The Waikato Times TUESDAY, DECEMBER 27, 1938 PLANNED ECONOMY

Waikato Times, Volume 123, Issue 20689, 27 December 1938, Page 6

The Waikato Times TUESDAY, DECEMBER 27, 1938 PLANNED ECONOMY

“Planned economy’* is believed by many people to be capable of solving a nation's economic needs, increasing production and generally making the best possible use of a country’s productiveness and manpower. Consequently, in almost every country the governments, whether democratic or dictatorial, have placed a form of State control on all industries in order to make the best use of the national wealth. So sure have its advocates been of the infallibility of such regimentation and control that most have not paused to make comparisons and study the results of control as opposed to producing by private enterprise. Therefore the statistics contained in a letter to the W aikato Times are particularly interesting. The writer shows that despite its vaunted regimentation, Germany’s primary production has decreased substantially since the Nazis seized control —a fact that is astonishing when the nation’s

“supreme effort” is considered. Even in Russia where all the forces at the command of the Soviet have been directed to the improvement of production, the yield of wheat, for instance, has declined for several years. Of course it is obvious in the case of Germany that too great a proportion of the manpower has been diverted to the manufacture and use of armaments, but the fact remains that although the great army of Germany’s former unemployed was pressed into agricultural work, production has not been stimulated. Germany is suffering from a serious shortage of raw materials and its farmfe still lack the labour they could absorb. New Zealand is not exempt from the common rule. In years past private enterprise was responsible for a continual increase in production which seemed to have unlimited elasticity. Immediately the regimentation of the State was applied, with a rigid limitation of private earning, the increase ceased, and production in the past two years has declined substantially. Climatic conditions have been blamed, but there is more in it than that. No one would suggest that industrial activity should be free from intelligent planning, but when State planning places the producers in a straitjacket and takes away the incentive to produce more, a certain inertia takes hold of them. The simple fact is that farmers who are paid only fixed wages by the State will not produce as much as if they were free agents, endeavouring to make homes and fortunes for themselves. No matter how it may clash with economic or political theories, the fact is incontrovertible and must be taken into consideration in planning the national economy. A good farmer as a free agent will produce morQ. than a State servant, and all the compulsion in the world cannot alter the fact. “Planned economy,” of course, involves a wider field than mere production, and if applied in defiance of natural laws will produce a host of restrictions and prohibitions the nett result of which is a tremendous show of “efficiency” from which, unfortunately, the desired result is absent. It is so with Germany, Italy and Russia. So absorbed have those nations been in their own efficiency that it must be galling to discover that after all in fundamentals they are not making progress and have need to look abroad for the satisfaction of their people’s ordinary requirements.