The Evolving Air Transport Industry

CHAPTER 2 • PRINCIPLES OF ECONOMICS
increases demand for oil. They would also agree that some easing of environmental
restrictions on oil drilling will tend to reduce the price since this will increase supply. Of
course, botheconomicgrowth andenvironmental regulations are affected by government
policies and hence political elections. So, to be certain of the future price of jet fuel, one
would have to know the outcomes of future elections and exactly how politicians will
affect environmental regulations and economic growth-an obvious impossibility.
However, there are problems thatgo beyond the complexity of forecasting. To putmatters
very bluntly, economists are not always completely straightforward, particularly in the
context of public policy issues. The same may be said, of course, for any other profession.
When, for instance, a lawyer proclaims the innocence of his client we all recognize that
the lawyer is paid to make that claim and may not believe it at all. When a scientist knows
that taking a certain position on global warming will garner an outpouring of favorable
media attention and increase the likelihood of obtaining lucrative government grants,
we understand that the allure of fame and fortune may trump integrity and scientific
objectivity (Agin, 2006). Alas, some economists, often very prominent in the profession,
succumb to the same sort of temptation. It is not difficult to find economists employed by
politicians sometimes saying things that they know to be untrue. Indeed, economists will
sometimes do this even ifthey are not employed by the politician they defend but in hopes
of gaining future employment or just to help the politicians who they believe to be a lesser
evil than their opponents (Rubner, 1979). Thus, just as it's possible to find some lawyer to
proclaim the innocence of any guilty criminal, it is also possible to find some economist
somewhere willing to make false claims against any known economic fact. No wonder
most of the public thinks that, no matter how many economists you lay end to end, they
can never reach a conclusion!
There is, however, some good news. Economic truths are a good deal easier to
understand than quantum physics. It isn't necessary to accept economic principles on the
basis of someone's word; with a little work the average person can follow the trail of logic
and reach the same conclusion that objective economists reach -to a large extent, you can
learn to be your own economist.
THE ECONOMIC WAY OF THINKING
The only way that has ever been discovered to have a lot of people cooperate together voluntarily
is through the free market. And that's why it's so essential to preserving individual freedom.
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Milton Friedman
Economics takes as given that people respond to incentives in a generally predictable
manner. Though this is sometimes referred to as the fundamental assumption of
economics, economists believe that it is not an assumption at all but a simple fact
confirmed by common empirical reality. Students spend more time studying material
that is guaranteed to be in the test than material that is unlikely be in the test. They
are more likely to do an extra credit project if the project is weighed more heavily in
determining their grade. If, other things being equal, the price of air travel increases,
then people will fly less. People engage in any given activity more if the cost of that
activity falls or if its benefits rise.