AUSTRALIAN THEORY OF WAGES,

Dominion, Volume 7, Issue 1911, 20 November 1913, Page 9

AUSTRALIAN THEORY OF WAGES,

■ » ■■— INCREASES THAT DO NOT BENEFIT. A VICIOUS CIRCLE. (3)ram the "Sydney Meriting Herald. lu Australia, Unlay the theory oi wages, not often, expressed, but'still apparently very generally accepted, is something of litis sort— W ages should hear a reasonable relationship to the cost of living, should rise with it, i-ntt should not fall if. it ialis, while tins cost of living may bo defined as tUo amount which it would cost a prudent broadwifiiier to maintain himself and a family in plain but reasonable comfort at the ciuteut prices 01 commodities, whatever they way be. As au ethical idea there is nothing to be said against the conception, but as a working rule of economics it is faulty, m th.o extreme. Not only is it iaulty, it y harmful to the morals of ft c ' o * nl « mi %i mid contains within itSelf all thy elements <jf ultimate disaster. It tiu.ito overlooks the fact that the cost -of living itself is hasfcd in part opon wageSj and so every rise in wages inevitably involves ail .additional increase lit the east of living, winch thus, according to the theory, involves a fur* tlier rise iii wages, and B0 on ad infinitum, if tlii.s theory were substantially correct, theixj Would bo iio limits to the heights to which, wages Could be forced. .w>gal tribunals could decree higher and stif higher rates of pay, tile employer couM pass on the increased cost to the public, the public would say that tiio cost of living «-as still mounting up, and tiio wnge-ea, tilers among them would uciuSiici ruiti soourc still higher in eonseaueiieo.' So the vicious circle would whirl rournl aiid round in its never-ending journey till ive should .bo measuring daily wages in pounds instead of m shillings, .as is the case to- 1 day. The question is: What will be tile end of this sort of thing?' Is it possible lor us to Create aii artificial world iu winch prices of commodities and the ■prices of labour bear 110 relationship to those of other parts of the wot Id beyond? As a matter of fact, that is ' exactly what \vo have already dono to somo extent. The tariff has enabled' us 'to areato an artificial condition of af-. P 3 ' - an< ? ! i° *' ar 10 maintain'it. But there is limit beyond which tvc inay not pass. Already wo are reaching that limit in connection with some industries, ivcjc'iii ly oiio branch of a pottery 1 >nsiUe !'® wa ? sllut down because it eouhl not. Sord to pay the wages demanded: and at the same iimo compete against imports. Others nro getting into .a similar position. TJio boot industry is in a nto.ro or less parlous way. Import s wo getting 'heavier:, and local manufacturers are finding it harder and harder to compete. For them profits are, in most cases,, non-existent, But they see a remedy, or, at least, a palliative,'near at hand. They are agitating for higher 'duties, dimly cftneeious, however, of the fact that any advantage they get in- . this way will sooner or later he taken Way from, them as wages still further advance. This general ndrance in wages aiid iii prices has served no good pnrposo as far as tho employers .are coii(orned. It is triio tlint in. mpst cases' they havo succeeded in passing on the increased cost of production to the ptf.b, lie, and that., as this lsa.s involved the utilisation of. more capital than iii tiio past, tliey Imvd made a profit on the ad* • diiional capital as Well as on the original •amount employed. No doubt£his' ! jfe ! liot th' 9 'v'iew ; of tho workers. They f<yl that iii. sonic way their iiierepsa \Va|es' ari) coiitiiig',Jf; iVot : out capital''all least put of tho profits of their employers and 'they think tliey' tiavft ovideiiee <}f tille fast. Every now and then directors' reports and balancesheets are issued, wliicli delicto that the. profits of certain companies hare been' smaller than usual, ana the reason giveh ■is that expenditure, cliiefly oil wages, lias been so great as to materially oat into, profits, it is clear enough., say live workers) iii Such casesj tlht they have, ■gained something St the expense of the ■capitalist. An! so tliey have, hut merely ill a temporary til ail such c.aSe«, one, of two DhingS invariably hap-pens—-citfe tl)o concern succeeds m passing the increased «x>st son tli<? public ; or, if it cannot do fio, then' it sooner or later goes out of business In no ease docs it permanently pay wages either out of capital or our of profit*. Instoad it looks for a profit on that part of its capital Which is utilised for tiio purpose of paying tho iticreased wages. Were it otherwise, tiiero would bo no inducement for capitalists to remain jit , business. Tliey do not- conduct enterprises with, all tho attendant worries as a form, of amusement. More irangenial diversions eoliW easily bo found. Where profits are temporarily <rff«tcd by aft advance. h» wages, tlw industry, for the time being, is in a transitional stage. It has not at that paint succeeded in passing the increased cost oil, bring prevented, per- . Imps, through having contracts still im- , expired, that regulate their owii soiling prices or charges for services rendered. Not do these continual increases in I wages in any way benefit . the workers,. \Ylifiii they first begin to handle, at the week-end more money Jws'sibly tliari J; tliey over handled in their lives* boforo, ; tliey think they are better off. Hut they are not. -the increase is quite ; illusory. With every increase the cost of living advances. If tho bricklayer i gets an advance the cost of building ; rises, and so do rents. But the cost ' of building rises at greater, ratio than ■: tho increase ill tho bricklayers' wago.s,, i because the builder gets a profit on the ; advance lie lias- to pay, and tlie rent ad- : ranees more than what would fairly re- 1 present tho added cost brought about through rise in the bricklayers' wages-, because tho landlord gets a profit on that added cost, as well as a profit ou what, would have been the outlay had the bricklayer received mo increase in i his wages. So tho bricklayer himself .: must pay more rent, partly as the con-j < sequence of Ins having got more wages, j i and if the carpenters aiid tho plasterers j ; and the stonemasons and the. rest all i , succeed in getting advances, the cost of j J of building is so raised that rente must ; : materially rise, too, if landlords ari> to j'

get ail? reasonable return on their in- j vestments. If they cannot get a reasonable return, then they ilo not provide houses rapidly enough, and conipetition between would-bo to.n9ll.ts forces tip. rents whether they liko .it or not. Th'f same argument could bo used right through the whole gamut of industries. If the slaughterman gets better wages, up goes tlm price of meat; if the baiter gets more, it affects the price of bread; ! if the carters got more, i.trncfei% j everything rises. j