There’s an old cartoon I came across recently. Two men are standing in front of a house. One says to the other, “would you like to buy my house?” And the other replies, “yes.”. The cartoon is called “Life Before Estate Agents”.
Okay, so maybe it’s not the best joke, or even a particularly funny one, but it has stuck with me. Estate Agents are one example of what we call “Middle Men”, people who, I maintain, interfere in the natural order of things.
That’s not strictly true or fair, so allow me to qualify. As Adam Smith, the great economist, outlined in The Wealth Of Nations, products are derived from nature via a combination of effort and skill. If I pick up a stone and sell it to you, the process of a stone changing from a piece of nature to a product has one stage. I pick a stone, assign it value and, in an economy with perfect information, that value is commensurate to the utility of the stone. Bish bash bosh, as it were. That’s a transaction with no middle men.
Of course not all middle men are bad – heavens, no! To take another example, going to a restaurant for a fine dish of Salmon en Croute involves middle men. There’s the fisherman, who derives the raw product (salmon). There’s transport, which moves the fish from the shore to the restaurant. Then there is the chef, who cleans the fish, fillets it, prepares it, cooks it, and finally the waiter, who brings the fish to the table. These are all middle men. The difference between them and the second, more distressing type of middle men is a fact of economics: they provide a service. In each of their roles, they add value to the final product that we, the consumer, buy. A salmon by itself is useless to us: we lack the skill to make it en croute. By providing their skill and labour, the middle men add value, turning the fish from a raw product to a finished one.
Okay, James, you’re thinking. We know this. This is straightforward economics. Duhh. Okay, I’m glad we understand that. It’s worth restating what Wittgenstein would have called the case in order to show that there are in fact middle men who don’t provide a service at all, yet who have nevertheless triumphed in our world. When we see the world in terms of economic utility, we start to realise that there are lots of people who don’t add any kind of value at all.
Now, I’m not Ron Swanson-
– I know that middle men are more or less a natural function of economics. Some people have a skill. Some people don’t.
The former do things. The latter insert themselves into real processes, like viruses inserting their DNA into a host.
The funny thing is that there’s no bias or class to this view of economics. I’ve often said that bin men and sanitation operators have one of the most important jobs in our society. Without somebody to take our garbage away, out civilization would collapse. I have an idea for a film based around exactly that premise. It would be the most disgusting film ever made.
Cleaners, dish washers, et al provide necessary functions in our society. In economic terms, that puts them above middle management, HR, the civil service and a thousand other non- jobs that proliferate through our society. If we’re looking at things rationally, a Member Of Parliament has less inherent value than a toilet cleaner. Funny, huh?
Less funny is the fact that middle men breed more middle men. To go back to my heavy-handed organism metaphor, middle men are like a gateway virus such as HIV that allows further opportunistic infections. Once a gap had been opened in an effective process, middle men rush to fill it. I’ll give you an example.
Fresh out of university I went into a job with the British civil service. If you don’t know what a civil service is, it’s not really important. It basically serves as the buffer that stops government initiatives from being put into practice. It’s sort of the barrier between a democracy and a Tyranny Of The People. Anyway, I worked for a department that lost £10 Billion in its first five years of operation. I’ll put that in context: that’s more than the GDP of some small countries. The funny thing is, it was nobody’s fault. It just fell through the cracks. The reason was it was managed by a bunch of inefficient middle men who had inserted themselves between the Treasury and the final recipients. This sort of thing is pretty common. The UK has 600,000 civil servants. A nation of this size could, in theory, be run extremely efficiently by a staff of 10,000. What are the other 590,000 doing?
Actually, they’re just obeying a law buried deep in the fabric of economics, a law first devised by Scott Adams, the creator of Dilbert. Adams provided the following rule for weasels, which are functionally the same as middle men:
$10 = 1 Weasel
That is, for every $10 of value something has, it will attract one weasel who will try and get some of that money for himself. It’s a nasty law but, like the laws of thermodynamics, inescapable. Adams described it thus: “If you sealed a billion dollars in drums and ditched them in the middle of the ocean, a hundred million weasels would drown just trying to get close to that money.”
Every sector has these middle men. Government, as is well known, attracts the most weasels because most revenue passes through it at some point. After that, banks, which are infested with weasels who neither add to the value of the wealth they handle not provide any discernible service of any kind. A small company, on the other hand, will attract only a few weasels who disguise themselves as well-meaning folk. Business Consultants are a class of middle men, because as anybody who’s ever run a lemonade stand will know, you don’t need an MBA to know that more money has to come in than goes out. More common with smaller businesses is middle men who’ve inserted themselves at the ground floor. The best example of this is Human Resources, which provides a service that could be done by any other department during their lunch break.
Okay, okay, these are sweeping statements and they’re easily knocked down. But hey, you came here to read my opinions. To get back to government for a moment: we’ve seen the furthest possible extreme this situation, where weasels infest every level of power, can result in. The Soviets believed they had avoided a bourgeois Weaselpocalypse by destroying the idea of personal property, so there were no $10 for weasels to fight over. All they really did was banish money, not valuable stuff itself. As long as there was privilege, favors or raw materials of any kind, there would be middle men clustered around it. Eventually weasels were in the top echelon of government. In the end the USSR fell apart, not due to war, but due to sheer inefficiency- an empire brought to its knees by weasels.
A Weaselpocalypse is not an inevitable consequence of middle men – it can be avoided by judiciously managing your affairs. Middle men are everywhere, preying on any loose change they can find. It is a problem, but a manageable one. Now I’ve illustrated the problem and, hopefully, made you aware that it isn’t going away any time soon, I’ll leave you with a salutary warning: even the wisest of fools is soon parted from his money. Only you can decide who in your day-to-day affairs is a weasel. I’ll offer this poser: who, if they were absent from your transactions, wouldn’t be missed? It’s a tough question. I can only offer you this rule of thumb that I’ve devised: ask somebody to describe their job in four words or less. Many people can do it; “I make coffee”, “I run this business”, “I make people better”, or “I fly the plane”. If the person you’re asking can’t answer the question in four words, you might just have found yourself a middle man.