CHAPTER 16 / PRACTICE TEST I 605
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- Both passages credit Rousseau with
(A) attacking the Age of Reason
(B) inspiring revolutionary thought
(C) encouraging discipline
(D) praising the primitive state of nature
(E) establishing the Romantic movementThis isn’t an ideal example. India developed
a pharmaceutical industry many years ago
that could produce drugs very cheaply that
would have saved tens of thousands of lives
each year. In a free-market economy, the Indian
pharmaceutical industry would have been
allowed to make drugs and get them to the
people who needed them. But that would
mean that western pharmaceutical companies
would make less profit. Of course, it’s not that
the American pharmaceutical companies
don’t care about Indian children dying
because they can’t get drugs; it’s just that their
responsibility is to their stockholders. They
must maximize profits. But the “free market”
was getting in the way, so they simply
changed the rules.
Thus, in 1994 India “agreed” (that is, gave
in to Western pressure) to “liberalize” its
pharmaceutical industry by allowing its
largest drug companies to be sold to Western
interests, thereby reducing competition.
Drug prices predictably shot up, putting
them out of reach of people who needed
them, but the Western corporations made
more money. It was a big triumph for the
“liberalization” of markets, but a great blow
to free markets.
In a free economy, businesses are also ex-
pected to wager their own capital on success
in the marketplace. The adventurous entre-
preneur is a moral icon in the United States.
The American pharmaceutical industry, how-
ever, receives over half a billion dollars annu-
ally in federal tax dollars in the form of
research grants to develop medications and
vaccines that they can then patent and sell
back to consumers at monopolistic prices.
The legislators who sponsor these grants
know that their campaigns will likely receive
reciprocal monetary benefit as a result. What is
worse, most American voters accept this sys-
tem happily because they believe that they are
simply helping to find cures for diseases. The
reality, however, is very different: by discourag-
ing the competition that leads to real progress,
this system of protectionism is actually a huge
impediment to the elimination of disease.Questions 10–16 are based on the following passage.
The following passage was written by an
American essayist in 2003 about the status of
capitalism.In response to a journalist’s question, “What
do you think about Western civilization?”
Mahatma Gandhi is said to have replied, “It
would be a good idea.” Any honest person
who values the concept of the free market,
who believes in the promise of open economic
competition, would say the same thing about
capitalism. We hear our politicians, and of
course the corporate news and entertainment
media, speaking as if the United States were a
model of free-market capitalism, as if anyone
could start a business to create and sell a
product or service without the obstruction of
the government. The truth is quite different.
Those we hear saying such things are quite
often voices that are bankrolled by large cor-
porations, which themselves are often pro-
tected from competition by mutual agreement
with the federal government.
The concept of free trade is simple: if
Company A can produce and distribute a prod-
uct more efficiently and at a higher quality than
Company B, it should be allowed to do so, and
to charge any price for it that free consumers
are willing to pay. Although Company B would
likely suffer as a result, humanity would benefit
from freer and cheaper access to high-quality
goods. Sometimes free trade works nicely, as
when Company A is in the United States and
Company B is in India. Then, agreements are
signed to “open up” India to the cheaper goods
made by Company A, even if doing so crushes
Company B because, we say, consumers have a
right to cheap, high-quality goods. But if Com-
pany A were in India and Company B were in
the United States, the story would likely be very
different.Line510
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