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Salient: Victoria University Students' Paper. Vol. 27, No. 2. 1964.

Philpott Warns On Economic Future

page 11

Philpott Warns On Economic Future

Economics could be defined as the expounding of truths which would be self-evident to many people if they didn't have a vested interest in not seeing them, said Professor Philpott, addressing NZUSA Congress

There should be three facts about our economy evident to all. First, there was the maintenance of full employment, which he considered was a good thing and which should be continued. There was the equality of economic opportunity, and the extremely slow rate of economic growth. Professor Philpott thought that living standards in Japan could possibly pass those in New Zealand in a decade.

Arguing that economic growth implied rising living standards, which were desirable, Philpott advanced a number of possible steps which could be taken to secure this growth.

An increase in the amount of capital per head was desirable, and this could only come from increased saving. He suggested that the emphasis in taxation should be shifted from those who earned a lot to those who spent a lot. This could be done by indirect taxation or by introducing a direct expenditure tax.

Economic growth also depended on the wisdom with which capital and labour are allocated. Professor Philpott thought that there was not enough capital going into Government development programmes such as electric power. Part of the trouble was that taxation was already high due to the financing of the welfare system, and politicians were loath to raise it any further. He suggested that welfare services should be confined to cases of real hardship, that "we should abolish such frivolities as subsidies on bread, milk butter," and that the savings in expenditure be devoted to education and research.

There was a need to ensure that capital went into those industries which would enable us to provide the greatest number of consumer goods. Prof. Philpott said that we should increase our spending in agriculture as long as it would enable us to import more goods than we could make ourselves using the same capital He though that we should specialise in agriculture because we were suited to it and rely on exports to finance our consumer goods. He did not support the present system of protection because it encouraged capital and labour to move into the wrong industries.

Speaking of the need to encourage research and technical progress by the right incentives, Professor Philpott mentioned the shortage of graduates to do research, existing he said because such people were given bigger salaries and larger research funds if they went overseas.

There was also a need to see that managers and executives were chosen on a basis of ability rather than inheritance or class, and to this end he suggested an increase in estate duties.

Referring to planning in the economy, Phillpott said that he thought some kind of planning was desirable, but that it should not consist of a rigid system of controls. It would be better to devise a system whereby the prices could be used to nudue the economy in the direction it ought to go.

He closed his address by saying that if politics were the art of the possible the role of students as future leaders of New Zealand must be to make possible that which is desirable.

For the benefit of Salient readers who always complain about the paucity of pages we have provided the means for them to enter a new world

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