SINGULAR CONDITIONS

Taranaki Daily News, 6 August 1930, Page 14

SINGULAR CONDITIONS

WORLD-WIDE SIMILARITY SUBTLE ECONOMIC PROBLEMS. POLITICIANS’ INCOMPETENCE. (Special Correspondent.} Wellington, Aug. 2. The world conditions to-day are singular, and yet somewhat similar. It is singular that to-day the whole world should be suffering from an economic depression; it is singular that the wholesale prices of commodities should be depressed everywhere; it is singular that wholesale prices have not fallen relatively, nor yet has the cost of living, and this is the position in all countries. Some blame the New York Stock Exchange slump for the present day economic worries, while others think that the trade restrictions imposed by tariff barriers have obstructed the free flow of commerce, causing an accumulation of commodities, especially of raw materials, in the sources of production. Some regard the latter position as the result of over-production, but it is held that if the interchange of commodities were not obstructed by tariff walls there would be no such thing as over production now. The result of the changing conditions is fully reflected in earnings. Many joint stock companies—most of the world’s financial operations are now conducted by joint stock concerns have reduced their dividends' or passed them by altogether. Even in the United States this feature' has been noted. When the Stock Market panic occurred last September and October financial, industrial and political leaders in the United States published statements that the trouble was confined entirely to the stock exchange, and that there was nothino- the matter with the industrial situation. The forecasts and opinions of these leading men were utterly at fault, and the United States is expert eneincr a curtailment of trade and increasing unemployment. BLAME FOR SITUATION. . Some Wall Street magnates are layintr the blame of the existing situation at°th door of the so-called extractive industries, meaning producers of farm products, oil, copper, sugar and other commodities coming out of the ground. So far no way has been found to prevent the s ial'l farmer or owner of an .oil well from producing beyond a point where total production will balance consumption. It is argued that some time in the future, despite the efforts of the Government to protect the individual votiho 1 farmer by taking care of his surplus crops, the small individual farmer i going to pass out of the • picture, just* as the small bank and individual orocer, druggist and merchant are now being crowded out by the large unit doing business along highly organised lines. ' '

The singularity of world economic conditions is remarkable, and the remedies proposed or attempted appear to be s’milar —at least they appear to be so in the United Kingdom, Australia and New Zealand. In the three countries the authorities are relying upon increased taxation to bring about the remedy, but wc are assured by economists and sound financiers and business men that increased taxation, indeed practically all taxation, falls upon industry, and while industry can cariy a pretty good load of taxation the increase recently levied in the three countries makes the burd®ii excessive. Piling up taxation is just the simplest process, but it is not the best policy. In any event a body of politicians is not competent to deal with the subtle economic problems of to-day. There are Labour Governments in power in Britain, and Australia, and our own Government is maintained in power through the goodwill of the Labour Party, iyid that good will has to be paid for. In neither country has the Government suggested the reduction of salaries and wages, which some regard as necessary, at the same time holding that the cuts should begin at the top. The Federal Prime Minister, Mr. Scullin, has positively refused to lower Ministerial or members’ salaries, and there is no gesture in that direction in the Dominion. ' Such a proposal would be unpopular politically, but it has to come. We cannot afford to pay the salaries and wages of the past with butter, cheese wool and meat bringing in so much less money. Our costs of production are now too high, and the Government could give the country a lead by effecting reductions in the cost of administration. Business people cannot move in the matter, for they are bound by Arbitration Court awards; they can only create more unemployment by dismissing employees; and that, is being done.