Paul Samuelson and Milton Friedman are two of America's most distinguished economists. In recognition of their achievements, Samuelson was awarded the Nobel Prize in Economics in 1970 and Friedman in 1976. Both spent most of their professional lives on the faculty of major universities (Samuelson at the Massachusetts Institute of Technology, and Friedman at the University of Chicago). Given their similarities, one would think that the two would also hold similar views on economic issues. Nothing could be further from the truth. And, some of their sharpest differences center on the question of what ought to be the proper role of government in the economy.

Classical economists in the tradition of Adam Smith had long recognized the need for government to provide goods and services that would not or could not be provided by the private sector (like national defense). But they urged that this participation be kept to a minimum.

But Samuelson argued 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.

Milton Friedman sees things differently. Like the classical economists of old, he regards supply and demand as the most powerful and potentially beneficial economic forces. The best that government can do to help the economy, in Friedman's view, is to keep its hands off business and allow the market to "do its thing." The minimum wage laws are a case in point. Whereas Samuelson endorses minimum wage laws as a means of helping workers at the bottom of the income ladder, Friedman would argue that by adding to unemployment, they harm the very people they were designed to help. That is, he explains, by increasing labor costs, minimum wage laws make it too expensive for many firms to hire low-wage workers. As a result, those who might otherwise be employed are laid off.

On the one hand, Samuelson endorses the concept of government-sponsored programs such as public housing and food stamps as a means of reducing poverty. Friedman, on the other hand, would prefer to give the poor additional income and allow them to use the funds to solve their problems without government interference. To apply this concept, Friedman suggested the "negative income tax." The graduated income tax takes an increasing amount in taxes as one's income rises. The negative income tax would apply a sliding scale of payments to those whose income from work fell below a stated minimum.

Unit 10

Grammar: 1. Функции инфинитива.

2. Инфинитив в функции определения и обстоятельства.

I. Language Practice

1. Practise the fluent reading and correct intonation:

Asking the Way.

— Exöcuseøme, `can you `tell me the `way to Tra`falgar ø Square?

—ö Certainly. `Go `down ö Regent ø Street | into ö Piccadilly ø Circus | and `then `go `down the ö Haymarket.

— Exöcuse me, ø sir, | but `would you `tell me where ø Hyde ö Park is?

— I ö really have no iødea. I’m ö also a ö stranger here. You’d `better ask the poölicemen over ø there. ö He’ll give you `all the infor`mation you ö want.

— `Would you `mind ø telling me `how I can `get best from ø here to `Hyde ö Park?

— ö Oh, | that’s a ø pretty `long ö way from here. Go as `far as the ø next corner | and `wait for a `bus with ø «Hyde ö Park» on it.

— Exöcuse ø me, | `can you `tell me the `way to ø Hyde ö Park?

— ö Certainly. It’s about `fifteen `minutes’ run by `bus ö 9 from here. If you `tell the conøductor, | he’ll `put you ö down there.

— `One ö moment, ø sir. `Can I `get to `Hyde `Park by the ø Underøground?

— ö Sure. `Take the ø Underøground | from ö Mansion, House.

— Exöcuse ø me, | `am I right for ø Farringdon ø Road?

— No, madam. You are `going the ö wrong ø way. In ø fact, | in the opposite diörection.

— No. You’ll `have to `go ö back to the `bottom of `this ö road, | take the ø first `turning on your ø left (`turn to the ø left), and `walk ø straight ø on as `far as the `third ö cross-to-ads. You `can’t `possibly ö miss it.

2. Listen to the speaker; read and memorize the following words and phrases:

1. to survive - выжить

2. internal funds - внутренние средства

3. expenses - расходы

4. depreciation - амортизация

5. replacing assets - замененные средства

6. wear out - изнашивать

7. retained earnings - нераспределенная прибыль

8. external funds - внешние средства

9. to borrow - брать взаймы

10. proprietorship - собственность

Text. The Sources of Business Funds

In many ways, money is to business what water is to plants. Plants need water to begin life, to survive and to grow. Similarly, firms need money to begin operations, to meet their day-to-day expenses and to expand. Most of the money used by business comes from the sale of its products and services. Since these funds come from within the firm they are described as internal funds. The rest must come from outside, or external sources.

Internal Funds. As a firm sells its products or services, it receives money, which it uses to meet its expenses. One of these expenses, depreciation, represents the cost of replacing assets (like tools, machinery, and buildings) that wear out. Typically, businesses use internal funds to cover the cost of depreciation.

The funds that remain after paying expenses are a firm's profits or earnings. Although the owners or stockholders could take it all for themselves, in most instances some portion of the profits will be retained by the business. Since its "retained earnings," along with the sum it set aside for depreciation came from within the firm, they are known as internal funds. About 60 to 70 percent of a business firm's financing come from its internal sources.

External Funds. Sales do not remain constant from one season, or month or week to the next. There are times when more money comes in to a business than is needed to pay its bills. Similarly, at other times there is not enough money coming in to cover operating costs. When this happens, there are only four things that the firm can do:

· dip into savings,

· borrow,

· sell shares of stock (if it is a corporation) or seek additional capital from the owners (if it is a partnership or proprietorship),

· reduce spending.

II. Exercises on the Text:

3. Give English equivalents to:

во многих случаях; чтобы покрыть каждодневные расходы; большая часть денег; остальные должны исходить извне; поскольку фирма продает свою продукцию или услуги; чтобы покрыть издержки за амортизацию; в большинстве примеров; выделять на амортизацию; они известны как внутренние фонды; бывают времена; когда это происходит; продать долю в акционерном капитале.

4. Complete as in the text and translate into Russian:

1. In many ways, money is to business what ... 2. Plants need water ... 3.Similarly, firms need money ... 4. The rest must come from outline, or ... 5. As a firm sells its products or services, it receives money which it uses ... 6. Typically, business use internal funds...7.The funds that remain after paying expenses are ... 8. About 60 or 70 percent of a business firm’s financing comes... 9. There are times when more money comes in to a business than ... 10. Similarly, at other times there is not enough money coming in ...

5. Sum up what the text says about:

money is to business;

the sources of coming money from;

the usage of internal funds

the four things that the firm can do

III. Grammar Exercises