. The Role of Government in the Economy


A. Discussion

Discuss the following questions with your classmates:

• Do you think this oil field is owned by the U. S. government or by a private company?

• Are such industries (oil, gas, electricity) privately or publicly owned in your country?

• Do you think the U. S. government plays an active role in the nation’s economy?

• Does your government play an active role in your country’s economy?

Q B. Vocabulary and Key Concepts

Read through the sentences, trying to imagine which words would fit in the blanks. Then listen to a dictation of the full sentences, and write the missing words in the blanks.

1. One of the important characteristics of American-style

capitalism is individual_________________________ of

________________________ , including such things as houses

and land, businesses, and intellectual property such as songs, poems, books, and inventions.

2. The second characteristic is_________________________

3. The idea in a pure capitalistic system is for the government not

to_________________________ , that is, for the government to

take a_________________________ -________________________


4. In a pure capitalistic system, the government’s role would be se­verely limited. It would be responsible only for laws governing and property, as well as for the

5. Companies may have to install pollution______________________

equipment to_____________________________________________

government regulations.

6. People who earn little or no_________________________ can

receive__________________________________________________ ,

often called_________________________

7. The government makes sure that the marketplace stays

_______________________ through its_______________________

and________________________ laws.

8. The government interferes with the economy in an effort

to maintain_________________________

9. Through, the government tries

to control___________________________

10. The government has to be very careful to keep—————————

and inflation in_________________________ , however.

11. The government further tries to achieve stability through its

_______________________ and by controlling the

_______________________ rate.

12. Republicans, the more_________________________ party, tend to

_______________________ fewer taxes, less welfare to the poor,

and conditions that help business grow.

13. The government’s role in the economy is not a_________________

thing because the_________________________ of the government

changes every few years.

Follow-up: Check the spelling of the dictated words with your teacher.

Discuss the meanings of these words and any other unfamiliar words

in the sentences.

C. Predictions

Using the photograph and the vocabulary exercise as a starting point, write three questions that you think will be answered in the lecture.

Example: • How does the government make sure that businesses

obey environmental protection regulations?




Follow-up: After you have written your questions, share them with your teacher and your classmates.

D. Notetaking Preparation

1. Prelecture Reading

Most U. S. college and university teachers plan their lectures assuming that students will have read assigned chapters before class. To prepare for this chapter’s lecture, read the following text describing the ongo­ing debate about the role of the government, and answer the questions that follow. Notice that a distrust of the government has been seen in all aspects of American politics and economic life since the days of the colonies; however, this text focuses on the debate about the role of the government in the economic life of the country.


Americans have been debating the role of the federal government ever since the American Revolution in the 1770s. The thirteen origi­nal colonies, which banded together to declare their independence from Britain, were very suspicious of a strong central government and protective of their individual rights as states. The Confederation government they formed saw the thirteen original colonies through the Revolution.

A few years after the end of the war, though, the Confederation was unable to solve many problems facing the new nation, and the need for a stronger central government led to a new Constitution, which expanded the power of the national government. Still, the

debate about the role of government went on in many areas, includ­ing the economic sphere. Thomas Jefferson, third President, was a believer in laissez-faire economics; that is, he believed the govern­ment should not interfere in the economy. His general philosophy was "Government that governs least, governs best."

But by today’s standards, the role of the national, or federal, government in the economy was very small, consisting largely of setting tariffs and excise taxes as well as issuing currency. It wasn’t until the time of the Civil War in the 1860s that the first income tax was instituted. Before that time, the government did not have money for internal improvements to the country.

After that time, the government began to expand its role in the economy. The Industrial Revolution, which was occurring at the same time, led to demands for the government to expand its role in the regulation of railroads and other big business. During these years the government tended to take the side of big business rather than the side of organized labor. During the early years of the twentieth century, the government began to debate its role in the economy more sharply. President Theodore Roosevelt and President Woodrow Wilson took steps toward controlling the excessive power of big business.

However, it was the Great Depression of the 1930s that led most people to give up the idea of a laissez-faire economy. President Franklin Roosevelt led the government to take an increased role in the welfare of the people. His "New Deal" instituted programs by which the government provided employment for large numbers of unemployed people and provided welfare for others. His administra­tion also instituted the Social Security system, by which workers pay into a fund that then provides a kind of insurance protection for older, retired workers and disabled workers. In the years following the New Deal, the role of the government in the economy continued to expand. During the 1960s there emerged a new conservative viewpoint, and efforts were made by many in politics to loosen the control of the government on the economy and to return to a more laissez-faire economy. This issue is still being debated.


a. Did the thirteen original colonies want a strong central government? Explain.

b. Why was a new Constitution necessary a few years after the end of the Revolution?

c. What role does the government have in the economy in a laissez – faire economy?

d. How did the Civil War enable the government to expand its power over the economy?

e. Between the Civil War and the Great Depression, which side, big business or organized labor (workers), did the government usually take whenever there were conflicts?

f. What programs did the Roosevelt administration carry out in response to the Great Depression?

Follow-up: Discuss your answers with your teacher.

2. Rhetorical Cues

Read the following sentences, which contain rhetorical cues to help you follow the organization of the lecture. Decide in which order you will hear them. Number them from first (1) to seventh (7).

___ a. In truth, because the United States is not a pure capitalistic

system, government today does not maintain a completely laissez-faire attitude toward business.

___ b. The first reason the government tries to regulate the

economy is to protect the environment.

___ c. Let me begin today by saying that the American economy

is basically a capitalistic economy. One of the important characteristics of American-style capitalism is individual ownership of property.

___ d. The last reason for the government’s interfering with the

economy is to maintain economic stability.

___ e. The second characteristic is free enterprise.

___ f. The second reason the government interferes with the econ­omy is to help people who for some reason beyond their control earn little or no income.

___ g. The third characteristic is free competitive markets.

Follow-up: Check your answers with your teacher.

IL LISTENING_______________________________________________

Q A. First Listening

In the introduction the lecturer discusses how a pure capitalist govern­ment would function in order to point out how the United States is not a pure capitalist country, and then he goes on to explain why the government interferes. Notice that the lecturer starts out with the sim­pler reasons and finishes with the most complex. Take down as many relevant details as possible, but be sure to take down subtopics. Continue to work on structuring your notes and using abbreviations and symbols.




Follow-up: Check your major subtopics with your teacher before you listen to the lecture for the second time.

B. Further Listening

While listening again, write down necessary relevant details below the main subtopics to which they belong. Remember to structure your notes to make them easier to use later.

Follow-up: Check your notes. If you missed important information or have doubts about your notes, (1) verify them by asking a classmate questions to fill the gaps in your notes or (2) listen to the lecture a third time. When verifying your notes with a classmate, do not show each other your notes; ask specific questions to get the information you need.

• How does the government try to help people who don’t have enough money? I couldn’t catch the names of the programs. Do you have them?


Did you get why the government lowers the interest rate?

This is also a good time to check to see if the lecturer answered your Predictions questions about the lecture.

Ill, POSTLISTENING__________________________________________

U A. Accuracy Check

Listen to the following questions, and write short answers. You will hear each question one time only.











Follow-up: Check your answers with your teacher. If your score is less than 70 percent, you may need to listen to the lecture again or rewrite your notes so that you can understand and use them later.

B. Oral Activities

1. Review

In small groups, review your notes, section by section, to be sure that all members have a complete set of notes for each subsection. At the end of this activity, your instructor will ask various class members to reproduce sections of the lecture for the whole class to listen to. At that time, check what you hear against your notes. If you don’t under­stand or you disagree with what you hear, wait until the speaker finishes. Then bring your notes into agreement by seeking clarification, as follows:

• Excuse me, I didn’t catch what you said about free enterprise.

• You said that raising taxes raises the inflation rate. I think it lowers it.

2. Transfer

If you and your classmates come from different countries, discuss these questions with a partner or in small groups. If not, discuss them with the whole class.

• Is your government basically laissez-faire, or does it take an active role in the economy?

• Does your government provide welfare, that is, help people who do not have enough money?

• Does your government provide medical care, or must people pay for it?

• Does your government regulate businesses in order to protect the environment?

C. Collaboration: Summary

In pairs, write a one-paragraph summary of the lecture. Include the main ideas from each of the main subtopics. Include important secondary points, but do not exceed 125 words.

Follow-up: Exchange summaries with at least one other pair. Find two things you like about the other summary.

D. Pursuing the Topic

The following is recommended for a closer look at the role of govern­ment in the United States:


Galbraith, John Kennneth. The Good Society: The Humane Agenda. Houghton Mifflin Company, 1996.

Canadian-horn U. S. economist discusses many aspects of the economy with a chapter on regulation.


Interview a U. S. citizen to find out his or her views on some of the issues highlighted in the lecture. Beforehand, write questions as a class to ask

• what the person thinks is the primary responsibility of government

• what the person thinks about tax money in the form of welfare going to unemployed healthy adults

• whether he or she thinks the government is doing enough to protect the environment

• any other questions your class is interested in

Write down the answers to the questions, and share the informa­tion with your classmates.

Variation: Invite an American to visit your class, and have the whole class interview him or her using the questions that you wrote.

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