It allows production to be done differently. So really, we see the size of these large middlemen growing in scale, that allows disaggregation. But I think it’s always dangerous when we talk about natural to understand, well, what actually results in the structures that we see around us? And natural might mean there’s efficiencies here, and there certainly can be, but part of what happens spaces is you see a bunch of tradeoffs that were made, and there are tradeoffs that were made assuming we were trying to maximize particular types of values. Where did this economy come from? For a lot of people, it just might seem like a natural progression, the evolution of modern consumer capitalism. And so trying to understand how these structures originally rose because they provided value, but then really have tilted the balance of power and brought opacity in ways that are far from optimal.ĬURT NICKISCH: Yeah. And it’s that combination that, again, it arose originally because it did help create value, it did help create efficiencies, but there were oftentimes very significant costs, unappreciated costs that we’re now starting to bear. And then they’re both feeding and fed by these very long supply chains, these very long layers of middlemen. We have a combination of these incredibly large and incredibly powerful middlemen. I first saw this in banking and then saw it elsewhere. They are the critical connectors that really do help the flow of goods, the flow of money from those who have them to those who want them, they overcome all those informational challenges and logistical challenges that can otherwise impede a transaction that would really make all parties better off.īut as you examine it further, we realize that we don’t just have an economy with a lot of middlemen, we have an economy where middlemen have grown in particular ways. So middlemen are absolutely pivotal to how the modern economy functions. Right at the beginning, it’s important to distinguish between middlemen and the middleman economy. So can you break down your term of middleman or can you break down your definition of middleman? What intermediaries are you thinking of here? They’re offering really handy services to consumers. But I think that the intermediaries that you describe in your book are companies that we use a lot like online retailers, big box retailers, that actually provide consumers a lot of value. And you’re fine with that because that middleman wasn’t really doing anything for you anyway. So when you cut out the middleman, you save some money by going directly to the source. Thank you for having me.ĬURT NICKISCH: So let’s start with that phrase that we’ve all heard to cut out the middleman. Her book is Direct: The Rise of the Middleman Economy and the Power of Going to the Source.
#The middleman episodes how to#
She’s here to talk us through her argument and to give some advice for how to navigate this economy as consumers and businesses. Kathryn Judge is a finance expert and professor at Columbia Law School.
Today’s guest has written a thorough critique of what she calls the middleman economy. They’re invaluable connectors in a global and complex economy that also gives them outsized power. The prices and mind-boggling access of goods that come via middleman are hard for customers to resist. They’re why you can easily buy something designed in Europe and made in China, you can search homes for sale and apply for a mortgage without ever getting off your couch. I’m Curt Nickisch.Ī great deal of what’s possible in our modern economy is thanks to middlemen. Judge wrote the book Direct: The Rise of the Middleman Economy and the Power of Going to the Source.ĬURT NICKISCH: Welcome to the HBR IdeaCast from Harvard Business Review. And she explains how customers and workers alike can lead to intermediaries offering more transparency and social value. Judge details the downsides and risks of this trend. Thanks to technology and globalization, she shows how the importance of “middlemen” in the value chain has increased, along with the length of global supply chains.
Kathryn Judge, a finance professor at Columbia Law School, is troubled by the rise of intermediary platforms between products and services and the customers who eventually purchase them.
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