WIDER SCOPE.

Auckland Star, Volume LXXIV, Issue 229, 26 September 1940, Page 9

WIDER SCOPE.

SPREADING OF NET.

VIEWS OF ECONOMIST.

Though agreeing with the principle underlying the issue of a war loan at announced by the Government, Professor 11. Belshaw, professor of economics at the Auckland University College, saad to-day that he would have preferred "to see the net more widely spread," particularly in connection with those on the lower-im-ome levels.

"The financing, of a war involves the problem of diverting la'bour and resources to war purposes," he said. "Save in very exceptional circumstances, this involves a reduction in consumption which may be brought about by taxation, savings or credit creation—and the last method is likely to lead to inflation. I would rule inflationary measures out undesiraible, which would then leave as a resort taxation and savings, as the best methods."

It seemed unlikely, he said, that taxation and voluntary savings would raise sufficient for war purposes and this necessitated resort to compulsory savings. It then became a question of applying a suitable method in connection with a move for compulsion.

"I see little objection to the present proposals put forward by the Government," Professor Beishaw went on, "except that I doubt if the net is sufficiently widespread and I would -also entertain some doubt as to whether many of the payers of income tax can supply the amount required, except by borrow-

ing from the banks on overdraft—a method which would, in effect, be inflationary.

"I would prefer to see an application of the proposals advanced hv the English economist, Mr. J. M. Keynes, under which the necessary reduction in consumption is. broujrht about by an extension of the principles of compulsorysavin™ to all classes below a certain income level, whether or not these classes pay income tax. As is clearly shown by Mr. Keynes, this would not. in fact, mean a reduction of living standards below that which will, iii any case, occur, but it would have the advantage that wa;re-earners in particular, would merely defer consumption until a later period, without losing their purchasing power altogether.

'"An opportunity was missed when the award rates were recently 'increased by •"> per cent," Professor Belsliaw continued. '"Had this taken the form, not of cash wages. but of compulsory saving, leading to deferred consumption to be liberated later. I am certain that the workers would V no worse off at the present—since the hijrlier wa«es have reflected themselves in increase! prices —and they would have had the additional purchasing power afu*r the war is ended."'