I have not read the book, but given the interview, I think this is in line with a couple of things I mentioned in earlier posts. In the talk, Harford refers to Donald Rumsfeld's request not to use the word "insurgent" and all its derivatives when referring to the war in Iraq. It's one of those examples where you build a system that might work in the short term but is prone to shocks in the long term. More generally, this is what you see with the Obama Administration trying to control the leaks of classified documents. As Geoffrey Stone puts it in a NYT editorial:
President Obama has also followed Mr. Bush in zealously applying the state secrets doctrine, a common-law principle intended to enable the government to protect national security information from disclosure in litigation.No matter where you stands theoretically on whether the government should have the ability to classify various things as "secret", or "top secret", there is a practical reason why the current policy is counter-productive. You create a huge incentive to whistle-blowing, and a leaked information is worse than a communicated information in the impact it has on the population's perception of the information.
In France, for instance, the Bettencourt trial basically ruined Eric Woerth's career when it was revealed, among others, that his wife had been hired to manage Liliane Bettencourt's wealth. You might worry that divulging this information will get the media over you for conflict of interest, but this is a sure thing if you do not divulge the info and the media finds it through a whistle-blower or a police investigation, for the very reason that you tried to hide it.
Classifying information is risky for this reason: you build a system that might work in the short run, but a "shock"(say, some guy downloading 150000 diplomatic cables on a Lady Gaga CD), will make the system completely unsustainable.