3 ms·

Market forces can, temporarily (but temporary can be any length of time that isn't forever), lead to impossible to sustain behaviors. Here is a just so story:

Market forces can, temporarily (but temporary can be any length of time that isn't forever), lead to impossible to sustain behaviors. Here is a just so story: Lets say you are CEO of a train company. You need $500M in income each quarter to pay salaries and stay solvent. You are barely breaking even, and if you have to borrow money it will be at terrible terms that you realistically can't afford to pay back. Your competitor starts running trains that are 3 times longer, and therefore can undercut you on price. If you don't lower your prices you will get almost no business and you will have to lay off workers or take a loan you can't pay back to meet payroll. If you lower prices you will lose money on every shipment and will have to take a loan. You decide to just start running the longer trains as well. You may have a suspicion that this is unsafe and that long term the costs of increased insurance and repairs to tracks and lawsuits to dead workers will cost far more than what you save running longer trains, but also you aren't sure of that. It will take years to know for sure, and you don't have the capital stay in business long enough to bet that your competitor will go bankrupt.

sophacles 4y ago
It should be noted that the railroads have been profitable for a long time, many reporting record profits for 2021. This scenario is plausible in isolation, but not really related to the rail industry in the US.
Spooky23 4y ago
If I had a tail, I wouldn’t need a chair, as I could hang from the ceiling, saving my company money. Great story, except everything you said is factually wrong. Railroads have monopolies in their corridors, are printing money, and are challenged only by trucking companies who are struggling to survive due to labor and fuel problems.
- ltbarcly3 4y ago
  And if your grandmother had wheels she would be a bicycle. It can't be factually wrong, it was explicitly made up (see https://en.wikipedia.org/wiki/Just-so_story https://en.wikipedia.org/wiki/Just-so_story), I was just illustrating how market forces can lead to seemingly irrational decisions.

sophacles 4y ago

It should be noted that the railroads have been profitable for a long time, many reporting record profits for 2021. This scenario is plausible in isolation, but not really related to the rail industry in the US.

Spooky23 4y ago

If I had a tail, I wouldn’t need a chair, as I could hang from the ceiling, saving my company money. Great story, except everything you said is factually wrong. Railroads have monopolies in their corridors, are printing money, and are challenged only by trucking companies who are struggling to survive due to labor and fuel problems.

ltbarcly3 4y ago
And if your grandmother had wheels she would be a bicycle. It can't be factually wrong, it was explicitly made up (see https://en.wikipedia.org/wiki/Just-so_story https://en.wikipedia.org/wiki/Just-so_story), I was just illustrating how market forces can lead to seemingly irrational decisions.