REFLECTIONS ON ECONOMY.

Waikato Times, Volume 112, Issue 18797, 19 November 1932, Page 11 (Supplement)

REFLECTIONS ON ECONOMY.

THE CORRECT AND THE CRUDE.

(Sir E. Benn, C.8.E., in Empire Review.)

ECONOMY MEANS THE WISE DISPOSITION of money and other values —wise spending; and the general failure to appreciate this true meaning has been the cause of some part of the distressful crisis through which we are passing. Individual saving may or may' not, be economy, according to the circuinstances of the individual saver, and the nation with the best economy is that whose citizens have the maximum income to spend. A right understanding of the word, and a clean conception of the purpose of the present Economy Campaign, is especially necessary at a moment wh4n a great deal of damage is being inflicted upon our trade in the

breast of the individual, but highly dangerous when it is permitted as at present to swamp a whole nation. The filing of forms Is a tedious way of picking up a living, but. if those forms are filed from nine to six at a wage within the limits of the money paid by the customers with whose business the forms are concerned, the work of fc flling is a useful contribution to the economic well-being of the whole. To-day, however, the youth whose capabilities are suited for filing forms finds that he can do his work from 10 to five, on forms to show the percentage of taxpayers who are living with their wives, or the relative prevalence of conjunctivitis in different educatt—'M areas. He further finds tliat he can secure a higher aai«ry for such useless work and avoid all the trouble and risk from the need to give satisfaction to customers, Indeed the more trouble he causes to his viotlms the more he charges them for it. It is, therefore, remarkable to find that hundreds of thousands of estimable people have swarmed into these tempting openings, and can we be surprised to discover that a large proportion of our swollen education expenses is devoted to training and encouraging boys and girls to

Mistaken Belief That Some Virtue Attaches to Non-spending. That we shall eventually achieve public economy is certain, but we are in danger of achieving it by a painful roundabout prolonged process that could be avoided if only we could clearly understand our purpose and the simple way to accomplish it. The stages of this long process are easily traced.

First, we multiply public expenditure by five times the highest pre-war figure. The extent of this development is seen more clearly if we remember that the Victorians governed themselves at a cost which was never more than five per cent, of the total national income, while our ideas of government absorb practically half of the total resources of the nation.

Qualify for These Parasitical Positions?

In the result, as Herbert Spencer prophesied, “an organisation of officials, once passing a certain stage of growl;, becomes less and less resistible. Not only does the power of resistance of the regulated part decrease in a geometrical ratio as the regulating part increases, hut the private interests of many in the regulated part itself, make the change of ratio still more rapid.” A cynic may be excused for thinking that Herbert Spencer was wasting his breath or his ink. Sixty years of argument have failed to do what 60 days of disaster last autumn have accomplished. The regulative part having swamped and bankrupted the regulated part, the folly has run its course, and now, whether the argument is accepted or not, the process must come to an end.

The second stage is brought about by the enforced economy, or reduced spending power, of all the people who are rated and taxed for these new purposes. These economies reduce our trade and increase our unemployment, and thus, in a vicious circle, increase the size of the trouble that brought them about.

Thirdly, all the out-of-work traders and their unemployed workers, having less to spend, bring about a further reduction in the normal trade of the country.

And, fourthly, and very stupidly, the minority who esoape all this suffering, those whose surpluses are still sufficient to enable them to enjoy a normal life, proceed to follow the fashion of economy, and, by refraining from spending what they might well spend,

. It is, in this way, immaterial whether the public have the brains or not to see that economic well-being can only be obtained In a condition of liberty. Economic well-being has, in fact, been destroyed by the withdrawal of liberty and the absence of the means to pay for the regulative and repressive machinery of governmental interference and control will of necessity some day or another drive us hack to liberty.

Add to tho General Tale of Depression.

We then reach the final stage (which will be understood better when the 1933 Budget comes forward) of a much smaller national income yielding much less in rates and taxes, and thus forcing the cessation of the public extravagance which was the prime cause of all the trouble. But what a pity to go such a long and painful way round. The Economy Campaign, therefore, starts with the injunction to the private individual to spend as much as he reasonably can. The old and discarded law of supply and demand (just as much a law as ever) supports this injunction, for, when the money market can only pay onehalf of one per cent, for money saved, there is the clearest indication that the saving of money is for flic moment not wanted in the public interests.

Economy is much more than a matter of money. Figures and money are only ciphers indicating more important things. On the surface, economy will be achieved because the money on which extravagance relies is not in fact there. But down below that superficial consideration will remain the real truth wrapt up in the eternal mystery of liberty. Mankind Oannot Perform the Natural Work of Life, cannot succeed in the struggle with the forces of nature which is thc natural work of life, so long as half the population insist on standing between the man and his work, the trader and hjs customer, and interposing every conceivable kind of artificial obstacle. A great deal of educational work remains to be done before the general public will realise the extent of the inherent danger in the governmental idea. When some fussy functionary, drawing a salary from the rates which he could never earn in any free market, .presumes to dictate to a Royal Academician on the design of a lily pond in a private garden in Hampstead; the matter is regarded as a joke.' A few funny newspaper paragraphs are written about it, and for a few days it is a good subject of conversation. But the greater truth of which the lily pond incident is only an indication remains hidden from the public vision, and it is hoped that the need for economy will do something to bring it into more general recognition. Mr Frank Salisbury, through this little incident, represents the whole body of active persons on whom our economic life depends, and who, to-day are unable to function for the general benefit, because half their total product is taken from them by people whose business it is to stop them from performing their necessary work. Without invoking the aid of figures, it is becoming evident that public expenditure generally defeats the object for which it was incurred. The Ministry of Agriculture and the Board of Trade cost fifty times as much as they did at the beginning of the present century, and yet our agriculture and our trade fail lo reflect the arguments on which these obstructive institutions were recommended to us. We establish a grandiose Ministry to find us work, and the only result is to drive more of us into unemployment. We wax enthusiastic over town planning and put a check on all development, the serious nature of which is at last beginning to be recognised. Year by year, for more than half a century, Parliament has found a new and improved solution of the difficulties of the coal trade, and in the result that great industry almost rivals Ireland as an Illustration of th© Futility of Politics. We have recently spent a £1,000,000,000 of public money on houses, and therefore the house is the only industrial product of which there is an absence of over-produc-tion. Whatever may be the rights and wrongs of the questions involved in the many social services which modern democracy has thought it desirable to inaugurate, the financial methods employed in connection with them are deliberately immoral. The plain fact is that while we “enjoy” these tilings we fail to pay for them. Our grandchildren are already over-mortgaged by our extravagance. This side of the question Is too big for discussion in a single note at the end of a magazine article, but students of economy are in duty bound to examine it. Public debt amounting to £10,000,000,000 is only a part of the burden we are passing on to posterity. The growth of the public service, and the consequent wholesale distribution of pension rights, has created a liability for the future of which no account is taken, and no calculation made. Non-be-lievers in democracy have here the gravest of the charges against it. Our social service enthusiasms have been satisfied at the cost of the soundest and oldest of social foundations.

It will be noticed that Ihe first stage in the processes we have traced was the increase in public expenditure. It might he called the Lloyd George stage. It arose from the newfangled notion that the Stale could find us work, feed our children, arrange our trade, take care of our health, provide our pensions, control our industries, and generally save us from all the ills lo which flesh is heir. We are beginning to know better.

In considering the causes of the present economic depression, we have to remember the war and the world chaos that came out of it. We get these causes into better proportions if we also remember that our publio expenditure since the war totals more than twice as much as the whole cost of the war itself. World conditions, so constantly quoted by our politicians, arise from the natural way in which every Government in the world has copied us and multiplied public expenses. Therefore, however many causes there are to explain our present plight, they all owe something of their origin to the Socialistic Tendencies of the Mother of Parliaments. The definition of' economy as wise spending invites the rejoinder that expenditure by Governments may be as wise as expenditure by individuals. Here we open up a very big subject with many subdivisions. Shortly, the answer is that wise spending can seldom he accomplished by anyone with other people's money. Wise spending implies an exchange of value for value, and it is given to very few to be good judges of the money of others. Wise spending starts with the money in the purse and proceeds to consider how far wants can be satisfied within the limits of the money. Publio spending begins by manufacturing wants and then searching oLher peoplo’s purses to meet the liabilities thus created. If it were the fact that all the money was in the purses of people who had no title to it and that all the wants were felt by people who had been robbed of a just reward, then our present scale of public expenditure would at least have a respectable sentimental backing to support it. Even such respectable sentiments would not, however, help us in our economic plight, because they overlook the natural consequences of their application. As the money owners cease to own and the money earners cease to earn, they both swell the numbers dependent upon ever-diminishing resources. The desire to be a private spender promotes the desire to work and to trade. The modern craze for publio expenditure damps down both aspirations. A good deal of our publio money is spent from, purely socialistic motives, the main incentive being to punish the rich. Most of the Lloyd George People’s Budget blessings were frankly recommended to the voters as an attack upon the dukes and the moneyed classes. Another large section of our public expenditure arises from the democratic weakness for bossing everybody, a weakness almost as. apparent in Conservative and Liberal as in Socialistic legislation. This part of our expense is self-multiplying. There has to be added to the salaries of all the inspectors and spies who infest our factories and our shops the Value of All the Trade Which They Destroy, A third large part of our rales and taxes operates to destroy the’ national wealth in yet another way. If a man can get something for nothing, lie will refrain from producing the something else which he ought to give in exchange. 'l’lie most elementary economic knowledge makes it clear that work produces purchasing power, in fact no real purchasing power can arise except from somebody's work. Yet our social services deliberately ignore 11 1 is fundamenl.il truth and profess to he aide to distribute purchasing power to lliose who have not been able to acquire it in a natural way. While it is true that given general prosperity a limited amount of Ibis charitable purpose ran always he achieved, it is the most obvious folly to suppose that a national economic system can he made from wholly unnatural economic ideas.

Progress in the past has consisted in the provision by Midi generation of a surplus for the enjoyment and elevation" of the next generation. JL has remained for us lo find a way of living in comfort ami leaving the bill to the future. Within twenty years from now the cost of pensions to officials will exceed the cost of the public debt. A full examination of the many sides of this new “credit” policy will convince the most ardent social reformer that

Future Generations Are Already Robbed of Their Birthright, anri will have no opportunity to indulge their own inclinations or to-invent new forms of political' “'benefits” because they will be so busy paying for our experimental work in these directions. They can, of course, repudiate our debts and thus destroy the framework of civilisation, or they can pay for our extravagance by hard work and low standards. It is, however, obvious that they cannot, in any case, live our prodigal lives and -pass on ever mounting liabilities to an ever more distant future. Economy is not merely a matter of a shilling off a rate here and a sixpence off a tax there. The real question Is whether society can continue to exist if it is composed of people whose main interest and occupation consists in governing one another.

Approaching the subject from an entirely different angle, consider the ordinary case of the middle-class youth or maiden in search of a way to earn a livelihood. It Is in the nature of things that a very small portion of the economic army is gifted with creative genius or managerial capacity. The great majority are from necessity doomed to keep the books, wrap up the parcels, or turn some handle on a machine of the workings of which they can understand but little. More than half a century ago Herbert Spencer explained in The Coming Slavery the dangers of public expenditure from this point of view. The urge to obtain the security of public employment is natural enough in the