The Engineers of Exchange: Middlemen, Part Deux
Episode description
Middlemen are not parasites but essential "engineers of exchange" who create value by connecting buyers and sellers who might never find each other otherwise.
• The word "monger" (and Munger) comes from a Saxon root--Mancgere-- meaning trader or merchant
• Middlemen historically seen as parasites for buying cheap and selling dear without improving products
• 11th-century "mancgere" traders defended their value despite not changing the goods they sold
• RA Radford's 1945 POW camp study shows how middlemen increase beneficial exchanges
• The prison camp padre who traded his way to wealth, while making everyone else better off!!
• Arbitrage improves market efficiency by exploiting price differences, and reducing differences in price so that people can rely on the price they are offered rather than having to bargain or comparison shop.
• Middlemen only become problematic when they control exclusive information or "rents"
The first "middleman" episode of TAITC: May 2023....
R.A. Radford, "The Economics of a POW Camp."
M.C. Munger, "Market Makers or Parasites."
Book'o'da'week: Country Music USA by Bill C. Malone, published by University of Texas Press.
Bonus: a great example of a middleman, from a listener in Oz!
You can follow Mike Munger on Twitter at @mungowitz