what is the meaning behind Frederic Bastiat's Negative Railroad? Be thorough and prove your understanding. 32I have said that as long as one has regard, as unfortunatelyhappens, only to the interest of the producer, it is impossibleto avoid running counter to the general interest, since theproducer, as such, demands nothing but the multiplication ofobstacles, wants, and efforts.I find a remarkable illustration of this in a Bordeaux newspaper.M. Simiot raises the following question:Should there be a break in the tracks at Bordeaux on the railroad from Paristo Spain?He answers the question in the affirmative and offers a number of reasons,of which I propose to examine only this:There should be a break in the railroad from Paris to Bayonne at Bordeaux3;for, if goods and passengers are forced to stop at that city, this will beprofitable for boatmen, porters, owners of hotels, etc.

In his paper titled “Negative Railway,” Frederic Bastiat argues that the free market is optimal at allocating resources. Any outside government intervention only leads to inefficiencies and a sub-optimal allocation of resources.He bases his argument on the demand by the Bordeaux government to create a break in the railway line in order to benefit the local economy as the break in the line will force passengers to stopover in the city, and hotels, porters, etc. will earn higher profits due to increased demand. He counters this argument by stating that if this government intervention is successful, then it is a slippery slope that will allow multiple governments of various French cities to demand a break in the line in their cities. Multiple breaks in the line will make the railway service very cost-inefficient for both the consumers and the producers. The demand for the service will fall, and the profitability of the railway company will decline. The service will not be profitable anymore and thus be forced to shut down. Thus to generate external benefits and attract votes during an election, the government distorts the market mechanisms, which is harmful to the consumers and producers. Bastiat reiterates that if the intervention were efficient and made a profit, it would already exist, and the reason it does not is because it is an inefficient loss-making venture.In the paper, Bastiat cautions of excessive market intervention by the government, distorts market signals, and pushing the market into a state of inefficiency and disequilibrium. The paper argues that the best and most efficient decisions will be taken under the free market. The consumers will only be willing to spend money on products that maximize their utility. Thus firms are incentivized to use resources to produce efficiently to make the highest profit.

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what is the meaning behind Frederic Bastiat's Negative Railroad? Be thorough and prove your understanding.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter10: Monopolistic Competition And Oligopoly

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what is the meaning behind Frederic Bastiat's Negative Railroad? Be thorough and prove your understanding.

32
I have said that as long as one has regard, as unfortunately
happens, only to the interest of the producer, it is impossible
to avoid running counter to the general interest, since the
producer, as such, demands nothing but the multiplication of
obstacles, wants, and efforts.
I find a remarkable illustration of this in a Bordeaux newspaper.
M. Simiot raises the following question:
Should there be a break in the tracks at Bordeaux on the railroad from Paris
to Spain?
He answers the question in the affirmative and offers a number of reasons,
of which I propose to examine only this:
There should be a break in the railroad from Paris to Bayonne at Bordeaux3;
for, if goods and passengers are forced to stop at that city, this will be
profitable for boatmen, porters, owners of hotels, etc.

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