Wairarapa Times-Age SATURDAY, JULY 23, 1938. SLUMPS AND INSULATION.

Wairarapa Times-Age, 23 July 1938, Page 4

Wairarapa Times-Age SATURDAY, JULY 23, 1938. SLUMPS AND INSULATION.

JF the Economic Committee of the League of Nations is anywhere near the mark in its warning that another world economic crisis is in prospect, it may not be long before Mr Savage and his colleagues are given an opportunity of demonstrating their self-announced ability to insulate this country against slumps. It is certainly cold comfort to be informed, in the report from Geneva, that the impending crisis “can be delayed if suitable measures are taken.’’ Most people would prefer to hear something about measures by which the threatened economic crisis might be averted altogether. It is possible to share in and sympathise with our Labour Prime Minister’s impatience with the idea of. slumps and scarcity in a world which has in its hands vastly greater powers of production than have been known in any preceding age. The fact stands, nevertheless, that the economic affairs of the world are in serious disorder. This is partly'due to the policy of economic isolation pursued by totalitarian States, but there is another and an astonishing side to the picture in the prevalence and extension of slump conditions in the United States, which figures in leading aspects of public policy as the absolute antithesis of the totalitarian nations. Whatever may be thought of this or that feature of the position, the underlying economic disorder of the world may be diagnosed quite confidently as a failure of organisation, producing conditions in which people desiring nothing better than to work and to exchange the products of their work with one another are denied the opportunity of doing so. i The problem ought to be attacked vigorously everywhere with a determination to make an end of that intolerable folly and injustice. At the same time it. is a matter of common sense to recognise that talk of insulating this country against slumps —if the talk implies doing so at- short notice—pays little regard to sober realities. The weakness of our present position is that our existing economic organisation, which cannot quickly be transformed, or even modified to any great extent, makes us in a high degree vulnerable to falling prices in world markets. It is plain that in order to strengthen our economic position, we must become progressively less dependent on external markets by enlarging the scale of production and exchange within the Dominion. In this way we may hope, without going to any unwise extreme of economic nationalism, to become gradually more self-sufficient than we are at present and progressively to build up a larger population. The outlook would be better than it is if some reasonably open approach could be seen to the conditions envisaged by the Minister of Finance (Mr Nash) in the following passage in the Budget presented on Wednesday last: — May I in conclusion emphasise that the progressive development of the Dominion is dependent upon the extension of secondary industries—that, in anticipation of the completion of the major public works now in progress and those still to be commenced, we must have in being manufacturing establishments to make commodities that are exchangeable within the Dominion both for other forms of secondary production and for our primary products. This extension of secondary industries must synchronise with an increase in population and the gradual diversion of employment from the construction of means of communication to our lands and our factories. The Minister’s forecast of development would have been welcomed even more heartily had he . pointed to the establishment of conditions favouring the expansion and establishment of secondary industries. Actually, however, the disconcerting fact obtrudes that in spite of the late prevalence of something like boom conditions, there are fairly widespread complaints by those engaged in manufacturing industries that even their existing enterprises are being handicapped and checked by a double load of heavy taxation and of rising costs. Perceiving, as he does, the Dominion’s need of industrial expansion, the Finance Minister and the Government of which he is a member, might have been expected to perceive also the wisdom of fostering and encouraging the development of industry by lowering taxation and by any other practical means available. The employment tax, for example, is a serious burden and handicap on trade and industry. Why is it necessary to continue the collection of over five millions a year in employment taxation now that unemployment, according to the Government, has been reduced to a minimum? The sales tax also checks and penalises trade and industry, and its removal would impart a valuable stimulus to development. Talk about the expansion of industries is all very well, but practical action to that end would be worth a great deal more.