INCOME AND INCOME DISTRIBUTION

We live in a double – standard economy. Our laws proclaim the rights of all women, and men and equality of opportunity. This is the rhetoric of modern democracy. But daily life in a market economy speaks otherwise.

As nations attempt to equalise incomes among their citizens, they encounter greater and greater adverse effects on incentives and efficiency. Today people are asking, how much of the economic pie must be sacrificed in order to divide it more equally? A fair income distribution is the most controversial and difficult economic issue.

The second of the three economic issues is the question of income, that is, income distribution the way in which income – that’s what people earn – distributed or shared around.

You and your family have an income. You have an annual income that is what you earn in a year. This income allows you to enjoy various goods and services. It means you have a certain standard of living. Your standing of living, of course, includes what you think of as necessary to your life, things like food, water, somewhere to live, health and education. But your income doesn’t just cover the necessities of life. It also includes recreation, whether that’s sport or TV or a holiday. Your income will be less than some of your neighbours’, but it will be more than some of your other neighbours’. Your neighbours mean not just people living in your own country but also people living in other countries.

Just as you and your family have an income, so nations, different countries also have an income – the national income, it’s often called. A national income is not the money the government gets. The national income is the sum total of the incomes of all the people living in that country, in other words, everyone’s income added together. In the same way one can think of world income as the total of all the incomes earned by all the people in the world.

Concerning the distribution of national and world income, some questions are to be asked: who in the world gets and what share of these incomes? The distribution of income, either in the world or in a country tells us how incomes divided between different groups or individuals. The distribution of world income includes income per head, percentage of world population and percentage of world income. In poor countries like India, China and the Sudan, the income per head is only one hundred and fifty-five pounds per year. But at the same time they have fifty point seven per cent of the world’s population. These poor countries only have five per cent of the world’s income.

In middle-income countries the income per head is eight hundred and forty pounds, that’s in countries like Thailand and Brazil. In the major oil countries like Kuwait and Saudi Arabia, it’s seven thousand six hundred and seventy. In industrial countries it’s six thousand two hundred and seventy.

Turning to middle income countries again, they have twenty-five point one per cent of world population with fourteen point two per cent of world income. The major oil countries have point four per cent of population, the industrial countries fifteen point six. The oil countries have one point five per cent of world, the industrial countries sixty-four point eight.

The first economic question is for whom does the world economy produce?

The world economy produces essentially for the people living in the rich industrial countries. They get sixty per cent of the world’s income, although they only have sixteen per cent of its population. This suggests an answer to the second question, that is of what is produced. The answer is that the most of world production will be directed towards the goods and services that these same rich industrialised countries want.

The third question is how goods are produced. In poor countries with little machinery, not very much technical training and so on, workers produce much less than workers in rich countries. And poverty is very difficult to escape. It continues on and on. And this goes some way towards accounting for the differences in national incomes. It accounts for an unequal distribution of income, not just between countries but also between members of the same country, although there individual governments can help through taxation. In other words, governments can act to help distribute income throughout their population.

NOTES:

proclaim – провозглашать, объявлять;

otherwise – по-другому, иначе;

to equalise – делать равным, уравнивать;

equal – равный, одинаковый;

attempt – пытаться, сделать попытку;

encounter – сталкиваться, встретить;

pie – пирог;

adverse – неблагоприятный, вредный;

incentive – стимул, побуждение;

sacrifice – пожертвовать;

fair – честный, справедливый;

controversial – спорный, дискуссионный;

to share around – делить приблизительно;

income distribution – распределение дохода;

an annual income – годовой доход;

a certain standard of living – определенный уровень жизни;

to cover the necessities of life – охватывать основные жизненные потребности;

recreation – отдых, досуг;

share of income – доля, часть дохода;

income per head – доход на душу населения;

percentage of world income – процент мирового дохода;

essentially – в основном, большей частью;

world production – мировое производство;

not very much technical training – недостаточное техническое обучение;

to escape – избежать;

to account for – объяснять;

to explain – /-/-

the differences in national incomes – различия в национальных доходах;

unequal distribution of incomes – неравное распределение доходов;

throughout population – среди населения;

COMPREHENSION QUESTIONS:

1.Is it possible for nations to equalize incomes among their citizens?

2.What is the most controversial and difficult economic issue?

3.What countries are called poor?

4.What is a national income?

5.Who in the world gets and what share of these incomes?

6.For whom and what does economy produce?

7.How are goods produced?

8.What is the role of government in distributing incomes?

VOCABULARY EXERCISES:

Exercise 1. Suggest the Russian equivalents:

Income is shared around; income doesn’t just cover the necessities of life; to suggest an answer to the question; to direct the production towards the goods and services; individual governments.

Exercise 2. Fill in the gaps with the words and expressions from the text.

1. You have ___, that is what you earn in a year.
2. Your income doesn’t just ___ the necessities of life.
3. It includes ___, whether that’s sport or TV or a holiday.
4. ___ is the sum total of the incomes of all the people living in that country.
5. In poor countries ___ is only one hundred and fifty-five pounds per year.
6. ___ is the total of all the incomes earned by all the people in the world.
7. In ___ countries the income per head is eight hundred and forty pounds.
8. Most of world production ___ towards the goods and services that the same rich industrialised countries want.
9. In poor countries, with ___, not very much technical training workers in rich countries.

10. This goes some way towards ___ differences in national incomes.

Exercise 3. Find English equivalents:

Распределение доходов; ежегодный доход; определенный уровень жизни; национальный доход; мировой доход; доля национального дохода; доход на душу населения; процент мирового населения; страны со средним уровнем дохода; в основном; скудное техническое оборудование; недостаточное техническое образование; объяснение разницы в уровнях национальных доходов; избежать бедности.

Exercise 4. Translate the sentences into English using all the active possible:

1) Национальный доход – это общая сумма, полученная населением в виде заработной платы, ренты, процента и прибыли в течение определенного периода, обычно в течение одного года.

2) Источники неравенства – это причины, вызывающие неравенство в распределении дохода. Поскольку существуют два основных источника доходов – трудовые доходы и доходы от собственности, источники неравенства разделяют на две группы: источники, вызывающие неравенство в трудовых доходах и источники, вызывающие неравенство в доходах от собственности.

3) В развитых странах источниками неравенства в трудовых доходах являются, в основном, образование и профессия.

4) Доходы от собственности еще более дифференцированы, чем доходы от трудовой деятельности, поскольку обусловлены неравенством в распределении богатства.

5) Источниками неравенства в доходах от собственности являются предпринимательская деятельность и наследство.

Exercise 5. Agree or disagree with the following statements:

1. An annual income is what you earn in a year.

2. Income should cover only the necessities of life.

3. National income is the money the government gets.

4. The distribution of world income includes income per head, percentage of world population and percentage of world income.

5. In India and china income per head is larger than in Brasil.

6. Countries with the largest percent of population have the largest percent of income.

7. The world economy produces essentially for the people living in the rich industrial countries.

8. Most of world production is directed towards the goods and services that the most densely populated countries want.

9. Workers in poor countries produce much less than workers in rich countries.

10. No one can help to distribute income among the population.

Exercise 6. Divide the text into logical parts and make up a plan of your own.

Exercise 7. Give a summary of the text using words and expressions from Lesson 2, ex.7.

Exercise 8. What do you think about distribution of national income in our country?

Exercise 9. Make up bits of conversation using the following formulas expressing:

a) making an offer

b) rejecting an offer.

a) We have pleasure in offering you … – Мы с удовольствием предлагаем Вам …

We are pleased to inform you … – C удовлетворением сообщаем Вам

b) We regret to inform you … – С сожалением сообщаем Вам …

Owing to unforeseen circumstances beyond our control, we have been obliged to … -

В силу непредвиденных обстоятельств, неподвластных нам, мы были вынуждены

In view of the fact that … – Ввиду того, что …

Text B

Exercise 1. Read the text without using a dictionary and find the sentences which tell you about the experiment of income distribution.

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