Monday, February 10, 2014

Agents in a Modern Economy

I read the first two paragraphs of "The Economic Theory of Agency: The Principal's Problem" by Stephen A, Ross before I got too lost. So instead of talking about that, I'm going to talk about the growing obsolescence of agents.

Agency as an occupation has been on the decline (trust me, I read this on the internet somewhere I can't cite). Travel agents have been replaced by travel websites. Tuition agents have been replaced by computers which take your input and determine what you're eligible for. Salespeople are disappearing while digital storefronts grow. Even real estate agents are on the decline, as more and more people are finding buyers and sellers for their homes through online advertisements, such as craigslist.

The internet is a clear reason for the decline in agents. People are being connected through computers, which can search through enormous lists with all sorts of data for all sorts of criteria in order to introduce people who ideally will decide they want to trade with one another. Matchmakers are not only unnecessary, but actually probably worse at bringing people together than websites with such previously mentioned capacities. Besides agents who are no longer making money at agenting, this is good for everyone.

Our communications are faster and more efficient than ever, and eliminating agents makes it possible to avoid fees and other barriers to trade. The only areas in which agents exist are where the most critical element of the trade is not finding someone to trade with (e.g. negotiating million dollar contracts with a specific person). This is because the agent does not operate to bring the buyer and seller together, but to specialize in this critical aspect of the trade. They offer a service such as memorizing mountains of legal documents and laws, or specializing in negotiating prices, such that they can perform in a trade in a way that can't be done without them.

In conclusion, agents are quickly disappearing, and are needed less and less in a modern economy with such infrastructure as the internet and computers.

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