“Case of the Tearful Tycoon...”

Pamphlet exposes bosses’ lies
about workers we

here.

“THE CASE OF THE TEARFUL TYCOON—AN ANSWER TO
J. V. CLYNE.” This popular pamphlet by Emil Bjarnason of the Trade
Union Research, is a timely answer to the lie that workers are pricing
themselves out of jobs.

The pamphlet is receiving wide distribution throughout the labor
movement in B.C. Because of its importance to workers in their struggle
for higher wages, we are reprinting some of the more important sections

Copies of the pamphlet are available at 25c per copy, or 15c for orders.
of 500 or more, at Trade Union Research, 339 West Pender.St., Vancouver.

CAN'T PRICE YOURSELF
OUT OF WORLD MARKET
T is a fact that has been
known to economists for
150 years at least, that the gen-
eral level of wages and prices
in a given country has no effect
whatsoever on its ability to ex-
port its goods.

Anyone can satisfy himself
of the theoretical truth of that
statement by checking the ar-
ithmetic of the following trans-
actions.

Let cameras cost fifteen times
as much, and pens ten times
as much in Canada as in Japan.
Then let Mr. Moneybags buy
1,000 ten dollar fountain pens
in Canada for $10,000, ship
them to Japan and there sell
them at the Japanese price of
$1.00, receiving therefore,
$1,000. With this, let him buy
five hundred $2.00 Japanese
cameras, and ship these to
Canada where he will sell them
at the Canadian price of $30.00,

several years now. It is, how-
ever, the influx of capital, and
not the level of our prices, that
has made our dollar and there-
fore our exports, costly, at least

until the Fleming budget.

Judge Clyne would have us
believe that high wages keep
us out of world markets. If
that were true, we should have
a favourable trade balance
with a country whose wages
are higher than our own, and
an unfavourable balance with

countries which have lower
wages. The reverse is the
truth.

The only country in the
world whose wage level is
higher than Canada’s is the
United States. Yet there has

not been a single year, at least
since World War II, when we
have succeeded in selling the
Americans as much as they
have sold to us.

Wage rates in the United

realizing a total of $15,000. | Kingdom are notoriously lower

Thus he has made a $5,000
profit by exporting goods to a
country whose price level is
one tenth of ours.

In practice, it doesn’t happen
that way. If Japanese prices
were on the average one tenth
_ of Canadian prices, there would
be So much demand for Japan-
ese currency to take advantage
of such bargains, that Canad-
lans- would have to pay ten
Canadian dollars for one Jap-
anese yen.

This would cancel out the
difference in prices, and leave
the two countries competing

* on an equal footing (with some
prices being lower in Canada,
some lower in Japan, and the
average price about equal).

This levelling out of average
prices through exchange rates
does not always happen auto-
matically or instantaneously.
Sometimes governments use
their gold or foreign exchange
reserves to maintain an artific-
ially high exchange rate for
their currency, but they cannot
do this for long, or their re-
serves would become exhaust-
ed.

At other times, large inflows
of foreign capital will keep the
currency above par and: there-
by discourage exports. This has
been the case in Canada for

Canada 16th Nation
In Social Security

Canada ranks 16th in the
list of countries with advanced
social security systems, accord-
ing to a study by the Interna-
tional Labor Organization. The
United States took 25th place.
The countries below Canada
are mostly in Africa, Asia and
Latin America.

than Canadian wage rates. Yet
there has not been a_ single
year since World War II when
we have not sold more goods
to the United Kingdom than
we have bought from her. ~

If we add up the figures for
all of the countries of the
world which pay lower wages
than Canada (that is all coun-
tries except the U.S.A.) then
we find that in every year our
exports to those countries are
greater than our imports from
them. But this favourable bal-
ance with the low wage coun-
tries is always more than off-
fset by our unfavourable bal-
ance with the highest wage
area in the world. The figures
for the year 1959 will serve to
illustrate:

In 1959,

Our purchases from U.S.A;
exceeded our sales to U.S.A.
by $517,000,000

our sales to overseas coun-
tries exceeded our purchases
from them by ___ $137,000,000

leaving an unfavourable bal-
ance of $380,000,000

Thus it is precisely the low-
Wage areas which are our best
customers ,and the high wage
area that is giving us the most
competition. The — facts
therefore, the exact opposite of
His Erstwhile Lordship’s pro-
nouncements.

ARE CANADIAN >
COSTS HIGH?

"This pattern of invesiment
is of course entirely natural,
since capital flows instinctively
to areas where it can be used
most profitably. I draw your at-
tention to it because it illust-
rates just how serious is the
disparity now existing in some

are |

fields of manufacture between

production costs on this con-
tinent and ‘elsewhere in the

world.” Hon. J. V. Clyne, Ap-

ril 25, 1961.

One would judge from the
above statement that somehow
Canadian costs and prices had
gotten out of line with those
in other parts of the world.
Other parts of his statement
suggest that this is due to the
“continuing claims” of workers
for higher wages.

It is a typical statement of
the widespread belief that Can-
ada is suffering from rampant
inflation caused by wage in-
creases. What is the truth of
the matter.

On page 12 there is a table |

showing the wholesale price
indexes of 29 countries... These
are all of the countries for
which the United Nations pub-
lishes_ continuous price index
series for the past 25 years.

Note from the table, that of
all the countries of the world
only two, Switzerland and
Venezuela, have held their
prices closer to prewar levels
than Canada.

If the Clyne version -of ec-
onomics ‘were correct, we
should now be so overwhelmed
with orders from abroad that
we could not hope to fill them.
Instead, the air is filled with
moans about competition from
countries whose prices have in-
creased anywhere from forty
times (France) to 250 times

By Emil Bjarnaso

(Japan) as much as ours.

How could it happen that
Japan’s prices could increase
by 25,000 percent, and _ still
threaten us with their competi-
tion? The simple truth is, as
we have said before, that our
costs and prices have nothing
whatsoever to do with our abil-
ity to sell competitively in the
world market. Our exports can
be made uncompetitive by rig-
id exchange rates, or by ex-
cessive inflows of foreign cap-
ital, but you can’t price your-
self out of the world market.

CAN’T PRICE YOURSELF
OUT OF HOME MARKET
EITHER

HERE will be those who
will argue that while you
may not be able to price your-
self out of the world market,
this will not be true of the
home market. Inside the coun-
try they will say, where every-
one is using the same currency,

= |an increase in the wages of one
é;/group of workers will raise

the price of their product and
cause unemployment through

: | high prices.

This too is nonsense. Wages
of production workers account
for only about a quarter of the
total value of production. Even
if we include the salaries of
white collar workers and

;|Management, wages and salar-
_|ies still account for only about

half of the total values produc-
ed. All industries have a wide
margin to manoeuvre in, be-
tween wages and prices. If it
should happen, as it sometimes
does, that wages rise to more
than half the total price, the
employer. does not have to add

, the inerease to the price, and

in point of fact, he more often
tries to cancel it out by raising
productivity. Otherwise, it
would not have been possible
for wage rates to rise eighty
percent while living costs rose
only 30 percent in the period
since 1949. This is progress, but

i| it is progress of a kind that the
:|Clynes of this world bitterly

# | resent.

A good illustration of the
fact that wage increases do not
automatically raise the price
is to be seen in the following
comparison of building trades
‘wage rates and building costs
in various cities. The wage

rates are those of carpentels:
the basic building craft, and
the price is the cost per square
foot of a standard bungalow
computed by the Canadiai
Mortgage and Housing Corpor“)
ation from actual: building Cony i
tracts. i

Wage rate Cost pet a J
of sq. ft. of
Carpenters Bungalow ~

St. John’s __ $1.83 $10.87
Quebec _____ 1.98 10.55
Toronto ____ 2.90 9.74

The city with the lowest
wage rate has the highest cost:
and the city with the highest ~
wage rate has the lowest cost.
Surely there could be no more y i
graphic illustration of the fact J
that high prices are not caused ©
by high wages. fl 4

It is sad, but true, that some 7
leaders have swallowed the @
Clyne theory and agreed tO ff
abandon the negotiating poll —
cies which have in the past kept
our living standards slowly but d
steadily improving. eS

All organized workers should 1 \
bear in mind that in good years J
and bad, their output per hovt
is rising by two, three or foul —
percent per year, and that if 4
their wages do not follow, they eS
are being swindled. oT

African Envoys in us. |
Victims of Racists

African diplomats accredited ~
to Washington continue to b&
the victims of racial discrim ~
ination. :

The latest incident which 7
has come to light involves AM¥ —
bassador Adam Malick SoW
from Chad, who was refuse@
service at a restaurant in Mary
land because he is a Negro.

The ambassador was travel
ing from New York to Wash”
ington to present his creded*
tials to U.S. president Kennedy*
Through his interpreter Am
bassador Sow explained that
he was a visiting diplomat, put
he was nonetheless forced 1 =
leave without being served. —

According to the New Yor# ®
Times, three other Africa? 7
diplomats have recently bee? #
subjected to similar humilia 9

tion in Maryland.
—

September 22, 1961—PACIFIC TRIBUNE—Page § 4