![]() And agents get paid a lot more when home prices go up, even though they are often doing less work when homes sell quickly. Yet the fees real estate agents charge haven’t gone down all that much. The problem is that should make it far easier for buyers and sellers to do much of this without the help of a full-service agent. Before the Internet, the MLS made it far easier for sellers to get their home in front of interested buyers and for buyers to quickly learn about the various homes that could suit their needs. They developed critical infrastructure - namely the Multiple Listing Service. Real estate agents initially grew in influence by providing a very valuable service. Indeed, your book points out that real estate commissions are higher here than in other countries. Real estate is a great example of how reducing our reliance on middlemen can put more money in the pockets of buyers and sellers. So I don’t think we can look at buying patterns as indicative of people’s actual revealed preference, because to the extent you’re skeptical about a label, you might be skeptical about who’s really making more money and “Who’s really benefiting from me paying this premium price?” If people had really been able to see the way that impacted workers and the health of a community, they might have been willing to pay a little more, but that fact was made opaque to them by the structure through which they were buying those goods.īut part of what’s interesting about direct exchange is that some of it can reduce cost. There are a lot of labels, and then there’s a lot of news about how the labels don’t actually mean anything. There are studies showing that consumers will pay more for goods made in an ethical way, but the system is such a mess that it’s hard to infer much from what people actually do. Suddenly people are coming to the table with a much wider set of values and expectations about our roles as consumers and investors. And one of the ways that we’re going do that is to invest in the infrastructure that makes it easier for small players to compete, like the post office.” That means ensuring it’s reliable and potentially offering even more subsidized access to it, particularly for small players, instead of saying, “Oh, if you’re really big, you get the favorable discounts and greater access.”Ī lot of the structures we have now arose when we assumed that all consumers wanted to pay the lowest possible price, holding the quality of the good constant, and that investors cared about absolutely nothing other than risk-adjusted returns. It’s never going be perfectly level, but we want to reduce the disparity because we care about the small producers. So part of what the government can do is say, “Look, we really care about creating a more level playing field. ![]() But it can also add to the disparity in how long you have to wait if you’re going to Amazon as opposed to going to Etsy and choosing something that’s homemade or going to an individual creator who has used Shopify to set up their own website. ![]() Right now they’re doing a great job using their market position to make sure that their suppliers are getting space in shipping containers. ![]() Once, you could have bought ground beef that came from a single animal slaughtered not far away now a package of hamburger might be made up of meat from so many sources that a bad batch is difficult to pinpoint.Īnother example: Amazon and Walmart have their own fleets of trucks. Once, banks directly loaned money to home buyers and held the mortgages eventually, loans got sold and resold into complex bundles of securities that can mask dangerous dynamics in the market. In her new book, “Direct: The Rise of the Middleman Economy and the Power of Going to the Source,” Judge makes the case that having too much separation between buyers and producers makes markets fragile and overly opaque to consumers and regulators. And Judge says the same phenomenon explains massive recalls of tainted ground beef, the erosion of American manufacturing, and why the supply chain for everything from furniture to electronics is out of whack today. It’s well known that the meltdown in the market for home mortgages wrecked the economy in 2007 and ’08, but what caused the meltdown? Too many layers of middlemen, argues Kathryn Judge, a law professor at Columbia University.
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