1/27/2024 0 Comments The middleman economy![]() ![]() Middlemen are often viewed as scalpers - those who employ a seemingly parasitic business model of buying up a resource (like concert tickets), then selling it for a much higher price.īut economists tend to think of middlemen differently, as people or companies that sell a reduction in the total cost of a transaction. The Web’s most successful retailers, eBay and Amazon, functioned as online brokers, charging a fee to help buyers and sellers connect with one another. It turned out that the opposite happened. In 1997, the New Yorker ran a now-famous cartoon, depicting seven business people seated around a conference table with a caption that read, “On the one hand, eliminating the middleman would result in lower costs, increased sales, and greater consumer satisfaction on the other hand, we’re the middleman.” “You could plausibly call it the middleman economy,” Munger said.ĭuring the dot-com era, as people tried to figure out what impact the Internet might have on commerce, a dominant assumption was that it would wind up eliminating middlemen, creating instead opportunities for direct links between buyers and sellers. Such companies, in other words, have the potential to drastically change commerce. “It may be as big as the Industrial Revolution.” “There is something big happening in the way we organize transactions,” said Michael Munger, an economist at Duke University. The middle, it seems, is where the money is. Rising interest in instant gratification has encouraged companies like Curbside to crop up with increasing frequency - there are startups vying to hit the local Whole Foods for you (Instacart) or even hand-deliver cash from the nearest ATM (Nimbl). What Curbside has done is create another step in the transaction, a new layer between consumer and retailer, both through the app and in real life. All of the businesses it works with already let customers place orders online and pick up in store. It doesn’t do the shopping for its users, or deliver items to their door. In a way, Curbside is the ultimate middleman. For each deal, Curbside receives a commission from the retailer.Ĭompanies from Amazon to Instacart are all rushing to solve the last-mile delivery problem, but Curbside is more concerned about that first hundred feet. As Judge reveals in this much-needed book, direct exchange is both the cornerstone of the solution and a tool for revealing just how much is at stake in decisions about “through whom” to buy, invest and give.So Curbside offers something in between - through its app, users place orders for in-store pickup at brick-and-mortar establishments and the service dispatches a Curbside employee to haul the stuff to the curb in front. Direct exchange reminds us that our actions always and inevitably impact others, as it rekindles an appreciation of our inherent interconnectedness. The process of direct exchange-and the resulting ecosystem of makers and consumers, investors and entrepreneurs-fosters connection and community and helps promote a more just, resilient, and accountable economic system. ![]() Drawing on a decade of research, Judge shows how to fight back: Go to the source. They use their massive profits and expertise to lobby lawmakers, tilting the playing field in their favor. They use their troves of data to push people to buy more, and more expensive, products. Middlemen today shape what people do, how they invest, and what they consume. In Direct, Columbia law professor Kathryn Judge shows how overgrown middlemen became the backbone of modern capitalism and the cause of many of its ailments. But the rise of the middleman economy comes at a steep price. Because of middlemen, we enjoy an unprecedented degree of choice and convenience. Over the past thirty years, middlemen have built intricate financial and retail empires capable of moving goods across the country and around the world-transforming the economy and our lives. Finance expert, law professor, and fellow overwhelmed consumer Kathryn Judge investigates the surprising ways that middlemen have taken control of the economy at the expense of the rest of us, and provides practical guidance about how to regain control, find more meaning, and contribute to a more sustainable economy.
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