The problem of transport economics
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THE study of economics is virtually inescapable for those in road transport taking professional examination courses. It is the most important single subject in both the Graduateship and Associate Membership of the Institute of Transport and forms the main prop in nearly all the university awards in transport. At a lower level the Diploma in Road Transport Subjects (administered by the Royal Society of Arts) includes a major paper entitled, "Economics applied to road transport".
The constant need for greater financial efficiency in road transport has resulted in costing methods and budgetary control techniques being brought into sharper scrutiny. Inevitably, this has heightened the role of transport economics as a subject which has tended to increase its importance when examination schemes come to be revised. The Institute of Road Transport Engineers, for example, is planning to include aspects of economics in the final part of section C of its examination.
Few would argue against the predominant role of economics in a study of road transport, but is its place over-emphasized? Frankly, I feel that too much stress is placed on economics in many examination schemes and I would like to see more attention being given to industrial change, town planning problems, geographical factors and the effect of' political decisions. Some knowledge of vehicle engineering would not come amiss in examinations exclusively devoted to traffic and operating considerations. But it is little use preparing for what might be— the reality is that transport economics is the principal field of study in professional examinations.
Economics is not an easy subject. There is a tendency to take up the study with rare enthusiasm at the outset but disillusionment can arrive very quickly. The first difficulty is dealing with the apparently simple words like "cost", "demand", "depreciation", and "monopoly", which in normal usage have straightforward meanings but are used in a specialized way by the economist.
Indeed, it is this initial problem of language which is the make or break phase in a study of economics. Unless this hurdle is properly cleared studies in transport economics can never really achieve a great deal. It is more than a question of language, this is only one of the keys to a new way of thinking and looking at problems. The subject is basically concerned with theoretical and abstract concepts and the attempt to formulate "laws" from these concepts.
Having mastered the theoretical side of economics, there is the harder task of translating these concepts into the practical realities of running a road transport business. It is little use having a good knowledge of theoretical economics on the one hand and a sound grasp of the practical financial working of a transport operation on the other. The two groups of knowledge must be connected.
I want to focus attention in forthcoming articles on assisting those preparing for examinations in clearing the first hurdle by explaining some of the commoner terms used in economics and, next week, I will look at the intricacies of the word "costs". Later, I hope to build a bridge by showing how economic terms are most relevant to a road transport operator. These articles will be a guide to those who are now at a stage of their courses when some of these principles are only being partly grasped. The articles will also be useful to those who feel the need to revise some of the concepts and are not certain of their exact application.