Isegoria

In “The Drift from Domesticity” (collected into The Thing and his collected works), G.K. Chesterton makes a Burkean point that bears repeating:

In the matter of reforming things, as distinct from deforming them, there is one plain and simple principle; a principle which will probably be called a paradox. There exists in such a case a certain institution or law; let us say, for the sake of simplicity, a fence or gate erected across a road. The more modern type of reformer goes gaily up to it and says, “I don’t see the use of this; let us clear it away.” To which the more intelligent type of reformer will do well to answer: “If you don’t see the use of it, I certainly won’t let you clear it away. Go away and think. Then, when you can come back and tell me that you do see the use of it, I may allow you to destroy it.”

This paradox rests on the most elementary common sense. The gate or fence did not grow there. It was not set up by somnambulists who built it in their sleep. It is highly improbable that it was put there by escaped lunatics who were for some reason loose in the street. Some person had some reason for thinking it would be a good thing for somebody. And until we know what the reason was, we really cannot judge whether the reason was reasonable. It is extremely probable that we have overlooked some whole aspect of the question, if something set up by human beings like ourselves seems to be entirely meaningless and mysterious. There are reformers who get over this difficulty by assuming that all their fathers were fools; but if that be so, we can only say that folly appears to be a hereditary disease.

But the truth is that nobody has any business to destroy a social institution until he has really seen it as an historical institution. If he knows how it arose, and what purposes it was supposed to serve, he may really be able to say that they were bad purposes, that they have since become bad purposes, or that they are purposes which are no longer served. But if he simply stares at the thing as a senseless monstrosity that has somehow sprung up in his path, it is he and not the traditionalist who is suffering from an illusion.

Megan McArdle cites this passage while discussing how finding good drugs is harder than it sounds — and cutting out Big Pharma won’t get good drugs to market faster:

The op-ed or magazine piece claiming that the “real” pharmaceutical research is all done in government and university labs, with pharma just swooping in at the end to smack a label on the thing and stack all their money in neat piles, is an evergreen. The truth is that the human body is complicated, finding good drugs is hard, and the regulatory hurdles make it harder every year.

In general, be skeptical of arguments that there are fabulous savings in money and efficiency to be gained by “eliminating the middleman”. The phrase is a favorite with infomercial hucksters for a reason — it’s the sort of thing that sounds really plausible and intuitive. But in fact, since most people don’t like paying more than they have to for their goods and services, and producers do not willingly give up a share of the profits, if there’s a middleman in a market, he’s usually there for a reason.

Of course, sometimes that reason goes away. The computers that are replacing travel and real estate agents, for example, are arguably delivering better service at lower cost, and I expect that both professions will eventually reconstitute themselves as consultants for those who want them — advising buyers on neighborhoods and carrying costs, helping sellers file the correct paperwork and set the price.

But you shouldn’t get excited about replacing the middleman unless you understand what function they serve, and have a plausible plan for replacing it.
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Midlemen are usually performing some valuable service for either customer or producer, or more usually both: price discovery, or bundling, or branding/quality assurance, or knowledge of local markets, or convenience, or some other expertise — something that makes producers willing to give them a cut of the profits. The proponents of the “real research” story seem to believe that in the case of pharma, that service is simply greed — academics are too busy doing the important research to bother themselves with trifles.

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