7 ms·

This rubbish is everywhere. Contract cleaning (offices etc) for instance, used to be a profitable small business. Not enough to be rich, but enough for a big ho

• dba7dba 10y ago
  I can vouch for this story. My parents went through this scenario exactly. They had gotten into office cleaning because it was relatively well paying in the 90's. But in the 90's middle men came into the mix. Someone with better sales ability would win the contract for cleaning office, and subcontract it to someone else. And even that 2nd person might subcontract it to someone else. Eventually, the person really doing the actual cleaning barely made above minimum wage. What does MBA school call this? Reducing cost? Increasing efficiency? Reducing risk?
  • tarsinge 10y ago
    Intrigued by how can it be cost competitive for the middle men, why aren't small business selling directly? Is the sales part the only edge of middle men?
    • edent 10y ago
      Because a small company has the ability to supply cleaning to X square metres across one city. A middle-man can say "We will supply your cleaning in several cities no matter your office size." So a company pays a higher cost - but only has to deal with one contract, which saves them effort elsewhere. It's the same as taxi companies. It would be cheaper for you to call a small firm with lower overheads, but you're happy to pay a premium for convenience.
      • leni536 10y ago
        Hmm, Uber for office cleaning?
        • flukus 10y ago
          So the yellow pages was basically just an uber uber?
      • flukus 10y ago
        A lot of this played out with single location companies and single city contracting companies (before they start merging). So I don't think that's the reason. I suspect it was cost. The middle men would just under bid and then under deliver.
      • djsumdog 10y ago
        You need the pigs. They're helping all the animals. That horse isn't really going to the glue factory. We just reused that glue factory truck, but really he was going to a retirement home (paraphrasing Orwell's Animal Farm). When people plant themselves in the middle, they essentially sell themselves as being necessary. Are they necessary? It depends .. but usually not.
        • DomreiRoam 10y ago
          Middleman have some utility but I think often they extract more money than the value they provide.
      • jaclaz 10y ago
        I see it in a slightly different angle, it is the company's Chief Officer for Cleaning Matters ;) that manages to work less (have convenience) at the expense of the company which pays more money for the service (besides the wage of the COCM ). Coincidentally that is also the same person that will convince everyone else in the company on how convenient the "global" contract is. There are a lot of activities for which sub-contracting makes sense, particularly when there are possible economies of scale, but when the activity is merely (or largely) labour, there are only four possible overall outcomes: 1) the actual workers are paid less than what would be fair 2) the service is inferior to what was expected/agreed upon 3) the service costs more (the middlemen somehow have to take their part) 4) the contractor or sub-contractor has made wrong estimation of the costs and before or later they close or go bankrupt
  • maze-le 10y ago
    That is a nice example of why the free market is not neccessarily the guarantor of efficiency.
    • leni536 10y ago
      But why? It exactly looks like a problem that free market should be able to solve.
      • maze-le 10y ago
        I am not an economist, but I think it is a problem with information assymetry. The cleaning worker does not have many connections to CEOs, to wich he can sell his services, but the middle men have. The middle men can leverage this situation to gain the profit, the cleaning worker would have gained. But I have no idea, why this would evolve into a pyramid scheme. One level of "management" would have solved the "information assymetry"-problem, without inefficiency (and this could be done in a fair way, so the worker can profit too).
        • deleted 10y ago
          [deleted]
        • flukus 10y ago
          > The cleaning worker does not have many connections to CEOs, to wich he can sell his services I think you might of hit on a possible explanation there, maybe it's wealth inequality? When there was more equality that CEO (or company owner, or just someone near the top) might have been going to the same bars or been part of the same local sports clubs as the cleaner, their kids might have gone to the same school. Now they probably live in other parts of the city. Politics lately has been an example of this divide.
          • patrickk 10y ago
            > might have been going to the same bars or been part of the same local sports clubs as the cleaner, their kids might have gone to the same school. Now they probably live in other parts of the city. I don't think this ever the case, in any era. Rich people in many countries definitely send their kids to posh schools through their connections (e.g. slots available for those with a parent who attended), go to different bars and follow different sports (e.g. rugby union vs football/soccer, depending on the country obviously).
  • djsumdog 10y ago
    Read "Debt: The First 5,000 Years." I cannot endorse this book enough. It is the most influential non-fiction book I've ever read. Basically it's called using money as a means to make money, and this was frowned upon in many civilisations. Even today, in much of the Muslim world they do not charge interest. They do have higher bank fees (no free accounts, no free checking or electronic transfers). Keep in mind if we travelled back in time even 100 years ago, charging 29.9% interest would be far beyond the limit of usury. Today in the western world, we accept the idea of being able simply move around money as a career that is beneficial to society, versus simply using money for trade and exchange. I really think this is one of the worst things we could have accepted as being morally acceptable. Board executives at JPMorgan Chase, PNC and the other banks that caused so much destruction in 2008 should have been thrown in jail next to rapists, paedophiles and murders. Instead they destroyed thousands of lives and made off with millions in bonuses.
    • fennecfoxen 10y ago
      > Board executives at JPMorgan Chase, PNC and the other banks that caused so much destruction in 2008 should have been thrown in jail next to rapists, paedophiles and murders. What strange ideas of justice the world has! In an ostensibly advanced country, America, one side of the political spectrum would be have us remain willfully oblivious to police abuses, corrupt prosecutors withholding or fabricating evidence, and the systematic dehumanization not simply of prisoners, but of any peripherally involved with the machinery criminal justice system, especially for the purpose of deporting undesirables. (The prison guards who put an inmate in the shower and turned on the hot water until the skin was peeling off his corpse? Normal. The immigrant detained by ICE for months and months, given aspirin for his developing penis cancer despite agency doctors' recommendation to get him to a proper examination until it was far, far too late? Incredibly normal. Predates Trump.) The other side of this political spectrum skims over meaningful questions of actual fraudulent or unethical business practices, issuing instead a blanket equation of the practice of making loans to people who assumed their house would apprecuate in value with crimes such as murder and child abuse. And these aren't even extremes. Both positions are pretty mainstream, real crowd-pleasers. What the hell is wrong with us? Can we not aspire to build a world where there is actual justice, and not mere retribution against our political foes and other un-persons?
  • chii 10y ago
    > What does MBA school call this? Reducing cost? it's called making money on someone else's dime!
• madaxe_again 10y ago
  Everything is marketing bullshit - I spent a decade running an ecommerce agency and got to see the bellies of many beasts. For instance, there's a pig related tea brand in the UK which is universally seen as funky and independent and all that shite. They're owned by tetley, who are in turn owned by tata. The ownership structure is sufficiently complex to make them look independent - but they aren't. It's just good marketing. Either way, this is just one of many examples that spring to mind - oh, also, call centres - in the U.K. you can call pretty much any large business you like and you'll be talking to one of two huge call centre operators. Then... where do you draw the line? Is private equity backing problematic when its obfuscated? Or just contract primacy?
  • fennecfoxen 10y ago
    Oh, TeaPigs? With the dachshund mascot on the Darjeeling Earl Grey, and the brown-paper boxes, and the overpriced wares? Yeah, you can get those everywhere; they're clearly _way_ too mass-market to be properly independent. If you're spending cash money the on indie feel of things, you'll be buying BigCorp sooner or later. Better to just buy quality. > Then... where do you draw the line? Is private equity backing problematic when its obfuscated? Or just contract primacy? Well, we're taught that the free market is efficient only when you have property rights, low barriers to entry, and low transaction costs. While monopoly issues get most of the antitrust press, I suspect that a lot of the other things people don't like about BigCorp world and the gig economy is the way that high transaction costs around hiring, firing, and most especially, contracts of all sorts. Any time these issues are complex and involve expensive lawyers, BigCorp tends to win. It's at the roots of a lot of problems these days.
    • madaxe_again 10y ago
      Yeah, them - they're essentially an independent business unit of Tata global. One thing that I found consistently interesting was that more often than not, their employees thought they were working for a small, independent business - and the principles would often use "we're only little" in negotiations. When you manufacture a reality for long enough it becomes real - at least, real enough in the minds of beholders that any opposing reality is dismissed as priggish or jealous.