Why More Wage Cuts?

Star (Christchurch), Volume XLIV, Issue 192, 14 August 1931, Page 8

Why More Wage Cuts?

To thw EAltor. Dear Sir. —Along with many other Civil Servants, all amusements have been cut right out and the popular pastime of many of us to-day is a comfortable seat in the Reference Library and the study of authoritative books on economics. Having just about read up every available book on this science I now claim to possess an economic mind, equal to that possessed by the average member of the much mentioned Chamber of Commerce from whose remarks, one would imagine, were the onlv people possessed with an “ economic brain.” I am, therefore, verr much amwed to find that Bulletin No. 79. prepared by the Department of Economics of the Canterbury College, is practically nothing mere or less than t»iased and plagiarised phrasings taken from Pigou. Taussig and a few others of the orthodox school. I am very much afraid that although Bulletin 79 may bluff the unthinking, such theories that wages must make another cut before prosperity comes along will no longer hold water. In quoting the United States Census Bureau figures, it can be clearly proved that the labour output and profits are to-day too high, and the crux of the present position is that the worker has collectively been getting less and less return for his labour. Up till now the foregoing has been more or less theory. But figures that have just been worked out by the UiLA. Census Bureau sustain my theory beyond doubt. The fact that there has been overproduction on the part of labour can no longer be questioned. But our friends the Chambers of Commerce seem to ask. “ Why do a surplus of goods bring hard times?” Thousands of New Zealanders are in need of more clothes, better food and more substantial houses, as well as the conveniences and luxuries of life? The U.S.A. Census Bureau says that in 1894 the manufacturing industries of the U.S_A. produced goods valued at approximately £200.000.000. and paid £47,350,000 m wages. Since that time both wages and the value of products have increased enormously. In 1929 the output of the manufacturing industries reached the highest point in history. Goods turned out byplants in the United States were valued at £13,600.000.000. Had industry paid the same proportion of this return in wages as it did in 1894, wage-earners would have received an aggregate of £3.200.000,000. Instead they were paid £2,254,223,200. leaving the wage-earners a debit of £945,776,800 as compared with the 1894 ratio. During 1927, says the same authority, wages amounted to £2,160,760,400 and the products of the manufacturing industries were worth £12,744.600000. Wages increased in the following two years by £84,444,800 in spite of the fact that fewer workmen were employed. But during the same period production was augmented to the extent of £1,147.027,800. In other words, labour registered a gain of 3.8 per cent in its purchasing power, while the output of industry gained* more than 9 per cent. In these figures lies the story of the industrial depression, and what applies to the U.S.A. also applies to New Zealand. Should the Professors of the Department of Economics of the Canterbury College or members of the Chamber of Commerce seek to disprove these figures at their source, or in reference to New Zealand, I still have a little more ammunition.—l am. etc.. AMATEUR ECONOMIST.

“Amateur Economist” writes: Permit me to say how much I appreciate the impartial policy of the “ Star.” When the first civil service “ cuts ” came along, your journal was cut right out of the family budget and scanned from the files of the library. However. although agreeing to disagree with your policy, as expressed in the Heading articles, one cannot but admire the impartial manner in which all sections of political thought are reported in the “ Star ” columns, and, hence. I am glad to be a subscriber once more and one who is more than satisfied with the efficient news service given.