4 Provisional handout for students of accounting ISCAM Semester I

Unit 4 Limits on Economic Freedom

4 A What is economic freedom?
I. Vocabulary
The words in table A and B are synonyms.
1. Match a word from table A with another from table B that have the same meaning.
Table A

choice, exchange, protection, efforts, freedom, distinguish, enforcement, coercion,

Table B

liberty, option, swap, compulsion defend, attempt, discern, imposition, notice,

2. Share your answers with a colleague.

II. Reading
Read the text and provide answers to the given questions.
 What is Economic Freedom?
Economic freedom consists of personal choice, voluntary exchange, freedom to compete
and protection of person and property. From this statement, we can derive two aspects:
freedom and protection. On one hand individual must be economically free when they
can do what they wish with their property, time and effort. On the other hand, all these
efforts done by the individual must be protected from violation of others and no force
should be exerted. Protection of freedoms is equally necessary because if not, freedoms
of various individuals would be in conflict.
Individuals have economic freedom when: (a) their property acquired without the use of
force, fraud, or threat is protected from physical invasions by others; and (b) they are free
to use, exchange, or give their property to another as long as their actions do not violate
the identical rights of others. Economic freedom also implies that an individual, in his/her
attempt to exercise their economic freedom must respect the norms set by their
community. Economic freedom is also tied to aspects of ethics: distinguish what is good
from what is wrong and act as a good citizen.
In an economically free society, the fundamental function of government is the protection
of property and the enforcement of contracts (Gwartney and Lawson, 2004). The Heritage
Foundation, another think tank which publishes (together with the Wall Street Journal)
Index of Economic Freedom since 1995 defines economic freedom as “the absence of
government coercion or constraint on the production, distribution or consumption of
goods and services beyond the extent necessary for citizens to protect and maintain liberty
itself”. In other words, people are free to work, produce, consume and invest in the ways
they feel are most productive (Beach and Miles, 2004). In this definition, there is a
substantial difference between the degrees to which people are free individually and
collectively to undertake economic activities. Individual freedom means the right to do
economic activities free from arbitrary control and interference by the state and other
individuals. Collective freedom refers to the extent to which the economic system that
controls choice reflects the expressed preferences of majority of the citizenry rather than
those of a ruling few (de Haan and Sturm, 2000. So, to what degree people are
economically free depends on each community/society or economic system. In some
communities the limits are simple while in others are complex.
Adapted and abridged from: Fuat Erdal

Questions
1. Define economic freedom.
2. Why is it necessary to protect economic freedoms?
3. Explain how ethics is fundamental to ensure economic freedom of an individual.
4. Who must guarantee the economic freedoms of citizens in a country?
5. Define collective freedom.

III. Speaking
1. With a partner discuss the following statement.
 Protection of freedoms is equally necessary because if not, freedoms of various
individuals would be in conflict.
2. Share the outcomes of your discussion with your classmates.

1 Form (B) Today is the first of January, the start of a new year. Most people are feeling a bit tired.
What were they doing at midnight last night? Use these verbs: dance, drive, listen, watch, write.

Use these phrases after the verb: an essay, his taxi, in the street, television, to a band

►Claire was listening to a band.

1 Trevor and Laura .................................................................................................................................

2 Vicky and Rachel ...........................................................................................

3 Tom .....................................................................................................................................................

4 Andrew ..............................................................................................................................................

2 Form (B) Complete the conversation. Put in the past continuous forms. Jessica: (►) I was looking (I
/ look) for you, Vicky. I'm afraid I've broken this dish.

Vicky: Oh no! What (1)………………………………………..(you / do)? Jessica: (2)………………………….

.................. (I / take) it into the kitchen. I bumped into Emma. (3)………………………………………. (she /
come) out just as (4) ……………………….. (I /go) in. Vicky: I expect it was your fault.
(5)......................................................... (you / not / look) where (6)………………. ................................
(you/ go). Jessica: Sorry. I'll buy you another one as soon as I have some money.

3 Use(C) What can you say in these situations? Add a sentence with the past continuous to say that
an action lasted a long time. ►You had to work yesterday. The work went on all day. / was working
all day. 1 You had to make phone calls. The calls went on all evening.
__________________________________

2 You had to wait in the rain. The wait lasted for half an hour.
__________________________________ 3 You had to make sandwiches. This went on all
afternoon. ____________________________________ 4 You had to sit in a traffic jam. You were
there for two hours. __________________________________ 5 Your neighbour played loud music.
This went on all night. ____________________________________

Lorna Bright is a long-distance walker. Look at this part of her diary describing a morning's walk
along the coast. Write the missing words. Use one word only in each space. It was a fine day (►)
when I started out on the last part of my walk around the coast of Britain. The sun
was(l)……………………….. , and a light wind (2)………………………… .. blowing from the southwest. I was
pleased that it (3)…………………………… raining. I knew by now that I (4)………………………………like rain. In
fact I (5)…………………………… it. I (6)…………………………. ... along the cliff top and then down into the
lovely little fishing village of Wellburn, past a cafe where people (7)…………………………….. having
morning coffee. Three miles past Wellburn I (8)…………………………. down for five minutes and
(9)………………………….. a drink. Now it (10)…………………………… getting warmer, so I
(11)………………………….. off one of my sweaters. 1(12)………………………… stop for long because
 1(13)………………………… to reach Seabury by lunch-time. (14)……………………………. I finally got there, it
(15)……………….. just after half past twelve

IV. Writing

Unit 4 Limits on Economic Freedom

4 B Aspects limiting economic freedom
I. Vocabulary
Look at the pictures below.
1. What do you think they represent? Match the pictures with the expressions a-f below
them.

Picture 1 ________ Picture 2 ________ Picture 3 ________

Picture 4 ________ Picture 5 ________ Picture 6 ________

a. Digital trade and market openness b. Scores of trade openness c. Rule of law and corruption

d. Mozambique Government spending e. Rule of law e. Regulatory efficiency

2. Share your answers with a colleague.

II. Reading
Read the text and provide answers to the given questions.

Aspects limiting economic freedom

As we have seen in the previous discussions economic freedom postulates freedom of acquiring,
exchanging or using their property. A major concern is to what extent should the different freedoms
should be exercised to avoid conflicts and social chaos. Economic freedom depends on the efforts
put forward by the regulating authority and the individual. In order to explore the effect of the limits
of economic freedom one must analyze the critical aspects of the relationship between the individuals
and the regulating authority. This relationship depends on a number of aspects that play an important
role in promoting and sustaining personal and community prosperity. According to The Heritage
Foundation, Index of Economic Freedom (2020), the aspects comprising the index of economic
freedom can be divided into four categories namely:
 Rule of law (property rights, judicial effectiveness, and government integrity);
 Government size (tax burden, government spending, and fiscal health);
 Regulatory efficiency (business freedom, labor freedom, and monetary freedom); and
 Market openness (trade freedom, investment freedom, and financial).
Rule of law –property rights protection gives citizens assurance that their property is safe. A key
aspect of property rights protection is the enforcement of contracts. This is reinforced by setting up
a functioning judiciary system to ensure that laws are respected.
Government size, overall tax burden from all forms of taxation including government spending (the
cost, size, and intrusiveness of government) have direct impact on the economic freedom of
individuals.
Regulatory efficiency includes, on one hand, the regulations associated with licensing new
businesses and running an existing business which may limit or encourage economic freedom. Labor
freedom, on the other hand, may also affect economic freedom as in the case of employment
opportunities and work, and government intervention regarding hiring, firing and work
compensation. Monetary freedom is also fundamental and can be influenced by the country’s
monetary policy.
Market openness includes trade freedom, investment freedom and financial freedom. Government
policies restrict trade and investment freedom when they set up trade restrictions, non-transparent
investment framework or barriers in licensing and the flowing of both domestic and foreign
commerce. In the same way, banking and financial regulation authority need transparency, honesty
and prudence to guarantee availability of savings, credit, payment and investment services to
individuals and businesses.
Questions
1. On what depends economic freedom?
2. How many items of economic freedom index does the text mention?
3. What tool is used to guarantee property protection?
4. How does government size restrict economic freedoms of individuals?
5. What aspects of regulatory efficiency does the text present?
6. How do government policies restrict trade and investment freedom?
7. Why do banks and financial regulatory authority need transparency, honesty and
prudence?

III. Speaking
The present perfect tells us about the past and the present. The aircraft has landed means that the
aircraft is on the ground now.

B Form The present perfect is the present tense of have + a past participle.

Has/have + Verb (Past Participle)

He/ She/ It has done the homework.

I/ We/ You/ They have Completed all the modules.

Negative form

He/ She/ It has n’t done the homework.

I/ We/ You/ They have not Completed all the modules.

Question form

has He/ She/ It done the homework.?

have I/ We/ You/ They Completed all the modules?

Regular past participles end in ed, e.g. washed, landed, finished.

We've washed the dishes. Have you opened your letter? The aircraft has landed safely. How many
points has Matthew scored? The students haven't finished their exams.

Irregular forms Some participles are irregular. I've made a shopping list. We've sold our car. I've
thought about it a lot. Have you written the letter? She hasn't drunk her coffee.

There is a present perfect of be and of have. The weather has been awful. I've had a lovely time,
thank you.

When we use the present perfect, we see things as happening in the past but having a result in the
present.
We've washed the dishes. (They're clean now.) The aircraft has landed. (It's on the ground now.)
We've eaten all the eggs. (There aren't any left.) They've learnt the words. (They know the words.)

Add a sentence. Use the present perfect. ► I'm tired. (I / walk / miles) I've walked miles.

1 Emma's computer is working now. (she / repair / it) ____________________________________

2 It's cooler in here now. (I / open / the window)._________________________________________

3 The visitors are here at last, (they / arrive) _____________________________________________

4 Mark's car isn't blocking us in now. (he / move / it) ______________________________________

5 We haven't got any new videos, (we / watch / all these) __________________________________

2 Irregular forms

Look at the pictures and say what the people have done. Use these verbs:

break, build, catch, see, win Use these objects: a film, a fish, a house, his leg, the gold medal

► She's won the gold medal.

Trevor and Laura are decorating their house. Put in the verbs. Use the present perfect.

Laura: How is the painting going? (►) Have you finished ? (you / finish)

Trevor: No, I haven't. Painting the ceiling is really difficult, you know. (1) ................... (I / not / do)
very much. And it looks just the same as before. This new paint (2)
....................................................... (not / make) any difference. Laura: (3)
..................................................... (you / not / put) enough on.

Trevor: (4) ........................................... (1 / hurt) my back. It feels bad.

Laura: Oh, you and your back. You mean (5)………………………………………. (you / have) enough of
decorating. Well, I'll do it. Where (6) .................………………………… (you / put) the brush? Trevor: I
don't know. (7) ............................................................ (it / disappear). (8)………………………………………. (I
/ look) for it, but I can't find it.

Laura: You're hopeless, aren't you? How much (9)………………………………… (you / do) in here? Nothing!
(10) ............................................................(I / paint) two doors.
Trevor: (11)………………………………………… (I / clean) all this old paint around the window. It looks much
better now, doesn't it?

Laura: (12)……………………………………… (we / make) some progress, I suppose. Now, where (13)
........................................................ (that brush /go)? Oh, (14)……………………………………..... (you /
leave) it on the ladder, look

IV. Writing
Write 5 sentences about changes that have been done in your community or school.