ABSTRACT
In a community in which wage-rates are everywhere adjusted to the conditions of demand and supply, so that no wage-rates are uneconomically high and there is no unemployment beyond what is necessary to allow adjustments to be made to industrial fluctuations, for the State to subsidise wages in particular industries must, in general worsen the distribution of productive resources and damage the national dividend. A policy of wage-subsidies applied to all industries would not necessarily damage the distribution of productive resources, but it could not improve this distribution; and, though in some circumstances it might increase the dividend, it would probably only do so at the cost of causing too much work to be done, and, therefore, not beneficial, to economic welfare. This chapter discusses that in a community, in which, apart from subsidies, rates of wages would be everywhere adjusted to the conditions of demand and supply, any policy of wage subsidies is likely to prove anti-social.
