The Waikato Times FRIDAY, SEPTEMBER 6, 1940 ECONOMIC BALANCE

Waikato Times, Volume 127, Issue 21211, 6 September 1940, Page 4

The Waikato Times FRIDAY, SEPTEMBER 6, 1940 ECONOMIC BALANCE

Now that an attempt has been made to measure the problem, the extreme complexity of the task facing the economic conference assembled at Wellington is apparent. The work has been begun in a businesslike manner, however, and there is good reason to hope that decisions of great benefit to the country will accrue from the conference. In essence the objective is to stabilise wages, costs and prices on a basis equitable to all sections of the community. To attempt that task is to face some of the major economic problems of all countries. And even when a solution has been reached in theory there remains the even more difficult question of applying it in practice. One condition essential to success is complete co-operation from all sections of the people, which implies readiness to give as well as to take. Mr Nash gave the conference a commendably clear broad outline of the financial and economic position as far as the facts are concerned, and his assistance to the conference was aided by Mr Fraser’s address. They showed that last year, goods available for consumption in New Zealand decreased from £133,000,000 to £114,000,000. The pressure of the increased purchasing power upon this decreased quantity of goods available had the inevitable effect of increasing the cost of living and led to demands for higher wages, which in turn upset the whole relationship among wages, costs of production and prices. The old remedy of increasing wages simply left the position worse than before; hence the need of the conference and the evolution of a plan that recognises fundamental economic laws. Purchasing power derived from the high volume of exports, from high wages and other sources has established such a margin over goods available for consumption that it has become imperative to dispose effectively of that surplus. Mr Nash suggested three possible methods—higher taxation, rationing and saving. Mr Fraser added this proposition : “The situation would undoubtedly be relieved if there were more production of the right kind, or if spending were diverted to saving, but to the extent that these fail to bridge the gap, the question arises how the remaining sacrifices should be spread equitably over the whole community.” He also suggested the possibility of employing part of the surplus by liquidating debts, which would be beneficial from the long-term point of view. Assuming this general survey of the problem to be sound, the conference may decide to choose among the various suggested methods, or it may produce other proposals. But among the three suggested courses, much is to be said in favour of saving, because of its reaction on the individual. Taxation might have the general effect desired by the Government in correcting the balance and imposing equality of sacrifice, but by its adoption the public would have lost an opportunity to make an investment in an essential cause. An expansion of the savings schemes would require the complete co-operation of the public, but if that can be secured, savings for investment in the prosecution of the war would offer a desirable means of equating purchasing power and goods available for consumption.