The Wanganui Chronicle MONDAY. JULY 17, 1939. THE STANDARD OF LIVING

Wanganui Chronicle, Volume 83, Issue 166, 17 July 1939, Page 6

The Wanganui Chronicle MONDAY. JULY 17, 1939. THE STANDARD OF LIVING

liie ciisii.se of lii> speicli (.luring the Adche.-s-s-iii-lieply debate Mr. -I. \. Lee said that the Government repudiated Ihe policy which made the standard of living depend on overseas prices. As a statement of repudiation it is an excellent one, and it would be most desirable as a statement of policy. Indeed, there arc very few people who would disagree with it as a policy, for it would even-out conditions in New Zealand from year to year and enable a balanced view to be taken of internal conditions. Before waxing enthusiastic about, this repudiation of .Mr. Lee's, however, it might be as well to approach it from the practical side, for while most people desire to see the Kingdom of Heaven come on earth they realise that a perfect world cannot be constituted purely by wishing for it or repudiating this imperfect one. In the first instance. New Zealand is unable to make all of the things that she needs to maintain the present standard of living and consequently those goods whieh.have to be purchased from overseas must be paid for. ]n order to secure the money which is acceptable to the seller—and New Zealand Reserve Bank notes are not acceptable to the manufacturers of Hngland and other countries nor even to the hotelkeeper of Australia—New Zealand goods have to be sent abroad to be sold in the markets of the world, but chiefly in the United Kingdom. The Government of New Zealand has no power which it ean exert over the buyers of Nev, Zealand produce in the United Kingdom mid those buyers will continue to exercise their choice as to the quantities which they will buy and the prices at whieh they are willing to make purchases. It must be remembered that New Zealand has no monopoly position in any of ils commodities and. therefore, it cannot dictate even temporarily to the buyers of ils products. It follows, then, that for goods that are sent overseas the prices realised will be those dictated by the condition of the markets concerned at the lime of sale. It follows, further, that as prices fluctuate the export income of the Dominion must fluctuate, and with a decline in income from exports fewer goods can be purchased abroad for importation into New Zealand. In short, the standard of living may have to be reduced in times of low prices. A study of the history of prices, however, is a very illuminating one for it reveals that there is no such things as a normal level of prices. Prices are continually changing, not only when registered in a general index but more particularly in respect to individual items of consumption. Nobody ean say beforehand whether, for instance, the price of butter will rise above the average of the last ten years because economic conditions never re-establish themselves, they are always changing. To take an example: Chile believed for a long time that its exported product. rock nitrate, enjoyed a permanent demand and the Chileans acted accordingly, loading the nitrates with an export lax for the financing of social services which reached a high level for a time. But ihc high level of prices which was maintained for Chilean nitrates was one of the factors which caused efforts to be made to fix nitrates from the air and now the Chilean rock nitrate has to compete with the synthetic nitrate product. The level of prices for tlv former product has consequently been permanently lowered. When a depression starts nobody knows when it is going to cease for their pai-tieula>• product and what, the outcome of the depression will lie and. consequently, it is desirable to shorten sail as much as possible immediately by reducing costs which, of course, includes wages. This does not always inflict a commensurate hardship on the wage-earner because the drop in money wages is partly and sometimes wholly offset by the lowering of prices, thereby leaving the standard of living at or near where it was before the decline in prices set in. Time-lags are left out of consideration for the moment for the sake of clarity. If it could be known beforehand when the uptrend in prices was likely to take place then any community could with justification run on its accumulated reserves, but. because there is no such foreknowledge obtainable anywhere in the world it is obviously desirable that some shortening of expenditure is desirable. There is. undoubtedly, one way whereby a community can enjoy a higher standard of comfort than its current, income warrants and that is by accumulating reserves of capital during periods of prosperity in order to have them available for consumption during periods of lowered income from exports. According to the pamphlet attributed to Mr. Loe, he is already seized of that point, and it was because the Government which he supports reversed the rational process and spent the reserves of capital during a period of exceptional prosperity and that Nmv Zealand is now confronted with the possibility of a period of lowered export income, that he was moved to write Iho pamphlet in question. The individual who spends too freely in good times will have to go short in bad times and i'_ is the same with a community. .Mr. Lee is. therefore, in a somewhat unhappy position while he, continues to ...ippert a policy whieh goes counter to his own professed desires.