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Not exactly. Economics is all about trading. Trading is all about wants, desires, and needs. If I make something that everyone wants, it is not useless junk, us

Not exactly. Economics is all about trading. Trading is all about wants, desires, and needs. If I make something that everyone wants, it is not useless junk, useless junk is something nobody wants. So it's actually very important to have feedback from middlemen who's livelihood is actually tied to successfully making available desirable things. There's an economic study I remember seeing in the last couple of decades that studied the value of middlemen. The study started with the assumption that middlemen were parasitic entities, especially since so much economic value seems to come from "cutting out the middle man". But the study authors were most surprised about was that the countries they studied that had the most middlemen, also had the greatest number of economic health indicators. That is they found middlemen to be highly correlated with the economic output of an economy. Their conclusion was that it was probably more than correlated, but largely causative and that middle men probably provided a lot more value than they're generally given credit for. This article seems to be providing some anecdotal data that supports the value of middle men. At the very least they are good at synthesizing back pressure data for factories so they don't end up overproducing, and have to fill landfills with stuff no one wants.

NoodleIncident 9y ago
Making something that everyone wants is a separate thing than making everyone want something. You can do both and make a lot of money, but if the former is fixing the windows the latter broke people still aren't better off. For the "middle man" study, I don't know how they came to that conclusion. But the more obvious assumption seems to be that economic output can support more middlemen, so I'm curious what data they used to argue that it works the other way around.
- icanhackit 9y ago
  > the more obvious assumption seems to be that economic output can support more middlemen, so I'm curious what data they used to argue that it works the other way around. That was my conclusion as well - when times are good you don't mind someone who contributes little hanging around. When times are tough, they're out and what little value they offered is replicated by someone desperate to stick around. When a business has a lot of administrative staff times are good and those watching the market can conclude, due to the number of administrative hires, that times are good for a particular market sector. But concluding that it means middlemen are undervalued seems like whoever authored the study had some odd motive.
- HeyLaughingBoy 9y ago
  I think your vision may be colored a bit because here on HN everyone seems to think that manufacturers can just sell direct to consumers easily by tossing up a Shopify page and letting nature take its course. The true value of a middle man is connecting buyers and sellers who would otherwise have no idea the other existed, or otherwise facilitating the transaction. Here's an example that I'm currently involved with. I was approached by someone to create a device that's needed on the market, but doesn't exist. I'm quite capable of building the thing and familiar with the domain, but never knew the thing was needed. Similarly, the company approaching me doesn't have the internal skills to build the device, but they can sell it. The market for this particular device isn't very large (it's only businesses who have machinery that was built using a particular older technology and need to have repairs done), and there are alternatives, so that explains why no one is building these. In this case, the company that approached me -- the middle man -- has excellent knowledge of the market and its needs and how to best serve them. I, the producer, had no idea this product was needed, and even knowing that now, have no access to this segment of the market, and it's simply not large enough to make it worth my time to begin a marketing effort in that direction. Similarly, the end customers have never heard of me, and have no concept that such a device could even be built. So there you are, a middleman has just added value by offering to buy something that I otherwise would not know to build, and by selling it (along with other products and services), to a very underserved market that otherwise would be forced to purchase newer equipment they otherwise don't need.
erikb 9y ago
Yes, something people want is a valuable tradegood. However it doesn't mean it's not useless junk. Useless means it doesn't really have a purpose. that's independent from trade value.
honestoHeminway 9y ago
Peoples wants can be warped, bent and deformed. If i make electronic crack, that keeps people addicted and glued to there phones, all other wants they could have during that time are going to vannish or be at least postponed. So one thriving market can damage other markets. Middleman have a interest to sell there products, even to extreme outliers- it is very often middle-man who push buisness ideas. "Yes, you run a rifer-rafting company. Have you ever considered to take a trailing craft along with beverages, like..."

NoodleIncident 9y ago

Making something that everyone wants is a separate thing than making everyone want something. You can do both and make a lot of money, but if the former is fixing the windows the latter broke people still aren't better off. For the "middle man" study, I don't know how they came to that conclusion. But the more obvious assumption seems to be that economic output can support more middlemen, so I'm curious what data they used to argue that it works the other way around.

icanhackit 9y ago
> the more obvious assumption seems to be that economic output can support more middlemen, so I'm curious what data they used to argue that it works the other way around. That was my conclusion as well - when times are good you don't mind someone who contributes little hanging around. When times are tough, they're out and what little value they offered is replicated by someone desperate to stick around. When a business has a lot of administrative staff times are good and those watching the market can conclude, due to the number of administrative hires, that times are good for a particular market sector. But concluding that it means middlemen are undervalued seems like whoever authored the study had some odd motive.
HeyLaughingBoy 9y ago
I think your vision may be colored a bit because here on HN everyone seems to think that manufacturers can just sell direct to consumers easily by tossing up a Shopify page and letting nature take its course. The true value of a middle man is connecting buyers and sellers who would otherwise have no idea the other existed, or otherwise facilitating the transaction. Here's an example that I'm currently involved with. I was approached by someone to create a device that's needed on the market, but doesn't exist. I'm quite capable of building the thing and familiar with the domain, but never knew the thing was needed. Similarly, the company approaching me doesn't have the internal skills to build the device, but they can sell it. The market for this particular device isn't very large (it's only businesses who have machinery that was built using a particular older technology and need to have repairs done), and there are alternatives, so that explains why no one is building these. In this case, the company that approached me -- the middle man -- has excellent knowledge of the market and its needs and how to best serve them. I, the producer, had no idea this product was needed, and even knowing that now, have no access to this segment of the market, and it's simply not large enough to make it worth my time to begin a marketing effort in that direction. Similarly, the end customers have never heard of me, and have no concept that such a device could even be built. So there you are, a middleman has just added value by offering to buy something that I otherwise would not know to build, and by selling it (along with other products and services), to a very underserved market that otherwise would be forced to purchase newer equipment they otherwise don't need.

erikb 9y ago

Yes, something people want is a valuable tradegood. However it doesn't mean it's not useless junk. Useless means it doesn't really have a purpose. that's independent from trade value.

honestoHeminway 9y ago

Peoples wants can be warped, bent and deformed. If i make electronic crack, that keeps people addicted and glued to there phones, all other wants they could have during that time are going to vannish or be at least postponed. So one thriving market can damage other markets. Middleman have a interest to sell there products, even to extreme outliers- it is very often middle-man who push buisness ideas. "Yes, you run a rifer-rafting company. Have you ever considered to take a trailing craft along with beverages, like..."