The Guardian And Evening Star, with which is incorporated the West Coast Times. Friday, January 6, 1928. THE ACADEMIC VIEWPOINT

Hokitika Guardian, 6 January 1928, Page 2

The Guardian And Evening Star, with which is incorporated the West Coast Times. Friday, January 6, 1928. THE ACADEMIC VIEWPOINT

The question of unemployment is a very' serious one for the Dominion at present, seeing that it lias ranged into the summer months, and is likely to l)C acute next winter. Ibe matter is being considered from various viewpoints. In one case the Auckland Branch of the Research Committee of the Economic Society of Australia and New Zealand, lias been giving tin; matter very full consideration, evidence of which is contained in the special report issued quite recently. l)r Belshuw (who will be romemliered here) was eliairman of the Auckland Committee investigating the. matter. Ihe report is too lengthy to reproduce here, but tho conclusions as to the causes of unemployment in New Zealand, which are set down under seven beads, might be detailed. According to the

report the principal causes are ns follows:—(1) There can ho no <loul>t that the chief cause is the trade cycle transmitted to New Zealand from abroad and acting mainly through lower prices for our staple exports. It is common knowledge that New Zealand is more dependent upon her export trade than almost any other country It has been estimated that New Zealand exports about 40 per cent, of the total value of production (exclusive of services), which is much higher than for any other part of the Km pi re, and of her total exports nearly 90 per cent, goes to Great Britain. Almost the whole of the export trade is in primary products. The present depression is therefore mainly due to diminished purchasing power on the part of the population of Great Britain.

which is again largely, hut not eutireh due to the reduced purchasing powci of the countries to which Great Britain ordinarily exports her products, The position in New Zealand has been intensified by over-importation ; which is the usual phenomenon associated with depression, and depends to an appreciable extent on the time lag between exports and imports-. This lag is compounded of at least two causes. First, although some merchants may forecast future requirements on the i basis of ruling conditions in the export market, it is more generally true that orders will he placed abroad on the basis of existing demand. Some time is likely to elapse before enhanced purchasing power amongst agriculturists consequent on letter markets abroad is translated into a corresponding change in the demand for goods. Second, some time elapses between when

the orders are placed and the goods arrive in New Zealand. In consequence, it frequently happens that goods ordered under boom conditions, in the expectation that such conditions will continue, arrive when the trade cycle is already on the wane, prices arc falling, and purchasing power is restricted. (2) The declining of certain industries by reason of the diminution or exhaustion of supplies of raw materials has been a contributing factor. This is especially so in the case of the kauri gum and saw-milling industries. Though there is still a <onsiderahle amount of standing timber, it is becoming more inac.-osisihle and therefore more expensive to work. In the case of mining in certain districts —notably gold mining—tlie same factors operate. (3) In reference to the timber industry, it should be further

noted that increasing cost through the above cause has been reinforced in its effects on unemployment by the importation of large quantities of foreign timber at lower prices than those at which the New Zealand supply can be sold at a profit; by a falling off in the amount of building as the post-war shortage has been overtaken; and by changes in the materials used in construction. (4) The introduction ot machinery and improved methods in some industries have appreciably affected the demand for labour. The introduction of electric power motor traction and the like have displaced farm i labour, while the falling prices of farm products have encouraged farmers still further to perform work for themselves. I In fhe shipping industry, the use of I oil instead of coal has displaced labour, I while the bulk handling of niotpr spirit I has reduced the demand for labour

both in the trade itself and in various distributive processes. Tho displacement of manual labour by mechanical excavators is another ca.se in point. (5) A further condition which is likely to have affected somewhat the volume of umcmployment is the heavy burden of post-war taxation. It has not been found possible in the time at our disposal to make any serious enquiry into the effects and incidence ot such taxation; but there seems little reasonable doubt that it an appreciable factor in some industries, especially in those which are subject to our anomalous company taxation. (0) The seasonable character of many of our industries has accentuated unemployment during the winter months. (7; It is commonly argued that a furtliem contributing factor is the uiuluiy high wage-rates paid in New Zealand, based on Arbitration Court Awards. They arc said to be above an “economic level.” Jll times of changing prices, wages tend to lag. Although there have been ups and downs in the level of prices .the trend lias been downwards since 192!), and it is said that wages have not fallen to the same extent, with the result that wages are unduly high. It. is important to consider this view. The problem may be looked at both from the point of view of the worker and of the burden of wages upon industry. It seems clear that

real wages, i.e.. money wages expressed in terms of the commodities which can lie purchased with them, have not risen in New Zealand when compared with the year 1914. Retail prices have risen slightly more than the rise in money wages. The worker is tlicrcl" in no better absolute position than before file war. In .summarising, the reporl says in conclusion, it cannot lie too strongly emphasised that any adequate preventative or remedy for unemployment must he sought, not in times of acute unemployment, but in times when trade is good, fine reason why so little progress has been made in the past has been that, when trade is booming, the need for understanding and investigating the problem is not felt; consequently, when a d*"-

comes and public attention is directed to tho evil, little can be done, for tho causes oj>erate some time before the phenomenon of unemployment appears. The. economic iiiariiino is then out of gear and the time is not favourable for experiment or change. The lessons which are learnt or .should be learnt are forgotten when trade improves and the .same difficulties have to Ik: faced when the next depression comes. The germ of (lie depression is usually In be found in I lie preceding boom ; and considered and far-sighted policies, embracing both good limes and bad, arc necossarv before any .suhst a 11! in I improveluein tail be expected. It follow-, that society lias not done its duty by the problem of unemployment if il is merely content with devising methods of alleviation when unemployment is acute. The provision of emergency relief wank and other -such measures, however necessary and desirable on both philanthropic and economic grounds is merely a palliative, and might be doserilred as the ambulance work of industry. What is required is an uudestanding of the economic disorders of which unemployment is .the symptom or result, and deliberate and far-sighted measures at removing those disorders.