Wairarapa Times-Age THURSDAY, APRIL 20, 1939. “AN ELEMENT OF STABILITY.”

Wairarapa Times-Age, 20 April 1939, Page 6

Wairarapa Times-Age THURSDAY, APRIL 20, 1939. “AN ELEMENT OF STABILITY.”

GOME people may have been inclined to rub their eyes and ° wonder whether they were seeing correctly, on reading that in an address to the New Zealand Dairy Board Conference ...yesterday, the Minister of Finance, Mr Nash,, emphasised the necessity of securing an element of stability m New Zealand economy for the next year or eighteen months and of avoiding the establishment of an ascending spiral of costs, and Had something to say also about the desirability of trans!erring men from local body work to employment m which they would produce something, either on the farm or in the factory. The extent.to which talk of this kind corresponds or fails to correspond with that heard from the Labour Party at election time last year no doubt will be the subject of a good deal of political controversy. It is perhaps of more interest, however, and certainly is of more importance, that the Finance Minister undoubtedly is heading in the right direction m desiring to secure an element of stability in New Zealand s economy. lie attainment of economic stability, by the establishment ot an equitable balance between different sections of the community, is desirable, not merely for the next year or eighteen months, but permanently. Indeed, the stabilisation of national economy on these lines is an essential condition of economic health and of continuing prosperity. Mr Nash, it may be noted, does not admit that an ascending spiral of costs has'already developed in the Dominion. Fie is asking the dairy industry, however, to agree that this year s guaranteed prices for butter and cheese should remain m force for next year, but when he was asked by. a delegate whether ■ he would undertake to reimburse the industry for any added costs next year, he said he could not give that undeitaking. Apparently, however, the; Minister has obtained, or hopes to obtain, an endorsement by the Federation of Labour of his proposed stabilisation policy. Presumably this would mean that the Federation of Labour, with its 180,000 affiliated members, would refrain during the stabilisation period from seeking any general increase in wages. What the actual position may be in that respect is not yet made, however, by any means clear. On the plain facts of the position, and getting.away from anything in the nature of party controversy, it is fairly obvious that the Dominion is already in the unfortunate position to which the Minister of Finance pointed as a danger—though he did not admit that the danger had yet taken actual shape—that of a general attempt to raise .wages and incomes on a price-raising basis, without regard to underlying economic facts. It may be perceived readily by those who look at these economic facts that the prosperity of our export industries depends, not on the prices they receive for their products, but on the extent, to which these prices balance, and provide an adequate margin over, working costs. 1 If that adequate margin be denied, as it is said to be denied at present in both dairy farming and sheep farming, the effect must be in the first place Io impoverish those engaged in export industries and in the second place to undermine general, national prosperity, since ' an unhampered flow of exports represents our only means of meeting oversea obligations and paying for imports. One essential condition of national prosperity in this country, and in most other countries, is that costs and returns in primary industry should be equitably adjusted. Another essential condition is that efficient secondary production should be expanded on the greatest scale that is practicable. Secondary production—the output of manufactured goods and extension of various services—is not efficient if it is carried on at the expense of those engaged in primary production. At anything but a very short view, balance and stability between the two great sections of production are in the interests of all concerned. There is no question in this country of arriving speedily at an ideal adjustment. Our economic affairs are in some respects seriously out of balance and the Government, local bodies and industry are faced by difficult problems for which it may be impossible, in existing political conditions, to find any comfortable or complete solution. Some approach to a solution of these problems undoubtedly might be made, however, on the lines indicated yesterday by the Minister of Finance —particularly a comprehensive effort 1o check rising costs (which progressively check production and tend to reduce real wages and incomes of every kind) and the transfer of as many workers as possible from unproductive to productive employment.