EWOT Goggles #10

Last week in class, we learned about middlemen- or people, businesses or organizations that bring buyers and sellers together to make a transaction more convenient. To do this, middlemen also charge an additional price for offering such convenience to buyers and sellers.

The other day, I was talking to one of my friends (Joe) and he gave me a perfect example of a middleman.

Joe was telling me how this year, his friend Shawn does not have a car on campus but he (Joe) does.

Shawn wanted some beer to enjoy his night on a recent weekend, and Joe agreed to go buy him some booze, since he had a car with which to drive to the store. But, Joe only agreed to do this on one condition: if Shawn paid him all the money for the beer plus an additional fee of $10.

I asked Joe what the additional fee was for. He told me: "Taking the time to go buy alcohol for Shawn came at a cost to me. I had no interest in drinking alcohol or buying beer, I was simply doing him a favor. I could've spent my time doing other things I valued, such as my school-work. So to incentivize me to buy him alcohol, I requested that he pay me a fee in response to the cost [of losing my time] that was placed upon me to go out of my way to get him beer."

And then it hit me: Joe was acting as a middleman, just as we learned in economics. Even though the store Joe was buying beer from was also a middleman, Joe was serving as an additional middleman- bringing a buyer and seller together. Joe was making the transaction convenient- and possible- for both parties, which is all part of being a middleman. And after putting two and two together, I realized that Joe very much deserved compensation for getting beer for Shawn, not only because it cost Joe his valuable time, but also because he was making a transaction much more convenient for both parties.

If it wasn't for Joe acting as a middleman, the transaction could never have occurred. Shawn would not have gotten the beer he wanted because he had no car to get him to the store. This shows how middlemen are indeed good for the economy- they stimulate economic growth through making transactions possible that would not have been possible without middlemen.