Failure to "Get" Hayek
By David Henderson
When I teach my Ten Pillars of Economic Wisdom, I tell a story to illustrate part of Pillar Five, “Information is valuable and costly, and is inherently decentralized.” The part this illustrates is the “inherently decentralized” part, which I owe to Hayek’s “The Use of Knowledge in Society.”
I won’t tell the whole story here, but I’ll start it and get to the gist:
Three good things happened on that awful day, September 11, 2001 and all involved decentralized information. One was that various people in the World Trade Center towers, although told by a central authority that everything was safe and that they should stay in the building, instead acted on their own hunches and information and got out, thus saving their lives. Remember the original estimate of the death toll: in the first few hours, it was about 20,000 and then down to 7,000 and then finally under 3,000. That was because of all the people who got out.
The second was the decision of the FAA to ground all the planes over U.S. airspace, something that was done successfully in about two hours. The decision was centralized, but the seat-of-the-pants methods that FAA air controllers used to hand off planes from one area to another were decentralized.
The third was the case of the passengers on United Flight #93. They broke the law by turning on their cell phones and then found out that the “payoff matrix” from this particular game was different from what they had thought. Instead of getting a free trip to Cuba, with a great story to tell their grandchildren, they learned that, if they didn’t act, they wouldn’t be around to talk to grandchildren and that the intended targets in, probably, Washington, D.C., wouldn’t either. So they acted on the decentralized information they had. Of course, they did die, but they almost pulled it off, and they prevented the deaths of others.
This all relates to the Nigerian passenger flying into Detroit on Christmas. Here’s the lead paragraph of the news story by New York Times reporters Eric Lipton and Scott Shane:
Despite the billions spent since 2001 on intelligence and counterterrorism programs, sophisticated airport scanners and elaborate watch lists, it was something simpler that averted disaster on a Christmas Day flight to Detroit: alert and courageous passengers and crew members.
Shane, incidentally, wrote one of my favorite books of the 1990s: Dismantling Utopia: How Information Ended the Soviet Union. It is beautifully Hayekian, as he explains in language clearer than Hayek’s (I know, I know, grist for Bryan’s mill) why central planning didn’t work. I asked him once if he had read Hayek. He hadn’t. (I know, I know, more grist for Bryan’s mill.)
Of course, the wrong lesson has been learned. Instead of the lesson being that the people on the planes can react to the situation and handle the problem, as they did with Richard Reid, the government is discussing further intrusions on our liberty, such as not letting us sit with anything on our lap for the last hour of the flight. Because of Richard Reid, the government now makes us take off our shoes. Because of the Nigerian passenger, we might soon have to twiddle our thumbs for the last hour. You might want to buy stock in whatever company makes Depends.