Wairarapa Times-Age WEDNESDAY, JUNE 1, 1938. PURCHASING POWER AND WELFARE.

Wairarapa Times-Age, 1 June 1938, Page 6

Wairarapa Times-Age WEDNESDAY, JUNE 1, 1938. PURCHASING POWER AND WELFARE.

gOME people in this country seem to be as firmly o£ opinion as exponents of the same cult in Alberta and. elsewhere that if only enough purchasing power could be distributed all would be well with those to whom it was distributed. Strangely as it persists, this theory does not even begin to be plausible and is plainly contradicted by experience. It- cannot reasonably be suggested, for instance, that the people of New Zealand are better off than they were in ratio to the increase in the volume and velocity of monetary circxdation that has taken place in thip country over a period of years, and particularly during the last year or two. We have experienced, during the period in question, a measure of general economic recovery, but much of the benefit that otherwise might have resulted from an increased circulation of money has been offset and nullified by increased prices—the official cost of living figures and the great increase that has occurred in house-building costs are outstanding examples in point.

It is hardly necessary in any event to be a master of economics to perceive that before there can be, in any real sense, an increased distribution of purchasing power, there must be increased production—that is to say, there must be brought within reach an additional amount of the things that people want to purchase. If that vital condition be not satisfied, of what earthly use can it be to circulate an increased amount of monetary tokens? Purchasing power, after all, is only a means to an end. It is the acquisition by purchase that really matters.

Although in the world at large a vast amount of productive power undoubtedly is going to waste, or is being worse than wasted in the creation of mammoth arments and in other ways, New Zealand certainly does not possess an untapped reservoir of potential production which might be drawn upon merely by providing an adequate volume of purchasing power. It is probably true that if we were cut off from all contact with the rest of the world, it would be possible, after the first shock and disorganisation had been overcome, to establish rude standards of general comfort. There need be no lack of food, clothing and dwellings, though many kinds of goods and services now taken for granted would have to be done without or greatly circumscribed.

The reality of our economic position, however, is that we are making year by year huge imports from abroad (in the absence of which our national economy would have to be designed and ordered on much more severely simple lines) and also are under the necessity of allocating not far from one-tenth of our total annual production to the payment of oversea debt charges.

We can only pay for imports and meet the charges on our external debt by exporting primary produce to be sold for what it will fetch in an unsheltered world market. No internal manipulation can increase in any way the return secured on these exports, which amount to nearly one-half of our total national production.

It is thus fairly obvious that an increase in purchasing power in the British and other markets in which their exports are sold is likely to be of more value to the people of New Zealand than an increase of purchasing power within their own borders.

The essential problem involved in raising the standard of living is that of making goods and service more plentiful and more readily available. It is a problem of enabling people to use their working powers to the best advantage in producing for the satisfaction of their own requirements or for exchange. No mere monetary manipulation can do much to facilitate an approach to the desired objective, though it is, of course, true that monetary mismanagement, working out in a needless disturbance of values and prices, and of the balance of working costs, may do a great deal to impede progress in the right direction.