The Guardian And Evening Star, with Which is incorporated the West Coast Times. WEDNESDAY, FEBRUARY 23, 1927. WAGES AND PROSPERITY.

Hokitika Guardian, 23 February 1927, Page 2

The Guardian And Evening Star, with Which is incorporated the West Coast Times. WEDNESDAY, FEBRUARY 23, 1927. WAGES AND PROSPERITY.

I In an economic study of the relation I of high wages to the degree of prosj perity created or affected, the monthly journal of the National Bank of the City of New York has a reference which is of special interest because it comes from the United States, where the question of wages and degree of industrial prosperity prevalent is often referred to' as being of some analogy one to the other. The paper goes on to say that so much is said in current discussion to the effect that high wages are the secret of this (United States) country’s prosperity that in the interest of clear understanding it is well that some qualifications he made. High wages which accompany high productivity, either as a cause or a result, undoubtedly make for prosperity and the general welfare, hut high wages which contribute to high industrial costs and are passed on for consumers to pay have no such beneficial results. If they yield benefits to the recipients it is at the expense of the rest of the community, and if no more substantial basis than this existed for the country’s prosperity the outlook would be poor. The real basis of prosperity is that as a rale prices to consumers have advanced less than wages, thus enabling the wage-earners to consume a larger physical quantity of goods. This could not | be §o unless productivity was in :

creasing. If wages and prices, both advance 50 per cent, with production remaining the same, it is evident that the wage-earning class will have no command over commodities than liefore and that its consumption, cannot increase. This is a fundamental truth which is ignored in much of current discussion. Wage increases witlionl increased production signify noth-

ing bill Ihe competition of indiisl riul groups with each other. If one wins larger Inning powers, il does so at the expense of the others. 11, however, by the installation of , improved machinery in production, or more powerful locomotives in transportation, the costs of production or transportation are lowered and prices are reduced accordingly, the result to every consumer will lie precisely the same as though bis wages had been inci'ea-cd, for a portion of bis buying power will lavailable for new purposes. The improvement in social condit ions so much desired, is not obtained by wage-battles which usually are costly and wasteful, or by victories for wage-earners which result in higher prices to consumers, but as the leader ok the T’nited .SlateLabor .Movement lias declared bv ‘“expanding productivity so that the cost of the manufactured article will be reduced instead of increased.’’ All this is of interest here in New Zealand where it is the practice, under the system of arbitration. to increase wages in proportion to the increased cost of living, irrespective of production as a result of the higher wages. It. is this system which is bringing the arbitration system, as practised in tho Dominion, into disrepute, and there is tt growing demand for a change, either in the system or the abolition of the Court. Wage increases withoul increased production or benefit, it is asserted, means a dead loss to the employer, who has to suffer it or pass It on according to his ability. That economic fact is worth hearing in mind in any general study of the present labor position in New Zealand.