The Waikato Times SATURDAY, AUGUST 17, 1940 IS NEW ZEALAND OUT OF DATE?

Waikato Times, Volume 127, Issue 21194, 17 August 1940, Page 6

The Waikato Times SATURDAY, AUGUST 17, 1940 IS NEW ZEALAND OUT OF DATE?

Mr W. Goodfellow has administered to New Zealand a jolt which, if accepted in the right spirit, might have beneficial results. His proposition is that the Dominion is 30 years out of date in its economic management, and that the Federation of Labour should be sent to England to discover the advances that have been made there in relations between capital and labour. The statement will come as a shock to people who for years have been told that they have been in the van of political and economic progress, and believed it. The Federation of Labour will, of course, question Mr Goodfellow’s qualifications to judge between the two systems, but prudence suggests that New Zealand should inquire carefully before rejecting his judgment, for Mr Goodfellow has had a unique opportunity to form a useful opinion. In labour legislation New Zealand has been nothing if not venturesome. Without question it has improved the lot of the working man in years past, but has it gone too far on untrodden paths and built up a top-heavy structure that will totter when it meets real adversity ? Has it, for instance, built a system that will stand the test when the world emerges from war and every country finds it necessary to arrange new markets ? New Zealand will have only its primary produce to offer, for the reason that manufacturing costs in the Dominion are far above the world parity. Even primary produce will have to meet severe competition from substitutes which can be manufactured more cheaply. New Zealand has attempted to improve the standard of living of the working people simply by forcing up rates of wages and reducing hours of work. It has succeeded in advancing the standard of living to a high plane, but the question arises whether the present system is not built on unsound premises, is of temporary advantage only and is, as Mr Goodfellow suggests, leading towards political and economic suicide. Standards of living are not maintained by high wages and short hours of work alone. Unless the foundations of a sound economy are well and truly laid, higher wages and consequently enhanced purchasing power will never make a country prosperous, for the simple reason that economic production is the basis of all wealth and all prosperity. That which can be done in an entirely self-contained country is very different from that which a country dependent on overseas markets may do. New Zealand has forced up its living standards, its wages and its production costs, with the result that the Government had to interpose a system of guaranteed export prices designed to ensure a subsidy when production costs overtook market values. That in itself is a warning. It may work satisfactorily when overseas prices are high, but what will happen if prices fall by 50 per cent.? Britain’s methods are held up as an example by Mr Goodfellow. There, labour and capital have come together and evolved a system by which a minimum wage is paid, with bonuses for additional production, and a remarkable success is claimed for it. The result, it is said, was that the “real” wages of skilled and semi-skilled workers in Britain were the highest in the world prior to the war, and production costs were kept at a competitive level.