Other formats

    Adobe Portable Document Format file (facsimile images)   TEI XML file   ePub eBook file  


    mail icontwitter iconBlogspot iconrss icon

Salient: Victoria University Students' Paper. Vol. 28, No. 7. 1965.

Round 4 of Dr Sutch's Economics

Round 4 of Dr Sutch's Economics

D.A.P. Replies

Messrs, Wolfgang Rosenberg and "BHE" have seen fit to criticise my Salient article on the Economic Consequences of Dr. Sutch. I rejoice at an attack from such worthy opponents. However, after reading their articles I must sadly conclude that they were written in undue haste. Both seem to have missed the main point of my article.

Dealing first with "BHE" may I make the following points:—

(1) "BHE" complains about the statistical techniques I used. If he cares to fit regression equations to the data (as I incidentally did) he will find that my conclusions still stand. In the period prior to import controls, wages and salaries rose faster than company incomes. After import controls were imposed, the reverse was the case. This does not, of course, necessarily establish a cause and effect relationship.

(2) "BHE" attempts to confuse the issue by talking about shares of "private income." As "BHE" well knows, this series includes farm incomes which fluctuate tremendously from year to year due to export price fluctuations. My own comparison of the two non-farm aggregates is the more accurate one.

(3) If "BHE" consults the Government Statisticians' Volume of Production increase he will see that the main speed-up in productivity per worker after 1956-1957 came from the farm sector, not from manufacturing. This invalidates his argument that import controls fostered faster productivity growth.

(4) Finally, "BHE" points out that the number of companies rose after 1958. In fact the rapid rise was evident right through the 1950s, not just after 1958.

Dealing next with Mr. Rosenberg's argument, may I point out:—

(1) I did not advocate any increase in unemployment. This is a red herring.

(2) Mr. Rosenberg's figures of reduced import dependence ignore the fact that internal prices rose faster than import prices. This invalidates his comparison in money terms.

(3) My figures for New Zealand's place in the Income league table were based on the latest available data.

(4) Basically Mr. Rosenberg has not countered my argument. In fact he admits that "There is some truth in your statement." This I take as an endorsement of my theme that Dr. Sutch's policies shifted income away from the workers.—D.A.P.