The Mistake

by Russ Roberts on September 23, 2005

in Education

In an earlier post, I asked readers of Cafe Hayek to identify the mistaken economic reasoning in one of the people quoted in an AP story on how air travel is hurting the environment.

I received many interesting and thoughtful responses.  Many people identified mistakes, but for me the most egregious, straightforward mistake was this sequence:

First, from the top of the article:


Air travel has boomed in recent years thanks largely to cheaper
flights


Then the following quote from
Environment Minister Elliot Morley:


"The evidence is that people will simply pay the tax and continue to
travel and we won’t actually stop the growth," Morley told British
Broadcasting Corp. TV.

So the cause of the increase in air travel is a downward sloping demand curve, a phenomenon that Morley denies.  So Morley believes that people will keep traveling no matter how large the tax—a vertical demand curve.

British reader Trevor Sayers notes this quote farther down:

Environmental pressure group Friends of the Earth, however, said it favored an aviation fuel tax.


"The Department of Transport’s own models on aviation growth show
dramatic reductions in air travel when assumptions are added for fuel
taxes and other factors," the group’s director Tony Juniper said in a
statement.

Sayers notes:

Marvelous! Here we have the minister demonstrating in a nutshell that lack of competence is no bar to promotion in the modern Labour party, why it is that under their stewardship High Street sales trends are at the weakest they’ve been for 22 years, that the Minister for the Environment doesn’t talk to the Minister for Transport, and that the only things my government learned from the Boston Tea Party were to disarm the population and surveil them more closely.

Shame we can’t have a stupidity trading scheme, so there is an absolute limit on the amount of such emissions from the political sector!

(The links are his.)

Congrats as well to Joe Orzechowski for identifying the same error.

And thanks to the many readers who identified other errors of reasoning or judgment particularly in the lovely quote from Friends of the Earth which should actually be called either Enemies of Humanity or Friends of the Earth but Not My Friends or Friends of the Earth But Not the Friend of Me:

"Aviation is a rogue
sector and its environmental impact is out of control. Climate change
is the most urgent challenge facing humanity and yet aviation policy is
doing the opposite of what is needed."

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