POLITICAL FALLACIES

Rotorua Morning Post, Volume 1, Issue 65, 7 November 1931, Page 2

POLITICAL FALLACIES

The first salvo in the political battle about to be fought in-the Dominion was fired by. the leader of the Labour Party, Mr. H. E. Holland, in Wellington on Wednesday evening when be delivered his election policy speech. Eliminating from his statement the tactical camouflage with which, in these days apparently, it is considered essential to mask the real nature of a political programme, much of what Mr. Holland said was true enough. It would, indeed, have been surprising had it been otherwise, because certain aspects of the country's economic sitnation are so obvious as to make a formal statement of them sound trite. Some of Mr. Holland's views as to the causes of our present troubles, however, if they were not wholly unsound, were based upon such questionable foundations as to be dangerously misl'eading. For instance: "The purchasing power of the people depends upon the level of income received by the wage and salary earners. Wage reduetions mean a depreciated local market and consequent trade stagnation." At first glance this •seems true enough. A moment's consideration, however, shows lts weakness. By what standard does Mr. Holland measure what he calls "the level of income?" In the last analysis, the level of the income of a people, their real income, must be measured by a comparison of the exchange value of their production per head with the average production of the civilisation of which they are a unit. The money value in which that production is expressed as ificome is of course, subject to a number of extraneous influences, but this does not affect the basic truth, any more then does the fact that a proportionately small number of men are able to enjoy a life of unproduetive idleness destroy the truth that the individual's income is the product of his labour in field ; in factory ; or in servicef to his f ellows. In an economically self-contained country it might be possible, without serious ill effects, to determine arbitrarily the money value of the products of labour, but in a country which, like New Zealand, has been and still is dependent upon outside capital for its development and outside markets for its products, it i$ not possible to depart very far from the standard of money value adopted by those whose assistance has been accepted and whosc custom is sought. It is the failure to recognise this which has, more than any other single factor, led both New Zealand and Australia into the financial and economic quagmire in which they now find themselves. A high standard of living is an entirely desirable national and individual aim and a legitimate object of political endeavour, but the means employed to its achievement must be basically sound, or the more fully it is achieved the greater the trouble that will follow. In both New Zealand and Australia the means employed since the war have been so amazingly unsound as to make it impossible to believe that the politicians responsible have possessed either honesty or intelligence. At the close of the war money — paper money — was plentiful and prices consequently high. Credit had been "created," >to use a favourite phrase of political Labour, to finance the war. Deflation could not be — or at any rate, was not, immediately undertaken, and loans were easily obtainable. Both this Dominion and Australia therefore embarked upon an'orgy of borrowing as a means of maintaining the "standard of living" which the abnormal conclitions of the war years had made possible. The effects, in thecase of the State, were precisely similar to those in the case of the individual who, either by borrowing or running into debt less formally, lives beyond his income. And the price to be paid is the same — both must do penance in some form or other, and for both the quickest1 and only honourable way is by productive labour. There s no easy way out and for the state, to interfere with the natural economic law that only by the sweat of his brow shall a man live can lead, at the best, only to a temporary postponement of the day of reckoning; and at the worst, to national dishonour such as has tarnished the name of the great State of New South Wales and recently has gravely threatened even the hither to unassailable reputation of Great Britain. For this reason political nostrums offered during the coming election campaign should all be viewed with the. gravest suspicion as being almost certainly mere vote-catching devices. The man or party to follow will be the one who cohrageously and unequivocally- recqmmeqds a course of hard work and economical fiying.