What If There Were No Prices?: A Railroad Thought Experiment
What if there were no prices? How would you use available resources? In this video, Professor Howard Baetjer Jr. of Towson University leads you through a thought experiment to illustrate why market prices are essential to human well-being. Suppose you were the commissar of railroads in the old Soviet Union. Markets and prices have been banished. You want a railroad from City A to City B, but between the cities is a mountain range. You can build the railroad around the mountains and use more steel or through the mountain and use more engineering. Which should you choose?