The Philosopher’s Beard - 2 (News Based RC) | Verbal Ability (VA) & Reading Comprehension (RC) - CAT PDF Download

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Date: 3 April 2023

Passage

Environmentalists often criticize governments for being overly focused on GDP and economic growth, arguing that this harms the environment. However, this view is only partially correct. While governments frequently discuss GDP, they don't necessarily prioritize economic growth. In fact, economic growth, when properly understood, is highly beneficial and desirable.
Governments worldwide, regardless of ideology, favor economic growth as it increases a population's wealth, improving their options and those of the government. This political convenience allows governments to satisfy various constituencies without difficult choices, maintaining power. Honest politicians can offer more public services without raising taxes, while corrupt ones can embezzle without risking revolution.
However, valuing an outcome doesn't always translate to taking necessary steps to achieve it. Policies needed for economic growth are often politically costly, disrupting the status quo and entrenched interests. For instance, the global housing crisis, where housing prices rise faster than incomes, is partly due to governments not building enough housing units in desirable locations. This is because new housing lowers the value of existing properties, displeasing current homeowners, a significant political group.
Governments also hinder economic growth through economically unwise policies, influenced by vocal interest groups. Examples include subsidizing fossil fuels, blocking economic migration and free trade, and unnecessary professional licensing. Governments focus more on the immediate political costs and benefits of their actions rather than on promoting economic growth.
Economic growth is the expansion of people's valuable options, allowing them to do more of what they want. It should include the social cost of environmental harm, just as it should account for housing shortages. Economic growth is not inherently linked to environmental destruction. Technological advancements increase productivity and reduce resource consumption per unit of production. Modern economies, largely service-based, require fewer physical inputs, demonstrating that economic growth does not necessitate increased environmental impact.
In summary, economic growth is beneficial, especially in richer countries where it leads to more and better services with minimal environmental impact. However, political incentives often oppose the drivers of economic growth. It's crucial to lobby governments to facilitate growth or remove obstacles.
Q1: What is the primary misconception about governments and economic growth, according to the article?
(a) Governments always prioritize economic growth.
(b) Economic growth is detrimental to the environment.
(c) Governments discuss GDP but don't always prioritize economic growth.
(d) Economic growth is not beneficial for the population.
Ans: (c) Governments discuss GDP but don't always prioritize economic growth.
Sol: The article clarifies that while governments often talk about GDP, they do not necessarily prioritize economic growth. This is contrary to the common belief that governments are solely focused on economic growth.

Q2: How does the article suggest economic growth impacts political decisions?
(a) It makes political decisions more challenging.
(b) It allows governments to satisfy various constituencies easily.
(c) It leads to increased corruption in politics.
(d) It has no significant impact on political decisions.
Ans: (b) It allows governments to satisfy various constituencies easily.
Sol: The article states that economic growth is politically convenient as it enables governments to serve different constituencies without making hard choices, thus maintaining power and stability.

Q3: What is one reason given for the lack of sufficient housing in desirable locations?
(a) High construction costs.
(b) Lack of skilled labor.
(c) Government regulations and zoning laws.
(d) Environmental concerns.
Ans: (c) Government regulations and zoning laws.
Sol: The article points out that government regulations, such as zoning laws, hinder the construction of new housing in desirable areas, contributing to the housing crisis.

Q4: According to the article, what is a key driver of economic growth?
(a) Expansion of physical resource consumption.
(b) Increase in average productivity across the economy.
(c) Government subsidies in key industries.
(d) Reduction in environmental regulations.
Ans: (b) Increase in average productivity across the economy.
Sol: The article emphasizes that the underlying driver of economic growth is the increase in average productivity, primarily through technological advancements and implementation.