Read the following passage and answer the item that follows. Your answer to this item should be based on the…
Read the following passage and answer the item that follows. Your answer to this item should be based on the passage only.
Passage:
Can a democracy avoid being a welfare state for long? Why cannot mass welfare be left entirely to the markets? There is a built-in tension between markets and democracy. Markets do not work on a one-person-one-vote principle as democracies do. What one gets out of the market place depends on one's endowments, skills, purchasing power and the forces of demand and supply. Markets reward individual initiative and skill, and may also lift many from the bottom rungs of society, but some people never get the opportunity to develop skills that markets demand; they are simply too poor and too handicapped; or skill formation takes too long. By creating jobs, markets may be able to help even unskilled people, but capitalism has always witnessed bursts of unemployment.
With reference to the above passage, the following assumptions have been made:
1. Modern democracies rely on the market forces to enable them to be welfare states.
2. Markets ensure sufficient economic growth necessary for democracies to be effective.
3. Government programmes are needed for those left behind in economic growth.
Which of the above assumptions is/are valid?
1 and 3 only
3 only
2 and 3 only
1, 2 and 3
Solution
Statement 1 is invalid: the passage stresses a built-in tension between markets and democracy, not reliance on markets. Statement 2 is invalid: the passage notes some never get opportunities and capitalism witnesses bursts of unemployment. Statement 3 is valid: since markets cannot ensure equity, government programmes are needed to help those left behind. Hence 3 only.