Industry and Employment

Sun (Auckland), Volume III, Issue 887, 3 February 1930, Page 10

Industry and Employment

HOW TO RESTORE PROSPERITY Factory Production Must Be Increased (Written for THE Sl'Xj WHAT is economic prosperity.’ It i- the condition which prevails when wealth production is proceeding at hi~h pressure; when consumption is universal and general—but production must keep ahead of consumption, because it is out of accumulation, i.e., the surplus of production over consumption, that we obtain the means of increased production.

I During tlie past five years, industrial production in New Zealand has not kept pace with the increase in population. Apart from industries like slaughtering and freezing, electrical supply, and a few others, there has been but small expansion. In some instances production has declined seriously. Is it any wonder that trade is depressed and that many wage earners are seeking work? An American authority in explaining the remarkable prosperity of the United States says: The production of the United States has increased within ten years by between 25 and 30 per cent, instead of at the normal rate of about 15 per cent. We have had a clear gain of between 10 and 15 per cent. The margin between “bad times” and “good times” is rarely as much as 15 per cent.; when in the past we went down 15 per cent, wo were flat on our backs and the bread lines were everywhere. In ten years we have not only increased by more than tire margin between good and bad times, but have added another 15 percent. It Is in this extra percentage that we find the cause of our abundant prosperity. CONFLICTING PRINCIPLES Much of our trouble in New Zealand arises out of the conflict of two schools of thought. One says: “Let us continue to rely on agriculture. We must produce more from lands already in occupation; we must break in undeveloped country; increase the numbers of sheep and cattle, increase the output of wool, meat, butter and cheese, etc. Then, if we can sell this at a profit in England and elsewhere, the proceeds will be available to meet the interest on our debts, and we shall be able to afford motorcars, gramophones, radios, and all the things that contribute to the enjoyment of life in the 20th century. The chief exponents of this idea are farmers, their political representatives, men whose business it is to assist in the marketing of agricultural products, the heads of financial houses, professors of economics, journalists, and a few doctrinaires whose hobby is economics—an abstract science which has little or no relation to the facts of business and commerce. The principal objections to this policy may be briefly summarised:—

(1) The scheme does not admit of sufficiently rapid development to provide suitable occupations for our growing population. (2) The capital expenditure required to establish each agricultural producer on a holding is too great, and is out of proportion to the results (a.) Because cheap primary production is no longer compatible with the high standard of living everyone, including the farmers, insists upon as a right; and (b) The competition of the agriculturalists of other parts of the world, where the standard of living is low, and cheap labour is abundant, Is depressing prices, and making it harder for the New Zealand producer to hold his own in a market which is 13,000 miles away. LOWER PRICES COMING There is fairly general agreement among the heads in the export trade and the banking authorities responsible for financing it that we have entered upon a period of lower prices Reduced returns from farming speedily affect the values of farm properties, because the chief item in the laimers cos. of production is interest on capital. As prices fall, farms become cheaper, equities diminish, and there is small inducement to spend money on undeveloped land. The people who seek the solution of the unemployed question and a return of prosperity by embarking on a policy of agricultural development have chosen a bad time. All the facts of the economic situation are against them To suggest that the State should borrow vast sums for an enterprise that private capital shvs at is sheer folly.

The problem the farmer is faced with today is how to get his costs down, because he sees that unless he can do so he must write down the value of his place, and while the reduction is not so serious where the property is unencumbered, it is a very important matter when he is farming on borrowed capital. Hence all the talk about abolishing the Arbitration Court, reducing wages and reducing import duties to lower the cost of living. It is all dictated by the very natural desire of the farmer to protect the capital he has sunk in his farm and to make enough to satisfy the demands of his family who. quite reasonably, want to enjoy the same amenities of life that are at the disposal of the professional classes and those engaged in industrial production. A NEW OUTLOOK

The other school of thought realises that the agricultural industries are no longer capable of providing an adequate outlet for a new generation which is much more exacting in its demands than its progenitors, and the uncongenial, unremunerative nature of the work makes small appeal to the expensively educated, restless young men and women of today. Nothing but sheer necessity will reconcile them to milking cows and the drudgery of farming: the world is wide, transport is quick, and the bird, finding the door of the cage open, soon ceases beating its wings against the bars. Result: There are between thirty and forty thousand New Zealanders getting their living in Sydney instead of New Zealand, and many thousands more in other parts of the world. The other day there was a school reunion in an obscure Otago township, and

the messages that poured in from absentees were a revelation. They came from England. Australia the United States, China and even Alaska. The immigrants we get from England do not compensate us for the loss of the young New Zealanders vo have reared and educated to occupy good positions in other parts of the world. INDUSTRIAL PRODUCTION What then is the logical alternative’ Obviously the answer is industrial production; and its advocates argue: (1) The standard of living in New Zealand must not be depreciated or lowered. Wages must be maintained and, If possible, the purchasing power of the • community increased. (2) How is it to be done? Chieflv by seeing that our spendings involve the employment of local labour here in New Zealand instead of being utilised to provide work for people in other parts of the world. Europe and America have settled down to industrial production in deadly earnest and have been able to flood the New Zealand market with goods at prices which put the New Zealand manufacturer out of the run ning. In some cases it is his own fault. His ideas are stereotyped and his methods are obsolete, and in few instances has he awakened to the fact that whatever the merit of his product he doesn’t know how to sell it. Like the farmer, some of our industrial producers are up against very stern realities, and it is only necessary to look at the balance-sheets of our woollen companies, boot factories, tanneries, woodware industries and others to see that they are having a thin time. These industrial enterprises, which should be absorbing a great deal of available labour, are not working ftill time and are feeling the burden of their overhead costs, with small prospect of immediate relief. Consequently we hear about the surplus of skilled labour, no jobs for boys leaving school, and unemployment among casual workers which threatens to become chronic. Let us look back a few years: From 1914 to 1919. when, from external causes, imports were greatly reduced, and in some instances entirely cut off. our manufacturing industries touched the peak of prosperity. Every factory was a hive of industrj’: all available labour was fully employed.

Leading wholesale houses who had placed orders abroad and could not get delivery forgot about them, and did not trouble to cancel. In 1919, many of these orders were executed at high prices: the goods were shipped to New Zealand; there was a serious crash for which nobody was prepared. Undivided profits o£ the boom on which heavy taxation had been paid, were wiped out. Deficits which did not interest the Treasury, appeared in their place, and the liquidation of these heavy imported stocks made it. hard for the New Zealand manufacturer. The years 1922, 23 and 24 saw a partial recovery. During these years industrial production in tlio United States, Canada, England and the Continent underwent a transformation. The war and its problems faded into the past. Plants were reorganised, mass production proceeded on a bigger scale titan ever, and good; are now being produced with a cheapness and in an abundance never previously known. But the industrial activity of other parts of the world does not provide employment for workers in New Zealand: it merely invites them to go abroad to look fer jobs. THE REMEDY

New Zealand cannot afford to lose the flower of her youth to other countries, nor is there any rhyme or reason why we should condemn our young, people to a life of toil on a farm to assist in keeping the industrial population of the United States and Europe prosperous and happy. The logical solution to the problem is: (1) To discourage imports by heavy duties so that New Zealand manufacturers, without reducing wages, can compete against foreigners who are operating on a cheaper bails through their command of greater resources and low-paid labour. (2) To merge plants, standardise products, eliminate overhead and generally’ to increase the efficiency of our manufacturing and marketing methods. The first merely involves the extension of the protection which for many yea~s has been a fundamental principle of the fiscal policy of New Zealand. The second is more difficult. but a strong minister for industries, with public opinion beh nd him. could put propositions to New Zealand manufacturers that, they could not afford to ignore. Industrial reorganisation should be made a condition of increased protection and it would be necessary because, if tariff is increased, British and .p*- 3 *; manufacturers who do not desire " relinquish their interest in '“is market, will establish works here They have done this to a limited extent in New Zealand already. this way all our skilled labour wetnu soon be fully employed and ~Uj prospects of casual and uns \T lea labour would be greatly improved. The most practicable way of carty ing out this policy would be to rrf! . 3 .’,. an advisory board representing leading manufacturing industries assist the government. To the pessimists who say it ca ' not be done, the only reply is that has got to be done. The trans of even ten per cent, of the * sent abroad to local industrial P y ducers would make a world difference to the prosperity o£ country and leave very few per® unemployed. Further indusdevelopment would then enable JS ’ revive and encourage inrmigrat • This in turn would stimulate b + ness and make a demand for ) 1< ? u sin..’ food and necessaries of every descr v tion. , In short. New Zealand is faces: • day with the alternatives of el jT na , ing industrial production or tion. Which shall we choose. , . ___ PETER SJMPI* wH