Common-Sense Economics.

Press, Volume LXIII, Issue 19137, 21 October 1927, Page 10

Common-Sense Economics.

We print a letter to-day from a correspondent who believes with the City Engineer—we are trying to. set it down calmly—that the purchase of foreign goods takes itfoney out of the country. The "common-sense view- " point," he says, is that " every pound "we can avoid spending on imports "by using local materials is a clear " gain of that pound for local circulation." And to make his meaning quite clear, he " brings Mr Galbrai,th's " views down to a simple formula ": My household requires, sSy, £o worth of potatoes in a year. If these - are bought from America, neither myself nor New Zealand has any further interest in the £5, although I get the potatoes. I could buy from the local potatO'growcr, and the £5 would remain in local circulation. 'Or, on the other hand, if I use my available back-yard and grow them myself, I still get the potatoes, the £5 is still atvajlaole for local circulation, and my finances are £5 to the good.

Wo hesitate to tell our correspondent that, in the first place, it is very unlikely that a single penny will go to America for his potatoes, but a dozen fleeces of wool or a case of butter; and in the second place that if he grows his potatoes in his back-yard he helps his finances only if, while growing them, he is more profitably employed than in any other way. If he .has the climate, and the soil, and the capacity to grow cheaper potatoes than can be grown and shipped from abroad, and would not, if he kept out of his back-yard, be producing £5 worth of anything elso, it will be advantageous to grow his own potatoes, and he should do so. Similarly if the City Engineer can obtain tar or asphalt or any other road material as advantageously within the Dominion as from abroad—in other words, if those producing the material are making the most economical use of their time by producing it, and could not be more profitably employed on other tasks while someone abroad is producing it —he should use local material, and it will be to everyone's advantage that he should do so. For it is true, as our correspondent says, that the finances of a country are "after all similar to the finances of "an individual." Our correspondent does not make his own boots because he can make more than their equivalent in value while someone else is making them. He does not grow his own grass, and graze and shear his own sheep, and weave and dye his own wool, and cut and make his own coat, because the time and money and energy he would have to devote to those things can be used to better advantage in other directions while the fanner and the manufacturer and the tailor are getting ,his coat ready for him. And in precisely the same way New Zealand does not, and should not, try to be wholly self-supplied and selfsustained, but simply to use all her Xttragroes to the best possible advan-

tage (allowance being made for the cases in which political or national or strategical considerations interfere with the purely economic). And as for sending money out of the country, and losing it. whenever wc buy abroad, and saving it for local circulation whenever we buy at home, it ought to be as difficult to find a genuine case of that superstition to-day as to find a genuine doubter of the earth's rotundity. We have pointed out already that if it were an advantage to " keep money in the Dominion" it would be an advantage to keep it in our own town and even in our own homes, so that Auckland would not buy from Christchurch or Christchurch from Auckland, and everyone, till cold and poverty ar.d hunger put some sense into him, would clothe and feed himself. There is no difference whatever, intrinsically, between paying for goods abroad and paying for them locally. If we buy local goods wc help those people who produce the goods, and do well to help them if they are able, after a reasonable time, to produce what we want advantageously. But to say that if we buy foreign goods we send money out of the country is to say something too absurd to be discussed seriously, and if our correspondent does not know why, we cannot imagine what excuse he gives himself for buying a chop instead of running down a rabbit.