Английский язык для экономистов - Малюга Е.Н.
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¦ Digene Corp. of Gaithersburg;
¦ Ethyl Corp.
K.2. Answer the questions.
1. Why is the licensing deal with Pfizer considered to be lucrative? In what way can it help the shares of Baltimore biotech?
2. Which of the companies is the most successful?
K.3. Find information about the operation of two or three similar companies on the Internet. Analyze and compare their performances.
K.4. Think of a conversation between a journalist and the Head of one of the companies. Discuss the present state of affairs and the future perspectives. Unit 9
The Role of Government
A. Preliminary discussion
1. What is the role of the government in the economy?
2. Should government interfere in all branches of the economy? If not, which ones it shouldn't.
3. What role does the government play in your country?
4. What do you think about the economic policy of your government?
B* Pre-reading exercises
B.l. Skim the text and give its key idea.
B.2. Scan the text for the following information.
1. What three points of view are presented in the text on the role of government in the economy?
2. Whose point of view is the most proper?
3. What is the principle difference in views of Samuelson and Friedman?
C Reading
C.l. Read the text and answer the questions.
1. What is the essence of Keynesians approach to the role of state in the economy?
2. What is the difference in the role of state in a country with market and command economy?
3. What do the classical economists think about the role of government?
4. Do you think that market itself can run economy properly? Unit 9. The Role of Government
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What Role Should the State Play in the Economy?
Plenty of economists provided intellectual support for state intervention during the era of big government, particularly from the 1930s to the 1980s. Keynesians argued that the state should manage the amount of demand in the economy to maintain full employment. Others advocated a command economy, in which the government would decide price levels, oversee the allocation of scarce resources and run the most important parts of the economy (the "commanding heights") or, in communist countries, the entire economy. The role of the state increased at the expense of market forces. Economists provided plenty of examples of market failure that seemed to justify this.
Since the 1950s, there has been growing evidence that government intervention can also be flawed, and can often impose even greater costs on an economy than market failure. One reason is that when a government acts, it usually does so as a monopoly, with all the attendant economic inefficiencies this implies. In practice, policies of Keynesian demand management often resulted in inflation, and thus lost much of their credibility. There was growing concern that public investment was crowding out superior private investment, and that other public spending on things such as health care, education and pensions was similarly discouraging private provision. Government management of commercial enterprises was often seen to be inefficient and, starting in the 1980s, nationalization gave way to privatization. Even when the state was not directly responsible for economic activity, but instead set the rules governing private behaviour, there was evidence of regulatory failure. High rates of taxation started to discourage people and companies from undertaking economic activities that would, without the tax, have been profitable; wealth creation suffered.
Most economists agree that there is a need for some government role in the economy. A market economy can function only if there is an adequate legal system, and, in particular, clearly defined, enforceable property rights. The legal system is probably an example of what economists call a public good (although the existence in many countries and industries of some self-regulation shows it is not always so).
Although politicians in many countries spent the 1980s and 1990s talking about the need to reduce the role of the state in the economy, and in 156
Английский ЯЗЫК ДЛЯ экономистов
many cases introduced policies of privatization, deregulation and liberalization to help this happen, public spending continued to increase as a share of GDP.
Classical economists had long recognized the need of government to provide goods and services that would not or could not be provided by the private sector. But they urged that this participation be kept to a minimum.
Paul Samuelson and Milton Friedman have different views on what role the government should play in the economy. Samuelson argues that too many of the problems the classical economists wanted to leave to the marketplace were not subject to its influence. These externalities, affecting things like public health, education, and environmental pollution, were not subject to the laws of supply and demand. Consequently, it was up to government to establish goals for the economy and use its powers to achieve them.
