PRODUCTION COSTS.

Stratford Evening Post, Issue 66, 15 October 1930, Page 5

PRODUCTION COSTS.

THE CALL FOR REDUCTION.

EQUALITY OF SACRIFICE.

(By N.Z. Welfare League.)

Wherever there is any discussion on the paramount need for reducing the costs of production, to enable our producers to meet the world markets, there is at once a protest raised by Labour leaders implying that the capitalists ae trying to engineer a reduction in wages, a lower standard of living, and generally alleging that there is a deep-laid plot to make the wage-earner carry the whole load. Some Labour spokesmen claim that Labour should carry none of the load, while a few claim there should be equality of sacrifice. This opens up one or two Questions. The first is that a call for a reduction in the cost of production does not in itself imply lower wages, but it does mean that a wagq-earncr should be paid on the basis of what he produces rather than on an artificially-defined standard of living. Anyone familiar with costs knows that high wages, if accompanied by correspondingly high production, nearly always result in lower cost of article produced, thus V call for lower costs does not necessarily imply lower earnings. The other question opened up for inquiry is; “Is capital making any sacrifice ’to justify ■it in calling in Labour to do likewise?” Capital, like Labour, can suffer in two ways. La hour can be asked to work longer hours, to accept lower wages, or a bit of both, while Capital may be called upon to lose some of its principal, or some of its interest, or both, and this applies in most parts of the world where economic law is allowed to •work naturally. But in Australia and New Zealand the rewards of Capital and Labour have been artificially placed on entirely different

footings. The reward for Labour cun only be altered bv a Court, while the I reward of Capital is varied by economic conditions, and may even be wiped out altogether without any warning. Investigation of the situation in Australia .shows that Capital bad, by the beginning of September, lost 3840 per cent, of its principal or its rewards for investment, whereas Labour still maintained 1 its full reward) as fixed by law. Capital’s loss is not so bad in New Zealand, but it has lost a rood deal. Is this equality

of sacrifice ? Do not these figures t show that the wages earned by Capital have been enormously reduced, and the result is much distress and unemployment? When the country is up against difficult problems the only way to ease the position for the whole community is for every section to do its bit toward recovery. The trade union leaders in England seem to have begun to realise that we must all pull together, and that no section of the community should claim immunity from sacrifice, and we cannot believe that the spokesmen for Labour here are not just as well aware of the necessity. If they are, why don’t they candidly explain the position to ther followers? If they do not realise it, they should he brought into close contact with those who do realise it, namely, bankers, business men, primary producers, and employers generally. This need would be met by -the 'Government agreeing to the request to convene a general conference to frankly discuss the whole situation, a course we have advocated voiy often during the past twelve months. The reply given to the proposal expressed the opinion that it was no use bringing together “interests so diametrically opposed to one another,” an opinion with which we venture to disagree. There is no doubt diametrical opposition between some of- these interests, but this arises largely from misunderstanding of each other’s difficulties.