Wairarapa Times-Age WEDNESDAY, APRIL 16, 1941. STABILISING COSTS AND PRICES.

Wairarapa Times-Age, 16 April 1941, Page 4

Wairarapa Times-Age WEDNESDAY, APRIL 16, 1941. STABILISING COSTS AND PRICES.

_AT a broad view there is a good deal to be said in favour of. the policy ol' economic stabilisation recommended to the Government by the annual conference of the New Zealand Labour Party—-a policy providing for the stabilisation 01. the present prices of essential goods and services, together with the present rates of salaries and wages. The central problem of war time financial and economic policy is that of arriving at a. just apportionment of sacrifices and in the extent, to which it is practicable and equitable, the stabilisation ol costs and prices should facilitate adjustment on those lines.

War, as the Prime Minister, Air Fraser, has said, must inevitably dislocate the national economy and entail sacrifices. In any conditions of control'there must be some lowering ol living standards when a country not only mobilises a substantial part of its manhood, but. devotes much of its industrial energy to production for war purposes. Except in the extent to which total production can be increased, war demands can be met in no other way than by cutting down civilian consumption. In these circumstances, high taxation and saving, enforced or otherwise, become essential, not only because Avar demands must be met, but for the reason that if purchasing power were not. in these ways withdrawn, ruinous and destructive inflation would become inevitable.

Measures of rationing and price control have in these circumstances much to commend them, but the fixing at a stroke, as recommended by the Labour Party Conference, of wages, salaries and the prices of essential commodities might, and certainly in some cases would, work out in serious injustice and dislocation. That trouble on a serious scale is developing even under the measures of price control, already in .force is indicated in a statement made by the New Zealand Federation ol Drapers, Clothiers and Boot Retailers to the Price. Investigation Tribunal —a statement embodying an appeal for a relaxation ol the methods of the Price Tribunal in granting increases of prices. The broad conclusion presented is that: —

Large groups of merchandise are now being sold at prices that cannot but result in a loss to the retailer; but the time has now arrived when all business must face the issue of a just mark-up or go out of business.

This is an ex parte statement, which must, stand or fall on the evidence presented, but that a general and sweeping fixation of prices, in a time of war “scarcity and reduced and dislocated trade, will work out in some instances with injustice and hardship, and with detrimental effects to the community at large as well as to individuals, may almost be taken lor granted. In submitting its recommendation, the Labour Party Conference suggested that the fixation of prices and rationing, where necessary, should apply only to essential commodities and services and that the ordinary law of supply and demand should be allowed to determine the of non-essential and luxury goods. It was suggested also that prices of imported goods and raw materials of an essential, character should be stabilised by the payment of subsidies.

While the aim must be to achieve l.he greatest possible measure of stabilisation, the position as a whole calls for more •detailed examination and investigation than it has yet received. The subsidy method, though its adoption may be unavoidable in some instances, needs to be safeguarded very carefully if it is ,not to lead to inefficiency, waste and abuse. Measures of' regulation and control should be reasonably flexible and should take due account of the desirability of maintaining existing organisation. Serious attention should be given, too, in this country more than most, to the possibility of increasing the total volume of useful production during the war period.