Unit 17 government and business

Section A. Your task: Read the text. Copy out words pertaining to the field Government and business to start forming your own glossary on the topic. Answer the questions below. Be prepared to produce a sight translation in class.

Give a summary translation of the text basing upon the questions.

To what extent should a government interfere in the economic system? There are two extremes in the spectrum. On the one hand a government can intervene minimally, allowing the forces of demand and supply and the price mechanism to determine what goods and services are to be produced. This is called a laissez-faire* (or leave it alone) policy. The argument runs that people will vote with their money for the sorts of things they want. If they want to read a particular newspaper, they will buy it, and the newspaper will stay in business. If they do not like the newspaper, they will not buy it, and the newspaper will go out of business. The same applies to television sets and motor cars, holidays in Spain and Chinese take-aways.

At the other end of the spectrum is the centrally planned economy in which the government makes all the major decisions such as what is going to be produced, who is going to produce it, where it is going to be produced, and who is going to benefit from it when it is produced.

Most governments operate somewhere between these two extremes. In capitalist countries governments tend to let the business world get on with the job of catering for the needs of the people. If they make profits, and we hope they do, we will tax these profits and use the proceeds to support the Welfare State (which offers free education, subsidized health care and pensions) and defend ourselves against external aggression. There is, however, general agreement that some economic activities should be controlled by the state, which explains our nationalised industries.

In Britain governments tend to concentrate their interest on controlling inflation, minimizing unemployment and encouraging economic growth. It is often the case that a policy which would be good for us in the short run would be against our interests in the long run. The point might be made in connection with a government's policy towards energy. In the short run we might benefit from a rapid disposal of our North Sea oil and gas supplies, but what happens when these supplies run out? Should the government intervene in these circumstances, or allow the multinational oil companies to make the crucial decisions?

Another problem facing a government in modern Britain is dealing with regional development. Inevitably, at the present time, as Britain draws closer to Europe economically, the south east of the country is prospering while the north goes into relative decline. Should the government let this happen or should it try to reverse the flow of people and jobs to the south east. It is not an easy decision for a government to make because it seems wrong to let parts of the country decline while others prosper.

Whatever decisions are made by a government they are bound to affect the business community. If taxes are increased on beer, the brewers' profits will go down and jobs will be lost. If interest rates are lowered, businesses will borrow more from the banks, jobs will be created, but prices might rise and that means inflation. Whatever action a government takes it will have repercussions on the business community, which is why the captains of industry are so watchful and wary of their political masters.

Your task

Having read the above passage answer these questions in your own words.

1. What is meant by laissez-faire? To what extent do you think it is possible for a government to «let things happen»?

2. What do you see as the benefits and disadvantages of a centrally planned economy?

3. How do you think the problem of unemployment should be dealt with?

4. Do you think that people should go to where the jobs are, or that jobs should be taken to the people?

5. Would you generally prefer to see the government more active or less active? What sort of actions, if any, would you like to see them taking?

Section B. Fill in the blanks

Your task: Fill in the blanks in this passage, using words from the list given below.

assessed	collected	includes	system
poverty	presents	democracy	earners
prosperity	benefits	encourage	purchased

One of the problems faced in a society aiming to produce an equitable distribution of national wealth is that those who are wealthy find it comparatively easy to increase their …………. further, while those who are poor are caught in what might be described as a ……………. trap. Since there are more poor people than rich people in our society, and since we live in a …………… where every adult has a vote (rich or poor), it is not surprising that our governments produce a …………. of taxation which generally directs wealth away from the rich to the poor. The actual rates of taxation are liable to change every year when the Chancellor of the Exchequer* ……………. his budget proposals to Parliament. Among other things the taxes ……………….. are used to distribute to the less fortunate members of our society in the form of unemployment ……………… and old age pensions etc.

Direct taxes are those levied on the taxpayer such as income tax, which is charged through the system known as PAYE* (Pay As You Earn). Companies pay Corporation Tax* which is ………….. on their profits. Indirect taxes, by contrast, are charged when goods or services are procured, so that you pay more. In this sense indirect taxes could be said to ……………… saving. This type of tax ……………… the tax on cigarettes and alcohol as well as VAT (Value Added Tax*) which has to be paid on most goods …………….. . The ultimate problem with taxation is the need to ensure that taxation is not so punitive that it demotivates the wage …………. and the profit-makers, thereby 'killing the goose that lays the golden egg'.

Section C. Interpretation of data

Your task: After studying the following diagram answer the following questions.