“DEMAND CREATES SUPPLY.”

Putaruru Press, Volume VI, Issue 251, 23 August 1928, Page 4

“DEMAND CREATES SUPPLY.”

“ If you want prosperity and increased production in this country,” said Mr. M‘Combs last night, “ please remember the economic dictum, ‘ Demand creates supply.’ ” The dictum is right, but the argument from the dictum is not wholly applicable to New Zealand. We cannot restore prosperity to the Dominion by the simple expedient of increasing wages, because the demand for our produce is so largely apart from Dominion wages. If Mr. M’Combs could increase the purchasing power of the British workers his application of the dictum would be correct. That is generally recognised—hence the preference given to British goods in New Zealand. It is a means of helping our best customer, and thereby helping ourselves. Wage increases as a local means of increasing demand should, however, be considered with great caution. The benefit of higher spending power does not go wholly to the local producer. In fact a considerable share of it must go to the overseas manufacturer, including the foreign manufacturer, from whom we obtain no adequate return. The labourer with extra shillings in his pocket will not spend all of it in buying more New Zealand butter, flour and meat. Further, that increased wage must be paid by someone. It establishes a debit as well as a credit account. If the producer has to pay more of it than he receives back in improved demand for his goods his position is not better, but rather worse. Were New Zealand self contained the case would be different ; but our prosperity is largely regulated by our exports. This must be remembered when quoting economic dicta which cannot be given an axiomatic application independent of circumstances.— Wellington Evening Post.