SATURDAY, OCTOBER 16, 1920. ARE ECONOMIC SYSTEMS FAILING?

Taihape Daily Times, Volume XII, Issue 3604, 16 October 1920, Page 4

SATURDAY, OCTOBER 16, 1920. ARE ECONOMIC SYSTEMS FAILING?

With surprising suddenness butter discussions have been given a sharp turn by the Prime Minister, who, it appears, has expressed his willingness to call upon the consolidated fund for £600,000 to enable butter to be sold to consumers at! two shillings and threepence a pound. Wc have always regarded protective duties as a danger to private enterprise despite the belief that such duties are levied for the purpose of encouraging private enterprise, because they are an admission that private enterprise .according to its own showing must have assistance from' the State in some form to enable manufacture practic- . stable and profitable, in protecting industries the general taxpayer is furnishing capital by way of an assured profit for which the State; has no quid pro quo, excepting that )in diverting taxation to the support of certain industries it is supposed to be evolving a further set "'of tax contributors. From the taxpayers' viewpoint circumstances have shown that/, the State's partnership in those industries is distinctly unsatisfactory. (The pretext offered for protective duty is.that the industry will not return a livable profit to its owner; but is it not a fact" that the State continues its paternal care by support with protective duties when many of them are virtually doubling the capital involved in one year's working? Then, the offices of the State are either being grossly abused or the claims of the State are not honest, the State is merely con tinuing to levy taxes for revenue purposes; to perpetuate a form of revenue raising that, doubly penalises the taxpayer by making the. cost of duty-boosted, "commodities a great deal higher than they should be. Now, in the case of bread and butter the State is using its taxing machinery to subsidise flour-millers farmers and others to the extent of upwards of a million of money per annum. The State is forced to admit that it is* impossible, in New Zealand, to grow the food people must have at a price people are able to pay for it." Of course, this presents a" very serious I aspect of economics that is going to be fraught with its disadavantages as well as its advantages. The State is in a quandary, and the only safe release in sight is in buying out of difficulty, at a cost of over one mil"lion pounds. The "State is investing huge sums of money so that, trading between trader and the masses of the people may not break doWn. An economic crisis is reached that threatens some degree "of collapse unless the State uses the taxpayers' money in paying some part of the price trad- \ ers are demanding. The justice oi j the demand is not now questioned, but there lurks a real danger to commercial systems and trading usages } first in protective duties and very much more so in subsidising sellers so that commodities may come within the power of the means of the masses of the people to purchase them. It seems to us that the State has only to go another step or two in a similar direction to virtually admit that private enterprise has so far failed that nationalisation has become unavoidable. It cannot be claimed that industry is being as intelligently and effectively nursed into success in New Zealand as it is, and has been, in'Germany. There can be no menace to private enterprise in the State acting as banker, or "Uncle*" but it seems that the State is furnishing undeniable argument in favour of nationalisation, when it is forced into paying part of the price of every loaf of bread, and of every pound of butter sold and purchased for consumption in the Dominion, in the country in which both are produced. These subsirTes are a frank admission ihat the masses of the people are not receiving wages adequate for buying the necessaries of life they themselves produce. The excuse that Britain paid a subsidy on bread amounting to

fifty'millions is not applicable to New Zealand's case. Britain 3* not a butter producing country New Zealand is # In Britain it was a case of exigency; in New Zealand, of expediency. It cannot very well be regarded as creditable for this producing country to, be for ever apeing the catastrophies that it was natural should overtake the greatest participant in the greatest of all wars. It is illogical to claim that it is right or reasonable for this Dominion to do things because Britain did them, while their is no analogy in the circumstances or the respective cases. Any action of the State that puts the axe at the root of self-reliance is a menace to its trading and economic systems, and while an astute Government may have tided over exigency with expediency in the past, the unfortunate occasion will come when disaster cannot be averted. All roads to nationalisation should be kept completely closed, for if the State should boast of any advantage secured to the people by giving them money from the consolidated fund to permit them to purchase the very means whereby they alone can live, that misuse of taxation will constitute an undeniable argument for bringing all industry under State control. The occasion for diverting money from the legitimate purposes of the consolidated revenue should not have been allowed to arise. The twenty, or so t butter balance-sheets submitted to the Government for investigation conclusively proved that the land boom is largely responsible for high cost of production in a number of cases. One lot of dairy-farmers disclosed that they could produce butter fat at 1/1 a pound, while others made it equally clear that they could not produce butterfat at less than 3/3, The ease of the latter is hopeless, for if their figures are correct, failure of the bitterest description faces them, and no subsidy the State can offer will save them. Agitators for nationalisation are already stating that if it is right for the State to subsidise butter and wheat, it is equally right to subsidise other industries, and it will be apparent that the Government will have a difficult task in making the people see the justness of much of the class legislation it is putting upon'the Statute Book. TFere has been a lamentable lack of foresight which is now producing its resultant heavy crop of expediency. Subsidies may now be advisable, but they should never have been necessary in this Dominion.'