Page 1, 28th July 1961

28th July 1961

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Page 1, 28th July 1961 — READ THE ENCYCLICAL SELWYN!
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READ THE ENCYCLICAL SELWYN!

Says Fr. PAUL CRANE, S.f. in an interview with HUGH KAY
ELEVEN DAYS after publication of Pope John's Mater et Magistra, a long term charter for the world's economy, Mr. Selwyn Lloyd has presented the British public with yet another series of negative short term measures.
This government is a great hand at tightening the reins. Its spurs, presumably, are too rusty even to put on.
The encyclical's encouragement to governments to enter into partnership with private enterprise without absorbing it, has a direct bearing on Britain's current balance of payments crisis.
It suggests that the answer lies in controlled competition, as opposed to the government's present policy of controlled stagnation.
The State's role is not to plan the whole of the nation's economy —let alone absorb it — but to stimulate competition as a means to greater efficiency and lowered costs. 'This would be helped enormously by our early entry into the Common Market.
Change
Since the and of the war our cost structure has been too high, As tong as the terms of trade were in our favour, we got away with this. But today, those conditions have changed, and our costs are so high that we can no longer sell easily abroad. The result is a heavy drain on our reserves.
From time to time the government meets this situation by ambulance measures--raising the bank rate, making his purchase more difficult, raising consumer taxes. This checks the demand for goods and thus brings prices down.
But this is only a short term remedy. We still continue to live on tick, wanting more than we are prepared to work for. We deceive ourselves into thinking that we have got the money. and so we stagger on for another year or two until the crisis breaks again.
The situation is worsened by a high degree of government spending, irrespective of the interest rate. of a kind which shows no immediate return. So one again. to avoid inflation, we have to fall back on the short term remedy of raising taxes and damping down demand in the private sector.
Alternative
It is true that, if inflation means too much money chasing too few goods, one remedy is to cut down on the amount of money or credit available to the consumer. But this does not make for long term stability and buoyant prosperity.
The alternative, long term remedy is to create an increase— at lowered prices—in the available goods.
As matters stand, too much of our industry is tied up in monopolies. This means that manufacturers have no inducement to produce more goods, more efficiently, and at lower prices.
One solution, offered by the Left, is state planning and state direction of industry along certain channels, But the economic failure of the industries nationalised since the war suggests that this is no answer at all.
The real answer is to force competition on the business community to such an extent that each manufacturer must either produce more and better quality goods at falling prices or cease to exist.
I am not urging a return to the economy of laissez-faire, but a dissolution of the evil results of laissez-faire —namely the giant monopolies.
This involves a reform of Company Law, the entry, where necessary, of gavernment-controlled industries into competition with private business, and the speeding up of the work of the Monopolies Commission and the Restrictive Practices Court.
Most important of all, our entry into the Common Market would mean that, faced with Continental competition behind the Continued on page 5, col. 6
same tariff barriers. British business enterprises would either have to improve or perish.
This is a typical example of the Papal doctrice of so hsidia ritywhereby governments are urged to take measures to stimulate the economy without taking the economy over. Entry into the Common Market would he one of the most powerful of these measures.
A further step would be for the nationalised industries to be decentralised and their different sectors to be made more competitive, one with the other.
It might be argued that, in a system of government-stimulated competition. employers would be tempted to bring their prices down by cutting wages, instead of by lowering their unit costs.
Emphasis
Here again the government's role would he to maintain a high employment level and to put the emphasis, no on cutting the wages of labour. but on increasing the productivity of labour. It must work in this way to bring efficiency and high capitalisation into industry so as to make the worker worthy of his increased wage demand.
The unbridled competition of laissez-faire destroys itself, because uncontrolled freedom. by its tendency to the formation of monopolies, ends up by greatly reducing the number of people free and able to run their own enterprises.
it is for this reason that Pope John encourages the state to apply the necessary correctives to the economy without swamping it. But a control which merely keeps our stagnant economy in being for bit longer is quite useless. Nor will Mr. Macmillan's pious exhortations make any difference.
We need direct stimulants in the form. for instance, of tax rebates to manufacturers according to the volume of therr exports. As long as the monopolist is relieved of competition at home. he will continue to produce shoddy goods which will not be bought abroad. This is precisely what is happening at present.
Pride
It is significant that. part from the Land Rover, there is not a single British ear capable of standing up to the roads of a country like Tanstenvika. But the Volkswagen can do it, so can the Mercedes-Benz. And meanwhile, more and more Continental cars are finding a market in Britain itself.
Finally, the worker's lack of pride in his work and the had blood existing between so many managements and their workers in this country can be ascribed in part to the lack of a good example from above.
Too many business men live on excessive expense accounts, come in late for work, wallow in the long weekend, and pay little attention to labour relations. This, coupled with n tendency in some cases to draw excessive profits, means that managements are taking out of the business far more than is justified by what they put in.
The Continental (or the American) director. however. tends to be on the job by eight in the morning, whether at his desk or even in the workshop with his sleeves rolled up. He is also more disposed to see labour relations in terms of a creative art or science. If the British worker is lagging, it is partly, at least, because he lacks leadership.




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