The Dominion. SATURDAY, JANUARY 7, 1911. STATE SOCIALISM IN NEW ZEALAND.

Dominion, Volume 4, Issue 1019, 7 January 1911, Page 4

The Dominion. SATURDAY, JANUARY 7, 1911. STATE SOCIALISM IN NEW ZEALAND.

Although a good many books, some of them useful, but others of them trivial and ignorant rubbish, have been written about New Zealand'in recent years, the things concerning which lull and accurate information and' careful commentary would be of high .value to foreign students of politics arid economics have been very much neglected. The only important feature of New Zealand life that has been adequately treated is the operation of tiic Arbitration Act, and so much attention has been given to that law that local and foreign writers have quite lost sight of the fact that there are other political problems of. far greater importance than the labour problem. The average New Zealancler who is interested in the politics of his country is much more occupied with other topics, and for the practical reason that they affect his life far more than any one of our "Labour laws." Such topics' are: National finance and taxation, State trading enterprise, the disappearance of Parliament's 'power into the Cabinet room, and the system of public expenditure that has converted the public's money into party ammunition. These subjects have never been adequately treated in any book of which we have any knowledge, and this is very surprising, since at the present time a complete account of the state of these qucsti'ons—which would be a picture of the varied effects of the Liberal administration—would be of the highest value to political-students in Britain, where some of the principles which have worked to their noxious end in New Zealand are . rapidly coming forward into the list of irii-, mediato subjects for political action. Something like an essay towards this work reaches us from America in the shape of a volume on Stale Socialism in New Zealand (New York: T. Y. Crowell and Co.), by Professor Le Bossignol, of the University of Denver, and Mr. W. Downie Stewart. This is a really useful book, since its facts and figures aro wonderfully accurate (the references being all carefully dated), but there are sighs of a little carelessness in commentary now and then, due, no doubt, to ,the necessity for compression. For example, the statement that true progress can be attained only by checking and removing competition is given as the statement of a scholar and a statesman ! This was a slip, for Professor Le Rossignol of course agrees with all responsible writers upon economics that, as an English writer recently put it vrith admirable clear-

ness and force, if the hope of pecun- 1 iary reward is to cease to exist as incentive to industry, upon wjiich progress depends,, the only alternative will bo the fear of tlie lash. The authors are quite impartial, but are upon tho wliolc disposed to a cautious friendliness towards the Administration. Sometimes their anxiety to say a good word for the Government leads them to make sorne comical mistakes. The public will specially enjoy, for example, tho statement that "the financial stress through which the Dominion has passed has taught the wisdom of caution in borrowing and economy in expenditure" ! It is also observed, in tho concluding chapter, that there is no general demand for an extension ot governmental functions, the authority being that most extraordinary of the many strange errors in A'ew Zealand in Evolution, viz., the statement that "to-day it is the avowed policy of the State to encourage private enterprise" in water-power development! It must be said, and it is a significant fact, anyway, that such errors as ' these and others are due to the rapidity with which tho Government breaks its promises, forswears itself, and reverses its policy, in its feverish anxiety to keep in office. Who-would undertake, for instance, to say what the Government's land policy would be by the time his book, came out 1 There are many things in the _ book which well deserve the attention of the New Zealand public, and we shall note some of them. The admirable chapter on railway finance wo discussed several months ago when it appeared in the Harvard Journal of Economics. The authors incline to the interesting theory that the stops New Zealand has taken towards State Socialism, the "multifarious activities of the New Zealand Government" can be explained by the fact that "the early settlers had a sense of dependence which made them look to the New Zealand Company, and,, afterwards, to the State, to do'"things which the American settlers, unwilling to be. taxed , and unable to borrow, hii'd to do for: themselves."" This is ingenious, but quite unsound. The true explanation is in the drugging of the public conscience with loan money, which, coupled with "political" control of tho public works expenditure, enabled the Seddon Government to grow in power and to hide from an unthinking public, -revelling in borrowed goods/thc real cvil3 of State paternalism. In the very interesting chapter on land tenure, it is pointed out that "t-h'c chief danger of a large Stato_ tenantry has already been strikingly illustrated, namely, the immense political. pressure which they can exercise." The conclusion of the authors is that tho advantages of State ownership have been much exaggerated, and they follow up this opinion with a good statement of one of tho arguments for the granting of the freehold in the case of settlement land:

Had tho tenants been allowed to purchase tho freehold of these lands, the State-could have devoted tho proceeds of the sales to the purchase and division of ether estates, and this process might *havo gone,on indefinitely,'without borrowing so much money from abroad, while tho freeholders would have been more contented than the present- > arc, ".'.and might have contributed something to tho public revenue by wny of a land. tax.

We can only summarise a few of the more striking of the generalisations in respect of other phases of our social and political life. The ordinary "Liboral" politician will not appreciate, but we believe that the public will approve, the doctrine that "it cannot- be sound policy for a country likcJSTew Zealand, where the Government does so many things, to allow governmental enterprises to bo carried on at a loss":

. Other countries can.'perhaps afford the luxury of deficits in the postal service and tho like, because they merely-play at governmental ownership, but to adopt this policy on a- large scale- would bo to start upon tho downward path that leads to ruin.Governmental property pays' no taxes, and, when there is a deficit, it must fall, sooner' or later, upon the taxpayer. Thus, with every extension of governmental activity, taxes would increase, while property subject to taxation would, relatively decrease, and the burden would grow until it could not longer h rv borne. Then it would bo clearly seen that tho principles of sound privato and public financo are essentially tho samo.

Who can doubt the equal soundness of tho '-reminder that borrowing may become a source of grave danger in times of depression or crisis, especially in> New Zealand _ where "the most profitable enterprises in which the Government is engaged do little more than pay their way" and "have no considerable- margin of profit or surplus which could be used in case of emergency, no.buffer, to receive the. shock of loss, which must fall directly upon tho taxpayers or come out of loans which might be hard to negotiate" 1 Professor .Le Eossignol admits that the bestknown forms of corruption in America are absent from New Zealand, yet he could not help seeing, from an examination of the system of public works expenditure, that "the concentration of a large part of the economic power of the community in the hands of the Government has created a form of corruption which, while its moral evils may not be so far reaching, is still more wasteful from the economic point of view." A mass of carcfully collected figures-shows that the condition of the workers is riot so good as in America. . Colorado is in the. essentials of measurement strikingly akin "to . New Zealand,"' and while the : cost of living in Wellington is. "somowhat" less than in Denver, Colorado's capital, the wages in Denver are "considerably" higher than in Wellington. In the skilled trades the proportion' is roughly two to one. It is difficult to imagine anybody perusing this book without feeling a growing conviction that tho drift of our legislation and administration is towards peril. The country is rich and productive, to bo sure, and fit for great results under good management; but it has been sailing ever closer to the wind, and it is only the fact that under the Liberal regime the country has obtained on credit forty millions sterling worth of its consumable goods that, hides the true position. Our authors have said practically 1 nothing of the gradual crushing out of true individual freedom under the pressure of State Socialism, and that is really the most terrible evil of all.