David R. Henderson  

Failure to "Get" Hayek

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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.


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COMMENTS (4 to date)
E. Barandiaran writes:

David, I think your applications are wrong. You talk about how people reacted spontaneously to deal with a terrible situation in which they got commands from authorities that couldn't have all the relevant information. I'm sure it doesn't take too long to find many instances in which people in similar situations to the ones you consider follow strictly the commands from some authority with good or bad consequences, as well as instances in which they did not follow the commands with terrible consequences.
My point is that Hayek and Sowell (Knowledge and Decisions) are relevant for "designing" the commands, in particular, for assuring that the commands let people rely on their knowledge of the situation they are facing. We don't want people to follow commands without taking account of that knowledge. In societies where people may be afraid of not following commands strictly because of the penalties, you may have a point but not in societies where anyone that reviews what happened will most likely claim that people were right not to do it.

David R. Henderson writes:

E. Barandiaran writes:
I'm sure it doesn't take too long to find many instances in which people in similar situations to the ones you consider follow strictly the commands from some authority with good or bad consequences, as well as instances in which they did not follow the commands with terrible consequences.

OK. Could be. I'm open to considering your examples and/or those of others.

Randy writes:

This could be good. The more the feds harass air travelers, the less people will fly, the more expensive air travel will become, the more likely that businesses will find ways around flying, the more likely that I will get to stay in the office and run remote sessions rather than flying. Silver linings...

Justin Rietz writes:

David said: "Because of the Nigerian passenger, we might soon have to twiddle our thumbs for the last hour."

You can change "might soon" to "now." My family and I just returned from a trip to Mexico, and for the last hour of the flight we were told to stay in our seats, keep everything off of our laps, and "keep your hands visible." It felt like we were in some surreal Wild West poker game standoff.

Point of curiosity - how would the flight crew stop someone from going to the bathroom? Given the generally antagonistic sentiment of the other passengers on my flight towards the new regulations, I don't think anyone would have tackled me or my five year old daughter if we’d gotten up to use the head.

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