I wouldn’t say they are “hardly productive.” I think even you would acknowledge that there is *some* value added by the “middleman” to most transactions, otherwise they wouldn’t get paid at all. The issue is whether they are overpaid given their contribution. And that very well may be the case (I would argue that it is the case). But it does beg the question… why do they continue to get paid so much? Whether through ignorance or because they actually believe value is being added, folks continue to pay the middlemen. I’m curious as to the answer myself.
At a prior firm I did a fair amount of investment banking (at the small level – transactions generally under $100 million) and always thought everyone involved, including myself, was overpaid to some degree. And I’m still in the industry although I don’t do as much transaction-oriented work anymore, but I still look at a lot of deals and everyone’s still making a pile of money. And yet the firms involved still pay the fees. If you ask them why, the typical answer is, “It was expensive but it was worth it.” And while I don’t fully understand it, it’s hard to argue with that logic. They’re the ones paying, after all (or, more specifically, the investors are paying – but they’re fully aware of the fees as well).[/quote]
IMHO, they get paid because they have control over the distribution channels (distribution of goods or services), sometimes by lobbying politicians to prevent others from getting in on their territory (the NAR lobbying against banks selling their own REO inventory, for instance), or laws which require a “licensed” salesperson to handle a transaction for another party, etc. This is obviously found in the financial services industry. While I understand why the govt would require these licenses when trying to protect the public from unscrupulous business people, a party should be able to use whomever they choose, and should be able to circumvent using a licensed individual or “authorized entity” as long as they sign a statement acknowledging the lack of a license, etc. Imagine having a qualified, but unlicensed, friend handling a RE transaction for you. This person might be far more qualified than a licensed realtor, but without a license, they’re not allowed to handle things for you. Try buying a house (listed on the MLS) “on your own.” You can’t do it.
The public is restricted to using licensed salepeople in many transactions (especially in the FIRE industry). We don’t have a choice in the matter, and it’s because industry lobbyists have pressed for these laws under the guise of “protecting the public.”
Also, so much information is withheld from the public, again for “our own good” and is only accessible to those who are licensed or work in a particular industry. Again, we are **forced** to use their services because we need access to information they have (that we’re not “allowed” to have) or because they control the entire distribution channel or flow of documents, information, etc.
Those who manage to restrict public access to information, or restrict public accesss to trade make the most money.
