By the early 1970s, historian Gabriel Kolko and economist George Stigler had independently reached compatible conclusions about the interests served...
GMAT Reading Comprehension : (RC) Questions
By the early 1970s, historian Gabriel Kolko and economist George Stigler had independently reached compatible conclusions about the interests served by the United States government's regulation of business during the Progressive era (1890-1915). Kolko argued that big business led the struggle for federal regulation and that regulatory legislation was motivated primarily by legislators' desire to benefit business, not, as the view dominant up until that time had held, by the desire to protect the public interest. As Stigler explained, the federal government's ability to subsidize business, to control the entry of foreign goods, and to fix prices could be used by businesses to their advantage, just as campaign contributions from businesses could be used to advantage by legislators.
There is no denying Kolko's and Stigler's basic claims. Nevertheless, businesses within an industry did not always welcome being regulated, nor did industries necessarily respond uniformly to legislators' efforts to enact regulations affecting them. All but one major railroad in 1905 opposed an expansion of the regulatory power of the Interstate Commerce Committee (ICC) of the United States Senate, and though the Hepburn Act, which granted the ICC rate-making power in the railroad industry, was passed the following year, commercial users of the railroads were divided about the passage of the act: the coal industry opposed it, the agricultural industry favored it, and the lumber industry was split.
According to the passage, scholars whose research on the Progressive era preceded that of Kolko and Stigler subscribed to which of the following views about the federal regulation of business during the era?
1. Passage Analysis:
Progressive Passage Analysis
| Text from Passage | Analysis |
|---|---|
| By the early 1970s, historian Gabriel Kolko and economist George Stigler had independently reached compatible conclusions about the interests served by the United States government's regulation of business during the Progressive era (1890-1915). | What it says: Two researchers from different fields agreed about who benefited from business regulations between 1890-1915. What it does: Introduces main topic and sets up authority figures who will provide the central argument. Source/Type: Factual statement about researchers' work. Connection to Previous Sentences: This is our starting point - no prior context. Visualization: 1890-1915: Government creates business regulations 1970s: Kolko (historian) + Stigler (economist) = Same conclusion about who really benefited What We Know So Far: Two experts agreed on something about Progressive era regulations What We Don't Know Yet: What their conclusion actually was |
| Kolko argued that big business led the struggle for federal regulation and that regulatory legislation was motivated primarily by legislators' desire to benefit business, not, as the view dominant up until that time had held, by the desire to protect the public interest. | What it says: Kolko's surprising claim: Big businesses actually wanted regulations, and politicians created regulations to help businesses, not to protect ordinary people. What it does: Reveals the counterintuitive central argument and contrasts it with traditional thinking. Source/Type: Kolko's research claims. Connection to Previous Sentences: This builds on sentence 1 by revealing what the "compatible conclusions" actually were. Now we know what Kolko discovered. Visualization: Traditional View: Government regulations = Protection for public Kolko's View: Government regulations = Benefits for big business (who actually wanted them!) Reading Strategy Insight: This explains the mystery from sentence 1 - we're getting answers, not new complexity. |
| As Stigler explained, the federal government's ability to subsidize business, to control the entry of foreign goods, and to fix prices could be used by businesses to their advantage, just as campaign contributions from businesses could be used to advantage by legislators. | What it says: Stigler explains HOW this business-government relationship worked: Government helped businesses through subsidies, import controls, and price-fixing, while businesses helped politicians through campaign money. What it does: Provides concrete mechanisms that support Kolko's argument with Stigler's perspective. Source/Type: Stigler's explanatory framework. Connection to Previous Sentences: This builds on and reinforces sentences 1-2 by showing Stigler's "compatible conclusion" - he explained the specific methods behind Kolko's general claim. Visualization: Government Tools → Business Benefits: • Subsidies → Direct money to businesses • Import controls → Less foreign competition • Price-fixing → Guaranteed profits Business Tools → Politician Benefits: • Campaign contributions → Political advantage Reading Strategy Insight: Feel relieved here - this is elaboration and support, not contradiction. Both researchers are on the same side. |
| There is no denying Kolko's and Stigler's basic claims. | What it says: The author accepts that Kolko and Stigler are fundamentally correct. What it does: Author's endorsement that validates the researchers' main argument before introducing nuance. Source/Type: Author's opinion/assessment. Connection to Previous Sentences: This restates and confirms everything from sentences 1-3. The author is saying, "Yes, these researchers got it right." Visualization: Author's Position: ✓ Kolko's claims = Valid ✓ Stigler's explanations = Valid ✓ Traditional view = Wrong Reading Strategy Insight: The word "Nevertheless" is coming - this confirmation helps us understand that what follows will be refinement, not rejection. |
| Nevertheless, businesses within an industry did not always welcome being regulated, nor did industries necessarily respond uniformly to legislators' efforts to enact regulations affecting them. | What it says: However, the reality was more complex: not all businesses wanted regulations, and different industries reacted differently. What it does: Introduces important nuance while maintaining the core argument. Source/Type: Author's qualification of the researchers' claims. Connection to Previous Sentences: This adds nuance to sentences 2-4 without contradicting them. The "basic claims" are still true, but the author is showing the messy reality. Visualization: Kolko/Stigler: Big business generally wanted regulations Reality Check: • Some businesses in Industry A = Wanted regulations • Other businesses in Industry A = Opposed regulations • Industry B = Mixed reactions Reading Strategy Insight: This is refinement, not contradiction. The core insight stands, but real life is messier than theories suggest. |
| All but one major railroad in 1905 opposed an expansion of the regulatory power of the Interstate Commerce Committee (ICC) of the United States Senate, and though the Hepburn Act, which granted the ICC rate-making power in the railroad industry, was passed the following year, commercial users of the railroads were divided about the passage of the act: the coal industry opposed it, the agricultural industry favored it, and the lumber industry was split. | What it says: Concrete example: Almost all railroads opposed more ICC regulation in 1905. The Hepburn Act passed in 1906 anyway, and the industries that used railroads had mixed reactions - coal opposed, agriculture supported, lumber was divided. What it does: Provides specific historical evidence that illustrates the complexity mentioned in the previous sentence. Source/Type: Historical facts and evidence. Connection to Previous Sentences: This gives us the concrete example that proves sentence 5's point about complexity. Instead of the simple "big business wanted regulations" story, we see real businesses with conflicting interests. Visualization: 1905: Railroad Companies vs. More ICC Power • Railroad Company 1, 2, 3, 4, 5, 6, 7... = OPPOSED • Railroad Company 8 = Supported (the "all but one") 1906 Hepburn Act Results: • Coal Industry = ? (opposed) • Agriculture Industry = ? (favored) • Lumber Industry = ? (split) Reading Strategy Insight: This lengthy example illustrates rather than complicates - it's showing us the "messiness" promised in sentence 5 with real historical details. |
2. Passage Summary:
Author's Purpose:
To show that while a theory about business-government relations during the Progressive era is basically correct, the real-world situation was more complex than the theory suggests.
Summary of Passage Structure:
The author builds their argument by first presenting a theory and then showing its limitations:
- First, the author introduces two researchers who agreed that big businesses actually wanted government regulation during the Progressive era, contrary to what people used to think.
- Next, the author explains how this business-government relationship worked, with businesses and politicians helping each other through money and favors.
- Then, the author agrees that these researchers got the basic idea right.
- Finally, the author points out that the reality was messier, with businesses and industries having mixed reactions to regulations, and provides a specific historical example to prove this complexity.
Main Point:
The theory that big businesses generally wanted government regulation during the Progressive era is fundamentally correct, but the actual historical situation was more complicated, with different businesses and industries responding to regulations in different ways.
1. Question Analysis:
The question asks us to identify what scholars believed BEFORE Kolko and Stigler's research in the early 1970s. We need to find the "dominant view" that existed prior to their groundbreaking work.
Connecting to Our Passage Analysis:
From our passage analysis, we identified a crucial contrast in sentence 2: Kolko argued that regulatory legislation was motivated primarily by legislators' desire to benefit business, "not, as the view dominant up until that time had held, by the desire to protect the public interest." This directly tells us what the previous scholarly consensus was.
The passage structure shows:
- Traditional scholarly view (pre-1970s)
- Kolko and Stigler's revolutionary conclusion (1970s)
- Author's agreement with the new view
- Author's addition of nuance through historical examples
Prethinking:
Based on our analysis, the answer should reflect the traditional view that government regulation was intended to protect the public interest, rather than benefit businesses. This is the "dominant view" that Kolko and Stigler challenged with their research showing that businesses actually wanted and benefited from regulation.
• This describes what Kolko and Stigler discovered (that businesses sometimes resisted regulation), not what earlier scholars believed
• The passage shows this as evidence of complexity in the new theory, not the old dominant view
• Earlier scholars wouldn't have focused on business resistance since they thought regulations were meant to help the public
Common Student Mistakes:
1. Confusing the new research findings with the old scholarly consensus?
→ Focus on the phrase "view dominant up until that time" to identify what came BEFORE Kolko and Stigler
1. Thinking all parts of the passage describe the traditional view?
→ Recognize that most of the passage discusses the NEW perspective that challenged traditional thinking
• This reflects Kolko and Stigler's conclusion, not the previous scholarly view
• The passage explicitly states this was their new insight that challenged traditional thinking
• Earlier scholars believed regulations were meant to protect people, not benefit businesses
Common Student Mistakes:
1. Mixing up the timeline of different scholarly views?
→ Keep track of "before Kolko/Stigler" versus "Kolko/Stigler's discoveries"
1. Assuming the passage only presents one viewpoint?
→ Notice the contrast between old and new scholarly perspectives throughout the passage
• Directly supported by the passage's description of the "view dominant up until that time"
• This is exactly what Kolko and Stigler challenged with their revolutionary research
• Fits perfectly with the timeline: traditional scholars believed regulations protected public interest, then Kolko/Stigler showed regulations actually benefited businesses
Key Evidence: "regulatory legislation was motivated primarily by legislators' desire to benefit business, not, as the view dominant up until that time had held, by the desire to protect the public interest."
• This describes one of the mechanisms Stigler identified in his research, not what earlier scholars believed
• The foreign competition aspect comes from Stigler's explanation of how regulations could benefit businesses
• Traditional scholars wouldn't have focused on how businesses welcomed regulations for competitive advantages
Common Student Mistakes:
1. Confusing Stigler's explanatory mechanisms with traditional scholarly views?
→ Remember that Stigler was explaining HOW the new theory worked, not describing old beliefs
1. Focusing on specific details rather than the broad theoretical framework?
→ Look for the fundamental difference in how scholars viewed the PURPOSE of regulation
• This describes part of Stigler's explanation of the business-government relationship, not traditional scholarly views
• Campaign contributions are mentioned as part of the new understanding of how businesses influenced legislators
• Earlier scholars focused on public interest protection, not business influence through money
Common Student Mistakes:
1. Thinking that all information in the passage represents traditional views?
→ Distinguish between what scholars used to think and what Kolko/Stigler discovered
1. Missing the fundamental shift in understanding about WHO regulation was meant to serve?
→ Focus on the core difference: public benefit (old view) versus business benefit (new view)