The knowledge needed to generate prosperity is not contained in a single mind, it is dispersed among many minds

From Cafe Hayek.

"Quotation of the Day…… is from page 38 of William Easterly’s excellent 2013 volume, The Tyranny of Experts:

Just as important as the science beloved by technocrats is the individual’s knowledge of constantly changing details of other people, places, and opportunities.  More important than how to build a machine is where and when and for what group of people machine will really pay off, where the “right” answer keeps changing and is known only to those on the scene.  The knowledge needed to generate prosperity is not contained in a single mind, it is dispersed among many minds.  The free society creates the incentives for each individual to utilize his or own particular bits of knowledge.

This important Hayekian insight (summarized nicely here by Easterly) is one reason why it’s important to severely discount a great deal of policy advice frequently offered by academics and other intellectuals.  Intellectuals repeatedly point to this or that alleged ‘flaw’ in real-world markets and then insist that government must forcibly intervene to correct it.  Yet often, such ‘flaws,’ were they real or severe enough to warrant correction, could be privately and profitably solved by the very intellectuals who stand idly by merely pointing to such alleged flaws while insisting that they be addressed by government action using only other people’s money and restricting other people’s range of choices.  In such circumstances – when the alleged flaws could be but aren’t seized as profit opportunities by the intellectuals themselves, using only their own money and efforts – it is foolish to trust the diagnoses of these intellectuals.  They simply (ought to) have no credibility in such situations."