Hayek on High Prices for 10 Seconds of Work
By David Henderson
Even economists who regard themselves as definitely immune to the crude materialist fallacies [i.e., thinking in terms of material wealth] constantly commit the same mistake where activities directed toward the acquisition of such practical knowledge are concerned—apparently because in their scheme of things all such knowledge is supposed to be “given.”
This is from Friedrich Hayek, “The Use of Knowledge in Society,” American Economic Review, September 1945.
I thought of this passage today when I took my iPhone to an independent repair shop. I pointed out to the guy, Steve, that the usual plug into my iPhone didn’t fit. I speculated that it was because the one in my car had left a little piece in there and showed him the cord from my car, which looked as if it had lost a piece.
Steve told me it’s because I bought a low-quality cord. He got a little tool and took all of 10 seconds to pull a little piece out of the phone and Voila, the normal cord fit. So I bought a new 6-foot cord from him for $15. He said it was higher quality and it looked it.
“How much do I owe you for fixing the phone?” I asked.
“Twenty dollars,” he replied, and then quickly, “That’s the charge for my experience and wisdom.”
“Sounds right to me,” I answered and handed him my MasterCard.