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Less Spending+Lower Pay = More Profit+More JobsSource: Fortnight, No. 123 (Mar. 19, 1976), p. 3Published by: Fortnight Publications Ltd.Stable URL: http://www.jstor.org/stable/25545751 .

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FRIDAY 19th MARCH 1976/3

FORTNIOHT

contents I

Calvin Macnee.2 Positive Ruling.4 Human Rights. 4 Wanna Buy a Meat Plant. 5 Profile: Andy Tyrie.6 The Other Way: Part 2.7 ] By Robin Percival | 4-page Business Directory.8 The Carnival is Over.13 REVIEWS Books. 14

Films. 16

Art.16

Theatre.17

Letters.18

Sidelines..19

Crossword.20

EDITORS Tom Hadden

Martyn Turner

ASSISTANT EDITORS Robert Johnstone (Reviews)

Phil Nichols (Finance)

PRODUCTION NOEL MURPHY

Ivan Gibbons

Typeset by Compuset

Fortnight's address is now

7 LOWER CRESCENT BELFAST

Less Spending+Lower Pay = More Profit+More Jobs

It is generally accepted that the budget is not what it used to be; that the

proper management of the economy is something that goes on all the year round. Still there is a point of view in having an annual stock-taking in any business operation. On a practical level too there are still some items for the Chancellor to carry out to complete the package which he has been preparing over the past year.

The basis ofthe new equation for greater general prosperity is fairly simple. The crude Keynesian remedy of spending your way out of a depression is now

thoroughly discredited, following its disastrous effects during the Heath/Barber boom of a few years back. Even in the 1930s true Keynesians realised that increasing public sector spending was bound to add to

inflationary pressures. It follows that if the major problem is inflation, a

Keynesian remedy will only make matters worse. Hence the need for strict control of government spending, and a firm rejection of Tribunite pressures for a continued increase. The proper argument for socialists to engage in is over the allocation rather than the amount of public spending.

To prevent a standstill or cut back in public sector spending resulting in

increasing unemployment it is then necessary to make sure that a small

proportion of the workforce does not win wage increases at the expense of other people's jobs. There is a certain amount of real money value in any economy. The job ofthe socialist is to see that this is more equitably shared

out, both between workers at various levels and in various industries and also betwen workers and non-workers, of whom the pensioners are the most numerous. The bulk of this part ofthe equation has to be worked out under the next stage of the social contract. But the Chancellor can also help by ensuring a more even distribution of tax burdens, both by raising the tax threshold and by bringing back lower rates of tax for the initial slices of taxable income.

The final element in the equation is investment. The important point for socialists to recognise on this level is that investment can only come out of

profit. The proper strategy for the Chancellor in this area is therefore not to' continue his policy of squeezing business profits, but to introduce measures which will help to increase the proportion of actual profit which is ploughed back by way of investment. One way to achieve this is to increase investment allowances. Another is to encourage firms to distribute their profits in the form of shares, both to employees and to shareholders. Government can help in the direction of investment into more generally profitable spheres than

during the property boom ofthe early 1970s. But in a mixed economy there must also be incentives for profitable investment on behalf of those whose livelihood depends on the private sector.

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