Blue print

[SmarpanGamt]

While there is no blueprint for transforming a largely government-controlled economy into a free one, the experience of the United Kingdom since 1979 clearly shows one approach that works: privatization, in which state-owned industries are sold to private companies. By 1979, the total borrowings and losses of state-owned industries were running at about £3 billion a year. By selling many of these industries, the government has decreased these borrowings and losses, gained over £34 billion from the sales, and now receives tax revenues from the newly privatized companies. Along with a dramatically improved overall economy, the government has been able to repay 12.5 percent of the net national debt over a two-year period.
In fact, privatization has not only rescued individual industries and a whole economy headed for disaster, but has also raised the level of performance in every area. At British Airways and British Gas, for example, productivity per employee has risen by 20 percent. At Associated British Ports, labor disruptions common in the 1970's and early 1980's have now virtually disappeared. At British Telecom, there is no longer a waiting list-as there always was before privatization-to have a telephone installed.
Part of this improved productivity has come about because the employees of privatized industries were given the opportunity to buy shares in their own companies. They responded enthusiastically to the offer of shares; at British Aerospace, 89 percent of the eligible work force bought shares; at Associated British Ports, 90 percent; and at British Telecom, 92 percent. When people have a personal stake in something, they think about it, care about it, work to make it prosper. At the National Freight Consortium, the new employee-owners grew so concerned about their company's profits that during wage negotiations they actually pressed their union to lower its wage demands.
Some economists have suggested that giving away free shares would provide a needed acceleration of the privatization process. Yet they miss Thomas Paine's point that "what we obtain too cheap we esteem too lightly." In order for the far-ranging benefits of individual ownership to be achieved by owners, companies, and countries, employees and other individuals must make their own decisions to buy, and they must commit some of their own resources to the choice.


It can be inferred from the passage that the author considers labor disruptions to be
(A) an inevitable problem in a weak national economy
(B) a positive sign of employee concern about a company
(C) a predictor of employee reactions to a company's offer to sell shares to them
(D) a phenomenon found more often in state-owned industries than in private companies
(E) a deterrence to high performance levels in an industry


Please help me how to solve " Inferred " related question. .. I very bad at this.

[albatross86]

Point A: In fact, privatization has not only rescued individual industries and a whole economy headed for disaster, but has also raised the level of performance in every area..........

Point B: At Associated British Ports, labor disruptions common in the 1970's and early 1980's have now virtually disappeared."

In the paragraph it is clear that Point B is served as an example for Point A in the second paragraph.

Thus we can infer that in the 1970's and 80's when labor disruption was common, the level of performance was low.

This points to choice E.


Here is an article on how to solve inference type questions: https://www.beatthegmat.com/mba/2010/02/ ... e-question

[viju9162]

Hi albatross86,

E seems to be right answer. However, how did you eliminate D ?

I got confused between D and E.

Regards,
Viju

[albatross86]

Hi albatross86,

E seems to be right answer. However, how did you eliminate D ?

I got confused between D and E.

Regards,
Viju

The reason I did not explain the other answers, is because in these kind of specific inference questions, it is really important to prephrase an inference before you go to the choices, since some of the answer choices are designed to mislead you. But if you are coming to them with an answer already in your mind it is very easy to jump to the correct answer, as long as you are careful to watch out for "tells" such as extreme wording or subtle contradictions.

Remember, an inference on the GMAT MUST MUST MUST be true. Keep saying this to yourself. It is not just something that could be true, or makes reasonable sense to you. Based on the information provided, an inference has to be true without doubt.

D says that it can be inferred that the author considers labor disruptions to be "a phenomenon found MORE often in state-owned than private companies"

This makes reasonable sense, because the overall feel of the passage is that privatization is supposed to improve companies and thus probably negative things like labor disruptions must be less common in private companies.

But is this really stated explicitly or even implicitly in the passage? Go back to it and read. The only mention of labor disruptions is in the example given about Associated British Ports, in which all we can say is that the labor disruptions in the 1970's and 80's disappeared after privatization, and that since this example is given after the mention of "levels of performance" being raised after privatization, that labor disruptions were a factor that caused lower levels of performance in the past.

Can you say anything about labor disruptions in any other company? What if this was the only state-owned company that had labor disruptions, and after privatization these stopped? We have other ways in which privatization benefited state-owned companies, so there's no dependence on labor disruptions being present in them. There is also no reason to believe that private companies are immune to labor disruptions - only that they tend to have a higher level of performance, which is clearly due to a combination of factors.

Thus this inference is too narrow and unjustified.

Did you notice that we took quite a bit of reasoning to eliminate this rather reasonable looking choice? That is why a prephrased assumption in a detail-based inference question will really boost your time management on the GMAT.

Good luck!

[viju9162]

Hi albatross86,

Thank you very much for this detailed explanation. I really agree with you.

I am building my RC skills ( I am really poor in RC) by learning various techniques, suggestions given in this forum. Believe me, it is working. And this is one of the best tip I will keep in mind while solving RC.

Thank you once again.

Regards,
Viju

[dilmaghanian]

I disagree with you Mr. Gmat destroyer and my reasoning is as follows:

In the passage, the author directly states that before 1979 Great Britain was in trouble mostly because of state-run industries. Then in the second paragraph, the author states that after the privatization occurred, most labor disruptions common in the the 1970s and the early 1980s disappeared. This SUGGESTS that privatization was the reason for the disappearance of labor disruptions and answer D states exactly that and hence my disagreement with your explanation and the book's.

You're welcome to reply.

[albatross86]

I consider my explanation above to be my best attempt, especially considering this was about 2 years ago. So I will have to agree to disagree and allow you your opinion. I will submit that D is a fairly reasonable answer and so you should be fine on the actual GMAT.

The one takeaway I would encourage you to pursue is spotting differences between examples of a relationship and generalizations of the relationship itself.

[dilmaghanian]

You're absolutely correct. "Spotting differences between examples of a relationship and generalizations of the relationship itself" is something I didn't do and that's why I chose the incorrect answer. Good advise GMAT Destroyer.