The Munk Debates Podcast - Kathryn Judge Dialogue

Episode Date: July 13, 2022

 The economic powerhouses in today’s economy are middlemen like Amazon and Walmart, a reality that has been exacerbated in the pandemic. So argues Kathryn Judge, author of the new book, DIRECT: The Rise of the Middleman Economy and the Power of going to the Source. In it, Judge says that we are trading convenience for long (and fragile) supply chains with often unethical sources. She argues a more just and fair economy is within our grasp, if we take small actions to be conscious consumers and go to the source more often. This will not only create a more resilient economy but also help us live more connected and fulfilling lives. QUOTES: “They're changing the rules of the game in ways that protect what they're doing, and it also allows them to take a bigger cut over time that often has blocked innovations that could reduce their power. So part of the challenge is first of all drawing attention to this allows us to say individually like, "Where are we making decisions that don't suit us?"”    Kathryn Judge  The host of the Munk Debates is Rudyard Griffiths - @rudyardg.     Tweet your comments about this episode to @munkdebate or comment on our Facebook page https://www.facebook.com/munkdebates/   To sign up for a weekly email reminder for this podcast, send an email to [e-mail].     To support civil and substantive debate on the big questions of the day, consider becoming a Munk Member at https://munkdebates.com/membership Members receive access to our 10+ year library of great debates in HD video, a free Munk Debates book, newsletter and ticketing privileges at our live events. This podcast is a project of the Munk Debates, a Canadian charitable organization dedicated to fostering civil and substantive public dialogue - https://munkdebates.com/   Senior Producer: Kelly Linehan Editor: Adam Karch  Become a Munk Donor ($50 annually) to get 72-hour advanced access to the full length editions of Friday Focus and Munk Dialogues. Go to www.munkdebates.com to sign up. Hosted on Acast. See acast.com/privacy for more information.

These statues have to come down. It's always been a pandemic of the unvaccinated. The problem now is it's a pandemic of the willfully unvaccinated. Falling birth rates are good. They're good for our planet. They're good for our societies. We're not responsible for the escalation with Russia. We're not the ones who invaded Ukraine.

I don't think it's fair to portray people of color as victims. It is a very dangerous time in American politics. Low monk debate listeners. Redyard Griffiths here. your host and moderator. Welcome to this, the latest installment in our Monk Dialogues long-form interview series, where we connect with some of the world's sharpest minds and brightest thinkers with the goal of leading you with some new analysis and insights onto the big issues of our time. This week, our focus, our topic is our just-in-time economy. During the lockdowns, many of us,

were kept busy by ordering everything online. from toilet paper to the latest technology. Walmart and Amazon are just two e-commerce giants that reach stratospheric heights in terms of sales during the pandemic. Amazon has had a banner year with the rise in online sales, of course, due to COVID, expanding warehouse operations and adding to its network of distribution centers across the country. Walmart is reporting that it, too, is raking in the cash.

The world's biggest retailer reports its profits soared 79% from one year ago. Columbia law professor and financial market expert and now bestselling author, Catherine Judge, says the rise of this just-in-time economic model has had dire consequences. In her new book, direct the rise of the middleman economy and the power of going to the source, Judge says we're trading convenience in the moment for a long-term and fragile supply chain, often with unethical sources and unintended consequences. Catherine Judge, welcome to the Monk Dialogues. Thank you for having me.

I'm excited to be here. So many issues and ideas I want to unpack with you, but let's just start with some basics here. You're writing about the so-called middleman economy. Explain to us what is that and why in your view it's something that is unique and important and really demands our attention. My focus is on two phenomena that really feed off each other. One is the growth of these outsized intermediaries,

these outsized middlemen in so many different aspects of our economy. So in retail, we have Amazon and Walmart and finance. We have these incredibly large banks, these incredibly large mutual funds, in food, we have middlemen like cargo. And part of what we've seen is as these intermediaries have grown in scale and grown in power, that has actually led to longer, more complex supply chains and the two have fed off of each other because these long supply chains seem to create short-term efficiencies and the bigger, the intermediary, the more you can justify

these small efforts from additional short-term games from doling out kind of like one step in the process to whoever can do it most cheaply. So we've seen this simultaneous rise of these very long and complicated supply chains facilitating the production of goods and the flow of funds and these very large and powerful intermediaries, and the middleman economies weigh the two feet off each other. And the core idea is just this has made our lives incredibly easy, provided unbelievable conveniences. It's really allowed goods to be far cheaper than the otherwise would.

Investing is easier. Access to credit, it is easier. But there's a lot of long-term costs. We're seeing it right now in the supply chain fragility. We saw it in 2007 and 2008 when the securitization chains really broke down. And we're also seeing it now, people want to know something not only about the good, but about the people and the places affected by the production or affected by their investments. And the opacity created by these chains

makes that hard to know. So a lot of benefits, some meaningful drawbacks. And it's helping us to kind of focus in on the tradeoffs that we might not have realized that we were making either individually or kind of collectively. Okay, let's talk about some of those tradeoffs. There are many. You've just mentioned, obviously the biggest one convenience that you get in turn for possibly in ways you don't understand higher fees, maybe alternatives of services that you're unaware of because the centralization of power amongst these middle men or women. So which is it, Catherine, which is the part where you think there's the most kind of friction and distortion that's being affected in terms of the economy, but in terms of our decisions as consumers and the choices

we make and how we live our lives. Yeah. So I think that there is a number and it varies. One of the important things that the book really draws out that I explore and direct as I look at the specific rise of the middleman economy in a lot of sectors is that very often in the near term, there's incredible gains. And part of the challenge, though, is a middleman come in, they build this incredible infrastructure. You know, the real estate agents created the multiple listing service, particularly before the internet, it allowed buyers and sellers to see homes. You know, Amazon has this very user-friendly platform, incredible fulfillment. So they're coming in, they're providing real value. But we see over time is there control over that critical infrastructure,

the expertise they develop, the relationships that they develop, allows them to meaningfully contort how the market evolves. It allows them to change and influence regulation. So they're changing the rules for the game in ways that protect what they're doing. And it also allows them to take a bigger cut over time and oftentimes block kind of innovations that could reduce their power. So part of the challenge is like, first of all, drawing attention to this allows us to stand individually, like where are we making decisions that don't suit us? Because intermediaries and the middlemen that we deal with are just so good at understanding all of our little behavioral biases. how do they exploit that and how can taking step back kind of help us to live a better life for

ourselves? But part of it is also understanding kind of the structures and the way the structures create power. So where we actually need innovation and better policymaking to actually restore meaningful choice and just a healthier balance of power. So part of what you're describing here, Catherine, sounds like in many ways inherent features of capitalism. There are tendencies towards oligopolis, monopolies, businesses love them. They're highly profitable. But you also think that the internet had a key role to play here. It's a kind of an accelerator to the middleman economy.

So maybe explain for us, you know, in a sense, what's different this time and why we're witnessing something that's just not run-of-the-mill regular, big corporate behavior that has been. and always inherently biased towards monopolistic outcomes. Yeah, so a couple of things there. One, going back to the Internet, I mean, what's really interesting about the Internet and that I try to draw out is it simultaneously

has created the opportunity for bigger players to come in and actually increase their size and power, but it is also created an environment where there's the possibility of disruption. So, you know, originally we had the internet and we had all these idealistic voices. You know, you had Bill Gates early on saying, all right, we're no longer going to need middlemen. Everybody's going to go direct because a lot of the role of middlemen is to help us just overcome the informational challenges of finding one another when the provider of goods

and the buyer are far apart. And so the internet has allowed us to facilitate a possibility of connections without the aid of the big middleman. And we see that with eBay, we see that with Etsy, we see that with Shopify, and the way it helps small businesses. There are a lot of ways that you can now connect. But the challenge today is Amazon also used an incredible amount of data, an incredible IT to create this really great platform where it feels really great, where every time you log in, you have this little store that's customized based on your history, but also the wealth of data they have about the buying habits of other people who shop like, So now the typical consumer who regularly shops online, when they're logging in to start shopping,

they're not starting at Google. They're going straight to Amazon. And there's a value in that, but then that changes over time. So for Amazon just as an example, we now have recent surveys showing a number of people feel guilty when they shop there. They want to shop elsewhere, but they have a hard time doing so. And similarly, when you're looking at the seller side, the fees that you're paying every time you buy a good on Amazon, the amount that's going to that third-price seller, relative to the

amount that's going to Amazon, has shifted every single year for the last seven to eight years with a bigger and bigger portion of that cut going to Amazon. So part of what we're seeing here is this weird pivot point of this technology that's coming in. And capitalism, I think, never operates in a vacuum. You know, it operates based on the rules of the game that are set up, but also the way the way the players involved help to shape those rules and shape that format. And they're creating the structures that we interact with. So part of what we're seeing right now is there's more opportunities for direct connection, including direct connections that actually, you know, span national borders. And yet there is also simultaneously as a result of the wealth of data that's available

and the dynamics of, you know, what economists like to call these two-sided markets, where buyers attract sellers and sellers attract buyers, a pattern through which we've had the largest, middlemen really growing in size and power and influence. You know the other argument. You must hear it all the time that there's efficiency gains and there's tradeoffs, yes, but look, what really matters is price. So what's Walmart slogan? You know, the lowest price is the law.

So these big businesses acting as these powerful middlemen and the economy would say, look, we are delivering literally a higher standard of living to people. by virtue of our ability to purchase goods on a mass scale and deliver those efficiently and effectively to consumers. So three things on that. One, up to a degree, some of that is certainly true. And that's a reason the goal in the book is not to get rid of any of these systems, but to rebalance the power so there's more meaningful choice. Two, when you're talking about the quality of life that people enjoy as a result of that, most people right now are thinking about consumer welfare. What is it on paper we're actually able to consume as a result of the money that

we have to spend? And now we can buy more. The challenge is most of us are not just consumers. We play a lot of other roles in our lives. And this has played a meaningful role shifting kind of the nature of work that's available and where that work is available. So if we think about Amazon and Walmart, There are not only the two biggest revenue producers in the United States, they're the two biggest employers. So we have a lot more people working from Littleman and a lot fewer people working actually as creators because those jobs have very often gone abroad as a result of the system. And the last point I would make, part of what the book tries to explore is this core tension between the decisions we make and our long-term happiness and well-being. And part of what we're seeing right now in the United States, for example, and I expect this is also true in Canada, is we have a loneliness epidemic that's almost in par with the obesity epidemic in terms of morbidity and mortality outcomes.

And so part of what we're seeing is the way we're getting everything we want, but we're able to do it in a very isolated way that seems convenient, that seems great. But sometimes actually forcing ourselves out of our comfort zones to create some of these connections. And again, it's not doing it all of the time, but once in a while, can help to build some of those casual relationships that can also be part of what makes a life meaningful. So there's a lot there, but what direct explores are all of these different avenues that maybe we've gotten slightly out of whack. I get it. Well, let's talk about some examples because I think it helps people, you know, think this through in more practical, real-world ways. So imagine the good.

the bad and the ugly when it comes to middle men. And maybe you could give us a kind of a sample of each. So we get a sense of the spectrum because you're not against middle men. You do think there are some that are genuinely innovating and delivering services in ways that are meaningful and I guess doing so with the social conscience. But, you know, let's hear about the ugly too. So I'd love to hear about that spectrum. Yeah. So I like the framing. So like starting with a good, again, the middlemen are those actors who are just helping us overcome all the information challenges, all the logistical challenges, separating us from the goods that we want or, you know, savers and entrepreneurs who need a little cash. And I think that they play a critical role in a whole variety of areas of our

economy. And one of the core ideas that the book draws out is to understand which middle meant to trust and how much you trust them. It's helpful to just think a little bit about what their incentives are, what their business model is. So if we think about a lot of small, local retailers, really they depend on long-term relationships and being trusted by those customers that they're serving and word of mouth so people really are willing to continue to go there. So oftentimes, there's a meaningful, positive correlation between their long-term viability as a business and actually really serving customers' needs in a long-term way. So that can play a really great role. And we also have these great intermediaries that are propping up creating markets for secondhand goods in an environment where we're more concerned about climate impact, you know, whether it's eBay or the real, real for clothes.

You know, part of what intermediaries do is help people connect. And so I think like these incredibly effective online marketplaces for for secondhand goods have also been like an incredible area of innovation. And you also have platforms that are kind of middleman light that are helping people connect. but doing so in a way where there's still transparency, there's still connection, and there's still accountability. So there's all kinds of great middlemen and also metalmen who are kind of neutral. For the bad and the ugly, again, here I would look kind of like what are the long-term consequences? And so one thing I'll talk about is when they're using their power in bad ways and the other is just kind of the opacity that comes from this. So one, in terms of power, you know, real estate agents,

great connectors, like they really came up helping people buy and sell homes, but the internet should meaningfully reduce kind of the need for their services. You can just do a lot more today online than you used to be able to. In the United States, but not so much actually in Canada or the UK or Australia, we still have an incredibly expensive full service real estate model where people are paying 5% and sometimes 6% total on the value of their homes. And there is, if you look at the history of how they've managed to entrench themselves. They've used their control over this critical infrastructure, an incredibly effective lobbying,

and kind of these norms of both cooperation with each other, but also refusal to cooperate with people who are being more innovative to really entrench this system. So it's very hard for individuals to opt out. And part of the concern there is not that this is specific to real estate, but this is what happened generally, which is why, going back to your earlier question about capitalism, why we have to be a little more worried when you have to,

outside power with intermediaries than with others because they're able to kind of perpetuate their role in particularly troubling ways. And the ugly, two things. One are those hidden sources of fragility is that you're getting oftentimes very short-term games, but maybe we're actually paying too little in price because that price doesn't actually cover the cost of building a resilient system. So when people actually need baby four million when they need good, suddenly their access is limited. So I would say, yes, we want low prices, but we also need a resilient system when we're talking about fundamental goods. And those were the failures that we saw in 2007 or eight in finance. Those are the failures we're seeing in supply chains now.

So I'd actually say a little bit of rebalancing is part of what we need. And the length and the complexity of the chains contributed to this kind of like outsized dysfunction. And we can talk about it later if you want, but then there's also the question of like accountability. Like what happens when people care about more than just the good? and they actually care about the impact on the world and other people. Okay, let's shift gears here and pick up on one thing that you just mentioned, which fascinates me, Catherine, is you think the effects here of middlemen, specifically of the last period of time, may have a direct bearing on the struggles

that advanced economies are having with inflation, and particularly how central banks and governments have maybe misunderstood the threat of inflation. Let's hear more on that. So a lot of it is the challenge of what becomes unknown and not easily knowable as a result of the complexity of the ecosystem that these long chains create. So if you want to understand kind of the impact of what sort of banks can know and don't know, we can actually even rewind to 2007 and 2008, which I think provides a very helpful parallel in unappreciated ways for what we're facing right now. So actually, the origins of the financial crisis were not inside of banks.

It was weaknesses in these long securitization chains and the quality of some of the mortgages. But the subprime mortgages that were underperforming were a really small part of the overall mortgage market, and most of the other mortgages in time performed pretty well. So the actual losses that drove the crisis were sufficiently modest that they should have been able to be absorbed. worked. The challenge is, starting in August 2007, over a year before the failure of Lehman Drellers and AIG and all of the explosive developments, you know, the FOMC, the Federal Open Market Committee was sitting around and they say, look, like liquidity is going bad, we're suddenly seeing dysfunction in all of these different markets that we didn't think were related to one

another. And a core challenge is it used to be all of the loans were on bank ballot sheet, so we knew where the problems were. But now with securitization and a reduced, to distribute, and it wasn't just securitizations, there's layers of securitization feeding in to other types of innovative financial products. We don't know where the risks are. And they were saying this in the fall of 2007, and yet it was a full year until, again, we had the explosions in 2008, but because the system had gotten so complex, they couldn't figure out where the problems were and kind of operate strategically to address those problems in a proportionate way or to understand kind of quite the full magnitude of what might go on. And similarly, if we kind of rewind

to the early stages of the current inflationary bout, we saw Fed Chair Powell and others saying, yes, we're seeing supply chain problems, but they're going to be transitory. So yes, prices are going up. They're going up faster than we expected. But that's going to self-correct. And again, there's this assumption going back to your earlier point, market self-correct, right? So if we see dysfunction, markets are self-correcting. As long as we provide enough liquidity, we provide a left time, there's going to be self-correction. But the challenge is you have this incredibly long chain, which is really a web as it gets built up, and all of the little players have only a little bit of information.

They know who they're exposed to and they understand their risk exposures, but they don't understand all the risk exposures of all the other parties that they are potentially exposed to indirectly through the complexity of this system. So once you have a shock to the system, rather than just recalibrating in light of that bad news, there's suddenly all these questions over like, well, what am I exposed to or how bad is it going to get? And then you suddenly have everybody really looking out for themselves, sometimes panicking, but even shy of panicking, potentially sending false signs over like what they need or what they can do as a way of trying to figure out, like, let's look out for ourselves. And when you have a complex, interdependent system, that means that shock,

in the absence of really new credible information about how this risk are allocated is going to lead to more and more dysfunction in ways that build on itself. And so a core challenge has just been the, I think the failure policymakers to understand the nature of the fragility and the way that the dysfunction is going to build. And also the opacity that meant so they couldn't go in and kind of understand, oh, like, here's, like, at least within the case scenarios, something that's probable. So we've had additional shocks. The pandemic was a significant shock. You know, the invasion of Ukraine was a significant shock. We had a fundamentally fragile system that was fragile and created these massive information gaps, I think, in ways that were

preventable and hadn't been adequately addressed ahead of time. Hi, Rudyard Griffiths here, your host and moderator. I have a favor to ask you, please consider becoming a monk member. Membership is free and you get access to a series of great benefits, including a 10-plus-year library of some of our best debates, dialogues, and podcasts. You also get a free monthly newsletter featuring the debates that we're watching around the world, and you get a specially curated Friday weekly Monk Members Only podcast that focuses on the big international events and trends shaping our world. All of that, again, free at www.

I hope you'll consider joining and becoming part of our community. Now, back to our program. What's your advice? Let's see for the three big groups we have. Let's start with corporations first because they're in the middle of this. Many of them have embraced their middleman role. Others maybe are middlemen but don't like to really advertise that fact. So let's start with corporations.

Then I want to move on here, what you think, the government and consumers can do. Yes, I think corporations are very broad, right? I think private industry is both part of the problem and has already been a huge part of the solution. So I think on a self-interested way, part of what's going to be really helpful for corporate leaders in understanding these dynamics, going back to what we were just talking about, is you understand your own risk exposures, but also you don't know about potential risk exposures in a different way. So if we're in an environment where you think there's high-oge geopolitical risk, there might be various climate-related and there's other kind of disruptions that it could occur,

understanding that you might have made a bunch of decisions because in the short run, they seem to be easier or create cost savings, but where there might be embedded complexity or risk that you haven't adequately taken into account, understanding this bigger picture can help you understand where should we go in and make different changes if we want to build up more resilience.

And also going back to the real estate, understanding that some of the middlemen you've come to rely on might be what you've been doing for a while, but maybe there's innovations out there that could allow you to forego their services and save yourself some real money in ways that you don't appreciate. So it's reevaluating both on the supply side, but also in your relationship with customers. Like what is it you don't know and what is it? How are you like delayed? We're seeing a lot of like, you know, firms that have just made bad calls regarding what their customers wanted, but sometimes it wasn't that direct relationship there.

So understanding the way intermediation can make things easier, can enable efficiencies, but also have drawbacks in terms of, you know, connection, communication, information flows, and potential sources of fragility. And so revisiting in a more conscious way, kind of the choices you've made. And then again, just separately, a lot of great firms are coming in and innovating, right? They're like, we're seeing direct-to-consumer and Shopify and all of these other kind of new innovations that effectively are saying, we think the system is broken. We think that there people who actually care about the impact of what they're consuming on the environment or on other people. And as a practical matter, today's chains are so long and complex, the no certification

scheme is actually going to provide consumers the information that they want. So we need to start from the ground up, build a shorter, more accountable, more transparent supply chain, build a way of connecting companies and consumers. And like that can be part of kind of to create an alternative ecosystem, again, which just creates that healthy level of competition and a meaningful choice for all of the players involved. So a century or more ago, Teddy Roosevelt broke up the big truss, oil and steel. And many people look back on that period and say, well, you know, that was an event in no small way unleashed the kind of wave of productivity in the American economy. In advanced economies generally, we are now seeing concentrations of corporate wealth and power within broad swaths of the new key pillars of the 21st century.

Is deregulation really the key here to breaking down the syndicates that various middle men and middle women have built up within their industries? or are there other policy innovations that we should be looking for? So I think there's a variety of tools. One is we do need to have healthy enforcement of competition policy and antitrust. It's existed on the books for a long time. It's gotten more rigid and more narrow in practice. Taking more dynamic view of the economy and of market share and of influence and power, I think is part of what's going on right now,

reinvigorating that field in healthy and critical ways. I think alongside that there's more. And then there's policymakers just not being part of the problem. And part of what Direct really explores are the ways that middlemen have used their influence through lobbying and through expertise. So sometimes it's people that are captured, but sometimes it's just people don't know any better and they're scared. And so it goes through the ways in so many different sectors,

middlemen have used their influence to push for laws. They're really entrenched an outdated and self-serving system. So, you know, don't be part of the problem. And the last is really thinking more creatively and proactively about what we can do from the ground up to create the infrastructure that allows people to opt out of a dominant system. So, I mean, you know, there's farmers markets all over the place, but there's usually public space that is set aside for the farmer's market. Setting aside that space matters. If we think about the U.S. Postal Service or kind of Postal Services and other countries, you know, oftentimes right now the focus is on, all right, like, let's make sure that, like, they're actually financially viable. And I actually think that's the wrong focus. We should certainly make sure they're incredibly well run. We don't want there to be wastefulness and inefficiency and how they're operating.

On the other hand, if we are worried that outsized power could actually have crippling effects on the health of the overall economy and limit the viability. of small businesses limit consumer choice, then finding ways to actually speed up rather than slow down, as we currently are, postal service and provide potentially subsidized rate to smaller players can make it so people can, you know, go off Amazon and wait, you know, two or three days, as opposed to now they've just shifted and said, oh, for some packages, four or five days, we'll still be on time, even for first class. So try and figure out how can we provide that infrastructure, not to pick winners and losers, but to ensure there's kind of ongoing healthy competition. Okay, moving on to the consumer, the individual.

I mean, what choices can we make? Because the relationships do often seem incredibly asymmetric. Amazon has all my data. I have very little information on Amazon, Facebook, you name it. They're opaque to me. So how do we reassert ourselves as arpeters, of an economy that is more disintermediated, more democratic by people. Yeah, and I think that really is the aim.

I mean, the aim over time is not to destroy any of the systems we have in place, but to rebalance some more of the power lies with creators and consumers than a little less of the power lies with the middlemen. So one of the things the book really explores is to say, like, look, we live in this incredibly heavily intermediate world right now, and here's everything that you're not seeing about the impact of your consumption. And part of what the challenge we face today is it's very easy to discount that which you do not see. So suddenly there's all of these adverse consequences actually for the well-being of people on the planet

that are feeding like my family and the clothes that we wear in ways that I hadn't been aware of because it's systematically blinded to me. So I think a cornerstone of a better balance starts with, just once in a while figuring out where can you actually go direct to a maker? You know, can you, is there a farm stand that you can go to or a farm, you know, a farmer's market? Or if you hate to cook, like, don't do that. Like maybe instead for you, it's like going on Etsy and occasionally shopping there with somebody who actually is. There's small and large production there now, a small production maker. So figuring out kind of where are a couple

of areas of your life where going direct might take a little more work, but might also bring rewards in terms of supporting your local community, creating new types of connections, and that just serves to remind us in this way that we've been dulled to of the impact of our actions on others. And then in other areas, a lot of it is about trying to figure out, well, where is there like a slightly shorter supply chain in ways that could create kind of more accountability and they're more consistent with my values? And so part of it is just being honest and the book goes through a lot of the evidence of the way a lot of claims made, you know, in an ESG investment fund, oftentimes aren't leaving up to the promises they're making.

And so it's kind of forcing us to make some of those harder decisions and be more honest about the tradeoffs. But the goal is not to kind of abandon the life that all of us have come to know, but start to cultivate more meaning and more connection and a better balance by bringing just greater awareness to the fact that it's not only like what we buy or in what we invest, but through whom we are buying and through whom we are investing that really changes the nature of the goods that we're bringing into our lives and the ripple effects, oftentimes in the broader world of those decisions. And this is also partly just about capital wealth remaining in communities.

If we think of the hollowing out of main streets, high streets across advanced economies around the world as middlemen kind of claim our attention and transact our businesses, our wishes on servers in Palo Alto. Surely one of the costs we pay a very real cost is the strength and vitality of our own local communities. It is a huge part of it. And other people have commented on that. Again, and so I think there's this stereotype of economists not caring about those. But we think about somebody like University Chicago booth, Raghu Rahan has a whole book on the third pillar on community and the importance of community and the critical role that it's played and the way that in our focus on markets and the focus on the state we haven't invested in community. And so this is drawing attention to, well, here's the very concrete way.

The changes in the structure of how we buy and we've invest have undermined this community about bonds and that energy. And here's concrete ways that we can start to make more complex. conscious decisions that help to build up something that's closer to actually what we care about. So, Catherine, you know, you're familiar with the phraseology, kind of there's the world as we might want it, and then there's the world as we receive it or the way it is. I mean, what do you think's going to happen here? Because, I mean, these are all arguments that I think many of us would intellectually and intuitively be attracted to. But it seems that the power of the middle man, the middle woman, the extent to which these companies are, you know, invading in more complex

and sophisticated ways, ever greater portions of our lives, of our democracies. You could even say of our political processes. Where is this headed? I think that's up for us to miss out. And so really what we see is I think we're at a pivot point. On the one hand, we are seeing all of the costs of the current system coming into light. We're seeing the supply chain fragilities that are becoming manifest in ways that are incredibly disruptive to the health of the economy and to individual lives. We're seeing that as people care more about the impact of their purchases and their investments, that they're not actually able to get that in the current system.

And so there's this sense of disconnect. between the values many people hold and the outcomes that we're seeing. And part of the books says globalization matters and scale matters, but intermediation design is really kind of part of what we need to think about. And so there is the possibility that through technology, through different decisions, and significantly through better policymaking, because you really do, it's not, the individual opting out bears too great of a cost for that to be. That's part of the shift, but it's not going to be all of it.

but through new types of innovation and through policymaking that really takes these dynamics seriously, building up an alternative ecosystem, which doesn't try to destroy what we have right now, but it's sufficiently robust that we do have more of that meaningful choice. And in the ability to opt out, that in and of itself undermines a lot of the opportunism and kind of self-serving behavior in the ways that are most destructive and costly that the current system potentially allows and enables. So there is the possibility of a healthier, but I will say also I see a lot of signs of the opposite. I mean, I think it's just right now so easy to fall in to the most familiar patterns. And as you said, there's certain big actors. They have all our data. They're the

easiest ones. They're putting a huge amount into lobbying, a huge amount into protecting their power. And there's a lot to be said for the concern that the status quo doesn't just get maintained, but actually we see a continued growth of the outside power. So I think we're really at a pivot point of more of the same or consciously making more meaningful investments and realizing it took decades to get here, it's going to take decades a change of kind of like, how do we create more meaningful choice and a healthier balance?

So final question, is there a country, a place in the world that you think is starting to strike a better balance? I mean, Europe has certainly tried to do that in terms of internet regulation. Where would you point us to to try to search out some, if not best practices, is better practices? You know, I think we see it all over the world in pocket. I think when you open your eyes, it is already everywhere, right? I mean, I remember working part of this book wall is in Taiwan. And one of the things I love about Taiwan is particularly in the south where we were.

There's just so many of these small little food stands and small little creator. and you're interacting and you oftentimes are like you know it's like the front of their house and you see their families so like transparency like you know where that money's going right like you don't want to get them short because you see the impact in these very concrete ways and they're still like i mean they're an incredible producer or semiconductor so it's an incredibly productive country but where they're still incredibly thriving small businesses and where that is a lot of the ecosystem but i think we see that throughout small parts of the united states and Canada and in europe and there's a lot of areas where we're actually still oftentimes smaller areas, but not only smaller areas, where we see some of

those signs that are there. And I'd say some of the areas of hope are not within a particular jurisdiction, but also span jurisdictions. I mean, we still live in a world where wealth is so far from equally distributed that if all of the move to direct is more local, then you could just exacerbate some of the existing inequalities. So we have these really innovative entrepreneurs who are using their own kind of backgrounds that oftentimes span different parts of the world to create companies where consumers in North America or Europe can buy shay of butters, you know, and actually see, like, the way that the women are laboring to crack the nuts and to produce the shade that goes into them. And then really providing those

women kind of support that they need. We're seeing it with spices from India. So we have these, also these kind of new things coming up that are not just about in one place, but like, let's figure out how to create community and bridges that are new. Wow, that's a really, I think, key point to think about that. The technology can be used for good, as you say, it can allow you to go direct beyond the local to the global, but still maintain those very human connections, that kind of human reality of the genius of capitalism,

which is, in fact, lifting people out of poverty, but doing that in ways that's, again, much more grounded in who we are as people, our own values, our own ethic. So Catherine, Judge, thank you so much for spending this time with me today. Thank you. I really enjoyed the conversation. Well, thanks for listening to this installment of the monk dialogues. You can catch all of our podcast programs archived in one place, our website, triple-w-the-munk debates.com. Log on and check out not only great debates and dialogues like the one we just had, but in-depth and thoughtful conversations on some of the big issues of our time,

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