United States Transport Advance and Externalities: A Reply

Is a railroad like a toy wind-up set, the locomotive moving endlessly, stupefyingly around a single circle of track? Or, as I believe, is it more like a fancy set, with various sidings, and connecting routes? Professor Weiss assumes that the carrying capacity of a railroad is bounded by its ability to store all its freight cars on the main line. And the view he (somewhat incorrectly) attributes to me—that “for every starting point there are 10 miles of clear road ahead†—is nothing more than the belief that a real railroad is not a simple circle. For railroad sidings do exist for inventorying cars. And connecting railroads that move cars out of a particular system do exist. Economists who contrast the productive capacity of Ford and GM rarely worry about whether a week's production can be stored within the factory. Entrepreneurs envisaged slack variables before they were baptised as such. (If sidings did not exist, or were a significant portion of the cost of one transport system but not another, matters might be quite different.)