The Wanganui Chronicle. TUESDAY, APRIL 19, 1949 THE NATIONAL INCOME

Wanganui Chronicle, 19 April 1949, Page 4

The Wanganui Chronicle. TUESDAY, APRIL 19, 1949 THE NATIONAL INCOME

only justification for making an effort at redistribution of the national income is that the altered position is better than the unaltered one. To propose a change for one section of the community while ignoring tl?l other sections is an inadequate treatment of the problem. At the present time the exported products income has increased in a manner that is wholly favourable for those who receive it or share in it. This favourable condition has about it a degree of stability which is unusual and not to be found in a free market. When the market is subject to the fluctuations brought about by the interplay of demand and supply there is justification for saying that he who takes the risk of the market shall take the gains and carry the losses. These individuals who engage in such risks cushion the economy of the country by pocketing the rises ami paying the falls. This they are able to do by employing their individual resources. When their resources prove to be inadequate their losses are transferred to those with whom they have traded. It may yet prove that this shouldering of gains and losses by individuals provides a more stable general condition than a managed economy where the community endeavours to put the pieces together in an intelligent manner. ’ x The recipients of a rise in the export income, however, do not comprise a class of persons, they are a number of individuals. Because farming income rises it does not follow' that all farmers have enjoyed an enlarged income. Some may be engaged in a branch of farming yherein the gains have been negligible, whereas in certain limited fields the gains may have been very large. The recent advances in the price of all grades of wool have increased the incomes of sheep farmers who sell their wool, but it may not necessarily follow that the man who sells store sheep is as much the gainer as the general average of farmers—in other words as the index number of farming income would indicate. It is the fear of the individual who 'nas not fully benefited that any general alteration in the distribution of income will be permanently to his disadvantage that brings out the atavistic spirit against the effort to redistribute national income. This is not a surprising manifestation for it is no more than the operation of the instinct of self preservation operating in the economic and social sphere. Where changes are decreed on the basis of an improvement in the national income it is desirable that at the same time machinery should be provided for deciding beforehand how a decline in the national income may decline although it remains stationary. Where there is an increase in population and the national income ■remains stationary it must be shared by the larger number of persons in the community so there must be less for each individual. Even where there is no change in the total population and the income remains stationary it may still register an actual decline as for instance if the industrial equipment has been improved but the output has not. Shorter hours of work or a lower value of the product of the hours worked may result in the inadequate provision for the replacement of the larger industrial equipment. In such a case the community would be living on its capital to the extent that the depreciation of the plant was not met year by year. The ultimate result would be a much lower standard of living for all. Further changes in the distribution of the national income may bring about a discouraging of the actual producers. For instance the retirement on pension of workers at an unnecessarily early age takes them out of the producer class and makes them a charge upon those who actually work. The more old age pensioners there are the greater must be the transference of earned income from the operative members of society to those who are not now productive in their occupation. The greater is this transference the less inclined will the workers be to enlarge the national income. Why should they do so when they do not receive the value for their labours? When a man works overtime and finds that five shillings in the pound is taken from him in deductions of one sort or another he ceases to be tempted to work for a pound and asks himself whether it is worth while doing the extra work for fifteen shillings. If he finds that he will be more happy at the cinema he goes there and pays for two seats instead of going to the factory and occupying one. The Treasury may lose three or four shillings by that decision, but the national production income is reduced by a pound. The transference of income can, therefore, be pressed too far for the national good. “Soaking the rich” is an attractive policy to advocate because it is the many chasing the few. But it is because the few are too few that the many find that in the end the process of soaking the rich not only operates to Jetjer the rich from making what is sometimes a very valuable contribution towards the general wellbeing, but it also discourages the many from making efforts to swell the national production income.