UNEMPLOYMENT, ITS CAUSES AND A REMEDY.

Rotorua Morning Post, Volume 2, Issue 285, 27 July 1932, Page 6

UNEMPLOYMENT, ITS CAUSES AND A REMEDY.

E. Earle

/ Vaile.) /

EFFECT OF PROTECTION

(By

(1.) This is the first of a series of four articles specially written for the "Morning Post" hy Mr. E. Earle Vaile, of Broadlands. In these articles, Mr. Vaile offers very many valuable suggestions for remedying the present disastrous drift of unemployment, and from his pen,_ these views command attention. The articles have been submitted to several of the leading Chambers of Commerce in the Dominion and have been unanimously approved Mr. Vaile does not only emphasise the gravity of the problem, and examine cause and effect, but what is more important, offers a practical solution along lines which his own expexi'ence has proved sound. The second article of the series will ap~ pear on Saturday and the final instalments on Monday and Wednesday of next week. That there is no effect without a cause is one of the basic truths of philosophy but the discovery of the cause is usually not a very easy task and great effects seldom spring from a single cause. Of course, unemployment is the result of unwisdom, but to state such a truism s'sems alniost to "beg the question." We must discover the partieular direction in which this unwifedom lies, otherwise we shall not be able to suggest any cure. World- wide Causes. In a world-wide sense it seems undoubted that the main cause of unemployment is high protection — the refusal of every country to do business with any other country except on terms impossible to the latter. Many people ascribe the world's troubles to overproduction, but there cannot be any such thing when half the people in the world are existing in a state of semi-starvation and nakedness. The Americans commit the erime of burning their wheat and * ploughing in their cotton, at the same time that hundreds of millions are starving in China and hundreds of millions going naked in India. And why? The Americans d'ecline business with those countries because they are "afraid of the competition of eheap Asiatic labour." Afraid! The American people have wonderful finance, great organisation, and high education and they flatter themselves that they have brains Further more, there is at the elbow of every American worker, on the average, six mechanical horse-power. Yet they are afraid of the naked Hindu with his two bare hands! I repeat a phrase I coined in their country. "Protection is the policy of cowardiee, of enmity and of scarcity. Free trade is the policy of courage, of friendliness and of plenty." Any country assuming the position of the world's creditor must adopt free trade. War Debt Burden Another world-wide cause of unemployment is the burden of war debts — though I do not attach nearly as much importance to this feature as most people do. The amounts involved are huge but are not recurring, and could be discharged under a system of free trade. Bnt to insist on payment in gold, when the plain fact is that the necessary gold is not in existence is perfectly impossible and such stupidity would be unbelievable had it not actually occurred. The limitation of the family is another major cause of unemployment. Marriage, nowadays, appears to be instituted not for the rearing of a family, but solely for pleasure. There are few children — often times none. The wife has insufficient employment as such. She goes out to work, competing with the men. The proportion of consumers to producers has greatly diminished. At this very time the perfecting of machinery in every department of industry is repldcing human labour at a rate that appears alarming. The consequence is that we seem to be approaching the strange position that half the world will he forced to work hard in order to maintain the other half in enforced idleness Local Causes. The Arbitration Court is undoubtedly the greatest cause of unemployment in New Zealand. Most suff'er under the delusion that wages can he, and indeed, are, fixed by the Arbitration Court. Nothing is further from the truth. What the Arbitration Court can do — and, unfortunately very often does — is to order an industry to pay a rate of wages beyond its capacity. It is a truism that no industry can be conducted, for very long without profit. if, therefore, the worlcers in that industry fail to "deliver the goods" out of which' their wages and some profit on the capital employed can ba paid, the result is that the industry ceases and those employed in it are thrown out of work. Instead of having moderate wages, they have none. In the same way the false awards of this Court discourage, and, indeed, prevent, the establishment of new industries. False Conception All this arisas from the utterly false conception that it is possible to arbitrarily fix a "standard of living." Indeed open boast is made of our high standard of living. Were this based on the superiority of our work, either in quality or in quantity, it might well be a matter for pride; but when based on nothing more suhstantial than our own conception of what we ourselves have a right to enjoy, it amounts at the best to impudence, and at the worst, dishonesty. The idea that any individual, group of individuals, community, or nation, has the right to indulge in a higher standard of comfort than their neighbours irrespective of Avhether they have earned it or not, is so basically false in principle that it is hound to bring those adopting it to ruin. Yet this has been the public policy of New Zealand for many years. The Arbitration Court as a nreans of settling disputes between emp.'loyer and employee would be an excellent institution if its-, awards were based upon wh'at an in-' dustry could pay. Its awards should build up industries — not destroy them The Credit System The overburdening and consequer breakdown of the credit system is another great course of unemployment.

Through the pernicious system of buying everything on the instalment plan — even to the extreme of no deposit business which ought to have come along this year or last year was transacted in 1929 and 1930, creating an unhealthy boom in those years to be inevitably followed by a slump. The lending of 95 per cent. of "valuation" and at a rate of interest below the market rate, for the purpose of building houses in the cities, was another device for creating false "values"; and intensifying and protracting a period of absurdly exaggerated pdces for land and buildings. I may incidentally remark that any private trustee lending 95 per cent. of value would very rightly have to make good the consequent losses. Action which is condemned in a private trustee cannot be praiseworthy in the trustees of the public funds. But their votes must be got someh'ow! (To be Continued.)