efe

6. Critics of reform, even in the light of such real gains, still point to the hardship experienced by many Russians. Official unemployment stands at around 8 per cent, with an estimated additional 6 per cent hidden unemployment. In a fifth of all Russian regions, unemployment is over 30 per cent, and in a few over 50 per cent. Those in work have not fared much better. The average real wage fell by some 37 per cent between 1994 and 1996. M any Russians today are faced with severe hardship.

7. Some, the “New Russians”, have become very wealthy -some legitimately, but some through criminal activities (the rise of the Russian M afia has been a disturbing development). The rise of the wealthy further serves to highlight the growing divide between rich and poor.

8. The old certainties have gone. ___ (4) Today’s market sy stem in Russia is one where the strong gain and the weak lose.

II. Look at statements 1-3. In each statement, which phrase or sentence is correct?

1.Imports were subject to a 20 per cent tariff. A. Prices were controlled.

B. Government set up a 20 per cent tariff. C. Customs duty was 20 per cent.

2.In a fifth of all Russian regions, unemployment is over 30 per cent. A. In every fifth region unemployment is 30 per cent.

B. In 20 per cent of all Russian regions unemployment rate exceeded 30 per cent. C. In a few Russian regions unemployment grew up to 50 per cent.

3.Foreign companies were encouraged to invest in Russia.

A.M any new private companies stimulated investment.

B.Business was given easier access to foreign exchange.

C.The special policy was adopted in early 1992.

III. For each question 1-4, mark one for the answer you choose.

1. It was hardly surprising that prices rose dramatically because

A.90 per cent of items price were abolished.

B.the purchasing power of wages fell.

C.economy was short of most goods.

2. Price mark-ups in state shops

A.could not exceed 25 per cent.

B.was limited to 20 per cent.

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C. equaled 25 per cent.

3. In “hyperinflation” money

A.would be practically worthless.

B.supply would rise dramatically.

C.is inherently weak for the radical nature of the policy.

4. Some of the “New Russians” have become very wealthy –

A.with the rise of the Russian M afia.

B.either legally or illegally.

C.to highlight the growing divide between rich and poor.

IV. Match each of these statements with one of the paragraphs numbered 1-8.

A.Free-market economy is a medication for central planning system

B.Introduction of reform policies and their effects

C.Counter-arguments against the transformation programme

D.The turning point in the economic disaster

V. Are sentences below “Right” or “Wrong”? If there is not enough i n- formation to answer, choose “Doesn’t say”.

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VI. Complete the following table:

A.President at power in 1991

B.Inflation rate in mid-1996

C.Predicted growth for 1997 onwards

D.Average real wage between 1994 and 1996

E.M aximum inflation rate/when

F.Unofficial unemployment rate

VII. The mistakes in the sentences below have been underlined. Write the corrections in the spaces provided.

1.In 1995 out put had fallen by 4 per cent.

2.In many of the new private companies, principal workers became a shareholders.

3.Four years on, the Russian economy seemed to have being turning the corner.

4.Critics of reform, though in the light of such real gains, still point to the hardship.

5.Such an impressive reduction in inflation was of largely government successfully capped its spending.

1._____________________________________________

2._____________________________________________

3._____________________________________________

4._____________________________________________

5._____________________________________________

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S HOULD HEALTH CARE PROVIS ION BE LEFT TO THE MARKET?

1. When you go shopping you may well pay a visit to the chemist and buy a bottle of paracetamol, some sticking plasters or a tube of ointment. These healthcare products are being sold through the market syst em in much the same way as other everyday goods and services such as food, household items and petrol.

But many health-care services and products are not allocated through the market in this way. In the UK, the National Health Service provides free hospital treatment, a free general practitioner service and free prescriptions for certain cat e- gories of people (such as pensioners and children). Their marginal cost to the patient is thus zero. Of course, these services use resources and they thus have to be paid for out of taxes. In this sense they are not free. (Have you heard the famous saying

“There’s no such thing as a free lunch”?)

But why are these services not sold directly to the patient, thereby saving the taxpayer money? Why is considered that certain types of health care should be provided free, whereas food should not? After all, they could both be considered as basic necessities of life.

The advocates of free health-care provision argue that there are a number of fundamental objections to relying on a market system of allocation of health care, many of which do not apply in the case of food, clothing, etc. So what are the reasons why a free market would fail to provide the optimum amount of health care?

2. There is a problem connected with the distribution of income. Because income is unevenly distributed, some people will be able to afford better treatment than others, and the poorest people may not be able to afford treatment at all. On the grounds of equity, therefore, it is argued that health care should be provided free – at least for poor people.

The concept of equity that is usually applied to health care is that of treatment according to medical need rather than according to the ability to pay.

3. If you were suddenly taken ill and required a m ajor operation, or maybe even several, it could be very expensive indeed for you if you had to pay. On the other hand, you may go through life requiring very little if any medical treatment. In other words, there is great uncertainty about your future medical needs. As a result it would be very difficult to plan your finances and budget for possible future medical expenses if you had to pay for treatment. M edical insurance is a possible solution to this problem, but there is still a problem of equity. Would the chronically sick or very old be able to obtain cover, and if so, would the premiums be very high? Would

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the poor be able to afford the premiums? Also would insurance cover be comprehensive?

4. There is also the problem of externalities. If you are cured of an infectious disease, for example, it is not just you who benefits but also others, since you will not infect them. Also your family and friends benefit from seeing you well; and if you have a job you will be able to get back to work, thus reducing the disruption there. These external benefits of health care could be quite large.

If the sick have to pay the cost of their treatment, they may decide not to be treated – especially if they are poor. They may not take into account the effect that their illness has on other people. The market, by equating private benefits and costs, would produce too little health care.

5. M arkets only function well to serve consumer wishes if the consumer has the information to make informed decisions. If you are to buy the right things, you must know what you want and whether the goods you buy meet these wants. In practice, consumers do have pretty good knowledge about the things they buy. For example, when you go to the supermarket you will already have tried most of the items you that buy, and will therefore know how much you like them. Even with new products, provided they are the sort you buy more than once, you can learn from any mistakes.

In the case of health care, “consumers” (i.e. patients) may have very poor knowledge. If you have a pain in your chest, it may be simple muscular strain, or it may be a symptom of heart disease. You rely on the doctor (the supplier of the treatment) to give you the information: to diagnose your condition. Two problems could arise here if there were a market system of allocation health care.

The first is that unscrupulous doctors might advise more e xpensive treatment than is necessary, or drugs companies might persuade you to buy a more expensive branded product rather than an identical cheaper version.

The second is that patients suffering from the early stages of a serious disease might not consult their doctor until the symptoms become acute, by which time it might be too late to treat the disease, or very expensive to do so. With a free health service, however, there is likely to be an earlier diagnosis of serious conditions. On the other hand, some patients might consult their doctors over trivial complaints.

6. If doctors and hospitals operated in the free market as profit maximisers, it is possible that they would collude to fix standard prices for treatment, so as to protect their incomes.

Even if doctors did compete openly, it is unlikely that consumers would

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have the information to enable them to “shop around” for the best value. Doctor A may charge less than doctor B, but is the quality of service the same? Simple bedside manner – the thing that may most influence a patient’s choice – may be a poor indicator of the doctor’s skill and judgment.

7. To argue that the market system will fail to provide an optimal allocation of health-care resources does not in itself prove that free provision is the best alternative. In the USA there is much more reliance on private medical insurance. Only the very poor get free treatment.

Alternatively, the government may simply subsidise the provision of health care, so as to make it cheaper rather than free. This is the case with prescriptions and dental treatment in the UK, where many people have to pay part of the cost of treatment. Also the government can regulate the behaviour of the providers of health care, so as to prevent exploitation of the patient. Thus only people with certain qualifications are allowed to operate as doctors, nurses, pharmacists, etc.

I.Match each of these statements with one of the parts numbered 1-7:

A.Health care generates a number of benefits external to the patient.

B.There are alternative policies open to a government to tackle market

failings.

C.It is difficult for people to predict their future medical needs.

D.Patients might be at a disadvantage because of their ignorance.

E.It is unlikely that competition would drive down prices charged by doctors and hospitals.

F.People may not be able to afford treatment.

G.It is important to make a distinction between health care and other products and services allocated through the market.

II.S ay whether the following sentences are “Right” or “Wrong”. If

there is not enough information to answer, choose “Doesn’t say”.

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III.For each question 1-5, mark one for the answer you choose.

1.The concept of equity applied to health care implies

A.treatment according to the ability to pay.

B.treatment according to social status.

C.treatment according to medical need.

2. The problem with medical insurance is that A. the poor might not be able to obtain cover. B. the premiums might be too high for the poor.

C. it might make it difficult for people to plan their budget. 3. If there were a market system of allocating health care,

A. doctors and drugs companies would probably take advantage of patient ignorance.

B. patients would be better informed.

C. patients would be more willing to buy expensive branded products. 4. In the free market

A. doctors’ fees would be reduced by competition.

B. doctors might charge standard prices for treatment. C. price would be an indicator of the doctor’s skill.

5. According to the writer, a free health service

A.is sure to provide an optimal allocation of health-care resources.

B.should be restricted to the very poor.

C.is not necessarily the best alternative.

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CAN THE MARKET PROVID E AD EQUATE

PROTECTION FOR THE EN VIRONMENT?

___ (1)

In recent years people have become acutely aware of the damage being done to the environment pollution. But if the tipping of chemicals and sewage into the rivers and seas and the spewing of toxic gases into the atmosphere cause so much damage, why does it continue? If we all suffer from these activities, both consumers and producers alike, then why will a pure market system not deal with the problem?

After all, a market should respond to people’s interests.

___ (2)

The reason is that the costs of pollution are largely external costs. They are borne by society at large and only very slightly (if at all) by the polluter. If, for example, 10 000 people suffer from the smoke from a factory (including the factory owner) then that owner will only bear approximately 1/10 000 of the suffering. That personal cost may be quite insignificant when the owner is deciding whether the factory is profitable. And if the owner lives far away, the personal cost of the pollution will be zero.

Thus the social costs of polluting activities exceed the private costs. If people behave selfishly and only take into account the effect their actions have on themselves, there will be an overproduction of polluting activities.

Thus it is argued that governments must intervene to prevent or regulate pollution, or alternatively to tax the polluting activities or subsidise measures to reduce the pollution.

___ (3)

But if people are purely selfish, why do they buy “green” products? Why do they buy, for, example, “ozone-friendly” aerosols? After all, the amount of damage done to the ozone layer from their own personal use of “non-friendly” aerosols would be absolutely minute. The answer is that many people have a social conscience. They do sometimes take into account the effect their actions have on other people. They are not totally selfish. They like to do their own litt le bit, however small, towards protecting the environment.

Nevertheless to rely on people’s consciences may be a very unsatisfactory method of controlling pollution. In a market environment where people are all the time being encouraged to consume more and more goods and where materialism is the religion of the age, there would have to be a massive shift towards “green thinking” if the market were to be a sufficient answer to the problem of pollution.

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___ (4)

Certain types of environment problem may get high priority in the media, like acid rain, the greenhouse effect, damage to the ozone layer and brain damage to children from leaded petrol. However, the sheer range of polluting activities makes reliance on people’s awareness of the problems and their social consciences far too arbitrary.

I.Which text reports on these items?

A.M edia priority of the environmental problems.

B.Costs of pollution.

C.A market response to the environmental problem.

D.People’s selfishness and social responsibility.

II.For each question 1-4, mark one for the answer you choose.

1. A market system should deal with the problem of pollution because

A.consumers suffer from producers’ activities.

B.people have become acutely aware of the problem.

C.it should react to people’s interests.

2. The costs of pollution

A.are mostly suffered by society.

B.are borne by the polluter.

C.are personal costs of the factory owner.

3. People buy “green” products and“ozone-friendly” aerosols because

A.they are totally selfish.

B.they are aware of the damage they do to the ozone layer from their personal use

of “non-friendly” goods.

C. being socially responsible they take into consideration the possible impact of their actions on other people.

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4. A very unsuitable way of controlling pollution could be A. encouraging people to buy more and more goods.

B.organizing “ green thinking” propaganda.

C.relying on people’s being socially conscious.

III. The mistakes in the sentences below have been underlined. Write the corrections in the spaces provided.

1.Recently people became aware of the damage being done to the environment by pollution.

2.Personal costs may be quite insignificantly when the owner is deciding whether

the factory is profitable.

3.People take into account the effect their actions have to themselves.

4.They like to do their own little bit, otherwise small, towards protecting the environment.

5.To rely on people’s conscious may be a very unsatisfactory method of controlling pollution.

1._____________________________________________

2._____________________________________________

3._____________________________________________

4._____________________________________________

5._____________________________________________

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