Strikes & Rising Prices

More and more numerous become the strikes: higher and higher rise the prices. This situation calls, of course, for even more strikes and still higher prices, and soon, ad infinitum. But it could be otherwise.

There is no need here to discuss the morality of strikes nor to pronounce on the need for them; but there is good reason to ask ourselves whether we are being rational in seeking to improve the lot of the citizens by constantly adding extra curves to the spiral of the cost of living, for any temporary benefit gained by striking workers must at once make for a permanent disadvantage to all other citizens, many of whom will seek relief by resorting to the strike weapon.

Strikes for higher wages ought to be forbidden, not by the Government but by the Trades Unions themselves. The obviously prime cause of wage strikes being the lagging of wages behind prices, the Unions should insist that the process be reversed, that wages should follow prices down.

How to bring this about?

The solution seems a fairly simple one. The experts should decide what the cost of living is at present. Let us say they arrive at a figure represented by X. They should then consult to find out what X means in actual wage. The next step is to estimate what the average family would need in addition to X in order to live an average decent life with its average amenities. This additional amount could be represented by the symbol Y, and be taken as a percentage of the cost of living average. In this way it would be seen that:

X + Y = Wage

For differentials, e.g.- tradesmens' wages and professional salaries there could be used the following scale:

Wage (Salary) = (X+Y) + 1 or 2 or 3 as the case may be.

Once this is settled, then a close watch must be kept on the cost-of living index. Should it rise, the workers can demand, by strike - if there is no other way, that prices be reduced. If as a result of this demand (or as the effect of greater production) there is a lowering of prices, than Y as a percentage of X must also be reduced. Thus wages will fall, but the worker will notice no lessening of his purchasing power as a result of that decrease. Indeed, it may happen that he is a little better off than he was before, for his wages would be following prices down, and even if the wage reduction be so accurately estimated as to leave an exactly similar proportion between wages and cost of living as existed before the fall, yet prices will have fallen before wages and he will have the benefit of it.

Such a fall in prices together with a proportionate fall in the cost of production would favour the export trade also, thus helping to balance the national books by bridging that ever-threatening gap between imports and exports. The country would find itself wealthier and that wealth could be used in various ways:- public services, education, building, roads, still lower prices, or whatever the public need might be. There might even be an increase in the value of Y; but such an increase should only be made after a long and careful investigation of its probable and possible effects. One could also imagine as a benefit accruing from increased National Wealth the fantastic notion of a considerable reduction in taxation.

The great merit of the system is seen in that important point: Wages follow prices down, not up. Instead of always being, as it were, in arrears, the worker would always be on the credit side. Whenever prices go down, production costs will also go down and, taxation being reduced as well, producers could have little objection to compulsory lowering of prices - it would work out as beneficially for employer as for worker.

To recapitulate:
X = cost of living minimum
Y = percentage of X required for a fair wage
X + Y = workers' wage
X + Y + 1 (or 2) tradesman's wage or Professional salary.
Whenever the cost of living falls, wages must fall in sympathy.
Whenever the cost of living shows a tendency to rise, prices must be cut.

If for some serious reason prices cannot at once be cut, X & Y are temporarily adjusted, and Trades Unions are to be on the alert that this is very rarely done.

Should it appear that an attempt is made to adjust prices upwards the Unions must demand a lowering of prices - even if it necessitates an increase of productivity on their members' part.

"ADJUST DOWN" should be the watchword, an idea much more in keeping with the Nations' well-being than when applied, as politicians often apply it, to education.

Well, there it is! The Economists will most likely find flaws in this suggestion, but what of that? If it makes them think along other lines than the usual ineffective ones, it will have served a very good purpose. One can only hope.

Contra spem Sperans

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