David R. Henderson  

Henderson on Extending Hayek's Insight

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Hayek's conclusion about the importance of local knowledge can be extended far beyond markets into many parts of our lives. In this essay, I summarize Hayek's argument and then apply it to some good things that happened on September 11, 2001, and to two cases after 9/11--the case of the "shoe bomber" and that of the "underpants bomber"--when airline passengers acted together to save themselves from terrorists.
This is from David R. Henderson, "Extending Hayek's Insights about Local Knowledge," one of the two Econlib Feature Articles for December.

I thank my sometimes co-authors Jeff Hummel and Charley Hooper for valuable comments. Jeff found a huge problem with one of my applications of Hayek's insight, pointing out that I was right historically but wrong to use it in this context. Charley pointed out that a generalization I tried to make in a previous draft was a bridge too far.

Another excerpt:

Interestingly, noted Levin, after 9/11, FAA officials started to write a set of procedures for getting planes on the ground in case something like 9/11 happened again. But then they stopped. Levin quoted Frank Hatfield, the FAA's eastern region chief: "A lot of things were done intuitively, things that you can't write down in a textbook or you can't train somebody to do." Indeed. Hayek's insight strikes again.

P.S. Remember my talk tonight at San Jose State University.


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COMMENTS (3 to date)
Pajser writes:

Can we apply Hayek's argument on capitalist companies, beside planned economies? Which difference between capitalist company and planned economy makes difference in Hayek's argument?

Andrew_FL writes:

As a matter of fact, Pajser, what you're looking for can be found in fact to be found in the writings of Murray Rothbard, where he applies the problem of planning to a firm which has undergone such extensive vertical integration as to have eliminated the external market for producers' goods.

Nice try trolling, though.

liberty writes:

Hi,

I am very curious about those comments. You say that:
"I thank my sometimes co-authors Jeff Hummel and Charley Hooper for valuable comments. Jeff found a huge problem with one of my applications of Hayek's insight, pointing out that I was right historically but wrong to use it in this context. Charley pointed out that a generalization I tried to make in a previous draft was a bridge too far."

Having written on this subject somewhat myself, I would love to see in what ways you might have gone too far or were wrong to use the theory in this context - if possible could you either post about it or email the notes to me?

Thanks so much,

Guinevere

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