per annum, which include the results of small savings, pensions, annuities, and incomes of people incapable of work, is regarded as non-trans-ferable.

" Earned incomes are also, of course, open to attack. A sufficiently extreme supposition in these cases is that every income might be reduced to £l6O (at the price levels of 1911). Putting aside the small amount of taxed farmers' income, we have £235,000,000 in question, divided between salaries and -profits. The Salaried and Professional People.—

"The salaries of 3135,000 employees of the Government, companies, firms, or individuals account for nearly £130,000,000,

the average salary being £340. About 40,000 salaries of over £SOO were assessed, the aggregate of these being £38,000,000. If all salaries were reduced to £l6O, while _none below that sum were increased, the amount saved would be about £70,000,000, equal to 9 per cent, of the national wage bill. " There remains £105,000,000 paying tax at the lower rates; this is the earned income of professional men, employers, or firms, using no capital or working on their own capital, whose individual incomes from all sources are less than £3OOO per annum. The average assessment per head in these groups (including those over £3000) is about £555 gross, say £SOO net. This affords a rough estimate of the average profits of professional and business men of all kinds whose earned incomes are over £l6O per annum. Supposition About Unearned Income.—

"If now wo take the supposition that all _' unearned ' income could have been nationalised, except that belonging to persons with less than £l6O all told, and all salaries, professional earnings, and employers' profits reduced to £l6O per head, while lower salaries were not raised, and the surplus devoted to national objects, perhaps £550,000,000 would have been available. The Luxury Balance.— " Actually, the cutting down of earned incomes would, in fact, seriously diminish the power as well as the will to work, and a good deal of income would disappear in the process of transfer. £550,000,000 is then an outside estimate of the part of home-produced income that is the target of attack by extreme Socialists. " Out of this sum, however, the great part of national saving is made and a large part of national expenses are met; when these are subtracted"only £200,000,000 to £250-,000,0C0 remain, which on the extremest reckoning can have been spent out of home-produced income by the rich or moderately well-off on anything of the nature of luxury. This sum would have little more than sufficed to bring the wages of adult men and women up to the minimum of 35s 3d weekly for a man. and 20s for a woman, which Mr Rowntree, in 'The Human Needs of Labour,' estimates as reasonable.

"In fact, the spendable wealth of the nation derived from Lome industry has been grossly exaggerated by loose reasoning.

Possible Family Incomes.— " Before the war the home income would not have yielded more than £220 gross annually per family of five, or £l7O net after all rates and taxes were paid and an adequate sum invested in home industries. The income brought home from abroad amounted to about £90,000,000, or £lO a family. The average family is not however, five, as-is frequently assumed, but about four and a-half persons; the number of households is not 9,000,000, as just taken, but about 10,000,000, and, the average net income of a family would have been £153 from home product, or £162 if income from abroad is included.. If this sum is compared with pre-war Avages it must be remembered that there are on an average nearly two earners to a family.,

"The wealth of the country, however divided, was insufficient before the war for a general high standard;, there is nothing as yet to show that it will be greater in the future; hence the mott important task—more important iriyhediately than the improvement of the division of the product—incumbent on., employers and workmen alike, is to increase the "national product, and that without sacrificing leisure and the amenities of life."