So the person in the market is unknown to you. He has something, you have something. You trade, life is good.
But how do you know when you give your money you'll get something? How do you know it's the thing you asked for? How can you be sure the trader isn't just trying to lure you back to some back room where you can be mugged or worse? While haggling at a bazaar can be great fun, there's a lot of risk involved. Financial transactions do not like risk. That's why we don't sell houses using the bazaar format.
I'd like to point out that houses sell and are bought for all kinds of reasons aside from price. So I believe your reply to be a little weak in that regard. Whatever the case, the position of "real estate agent" in our society confers all kinds of things. If the house is not the seller's, then you are covered. If the agent runs off with your down-payment, you are covered. If the agent knowingly misrepresents the house, you are covered. In fact, the idea is that the risk is reduced to simply: is it worth what I am paying for it? Financial markets like this.
There's no problem with multiple parties all having somewhat conflicting interests. Financial transactions occur when parties find some subset of aligning interests in which to trade around. Not total alignment -- that doesn't exist. Once you have enough alignment for a trade, you've got to reduce risk. Some of these cultures, for instance, refuse to use a banking system, believing it to be immoral. While I deeply respect the right of any individual to believe any dang thing he wants, cultures that do things like ban banking, private property rights, etc. greatly increase the risk during financial transactions. That's why I'd never get involved in Russia, for instance -- never can tell when the ruling party might decide just to take over your entire business. You can't have a highly-functioning society like that.
"How can you be sure the trader isn't just trying to lure you back to some back room where you can be mugged or worse?"
Like I said, I'd trust a Realtor more to not kill me (or perpetrate some other act of violence). Was just saying Realtor has much more financial incentive to screw me over in a legal, but still unkind, way.
"I'd like to point out that houses sell and are bought for all kinds of reasons aside from price. So I believe your reply to be a little weak in that regard. ... In fact, the idea is that the risk is reduced to simply: is it worth what I am paying for it?"
I totally agree that houses are bought for a number of reasons, but I was discussing the dimension involving getting the best price. If you love a house because it has fluffy pink toilet seats and are willing to pay any amount of money for that comfort, then you aren't getting screwed. On the other hand, if you live in the real world and have a maximum budget for a house, the realtor will always show you things just above your range, in the hopes you will splurge on it. Sure, you can find another realtor that won't do this, but most people won't. It's not illegal, and only slightly immoral, so I can't say I blame the realtor. They are just working within the system they are given to maximize personal gain, like anyone else. The problem I was pointing out is that the system is not well aligned with the needs of either the buyer or seller.
"Some of these cultures, for instance, refuse to use a banking system, believing it to be immoral. While I deeply respect the right of any individual to believe any dang thing he wants, cultures that do things like ban banking, private property rights, etc. greatly increase the risk during financial transactions. That's why I'd never get involved in Russia, for instance -- never can tell when the ruling party might decide just to take over your entire business. You can't have a highly-functioning society like that."
"Like I said, I'd trust a Realtor more to not kill me (or perpetrate some other act of violence). Was just saying Realtor has much more financial incentive to screw me over in a legal, but still unkind, way."
I'd rather have an equal playing field and do my own worrying about the realtor screwing me over than about my physical safety. The economy works great with people looking after their own financial interests, but not so well when things like contracts, personal safety, banking, or insurance bonds are non-existent.
Still like that idea of a bazaar being better than dealing with a professional in a western culture? From where I'm sitting it's not looking so hot. Remember -- the guy in the bazaar can still screw you the ways professionals in the west can -- but he can screw you in a lot more ways, too.
So the person in the market is unknown to you. He has something, you have something. You trade, life is good.
But how do you know when you give your money you'll get something? How do you know it's the thing you asked for? How can you be sure the trader isn't just trying to lure you back to some back room where you can be mugged or worse? While haggling at a bazaar can be great fun, there's a lot of risk involved. Financial transactions do not like risk. That's why we don't sell houses using the bazaar format.
I'd like to point out that houses sell and are bought for all kinds of reasons aside from price. So I believe your reply to be a little weak in that regard. Whatever the case, the position of "real estate agent" in our society confers all kinds of things. If the house is not the seller's, then you are covered. If the agent runs off with your down-payment, you are covered. If the agent knowingly misrepresents the house, you are covered. In fact, the idea is that the risk is reduced to simply: is it worth what I am paying for it? Financial markets like this.
There's no problem with multiple parties all having somewhat conflicting interests. Financial transactions occur when parties find some subset of aligning interests in which to trade around. Not total alignment -- that doesn't exist. Once you have enough alignment for a trade, you've got to reduce risk. Some of these cultures, for instance, refuse to use a banking system, believing it to be immoral. While I deeply respect the right of any individual to believe any dang thing he wants, cultures that do things like ban banking, private property rights, etc. greatly increase the risk during financial transactions. That's why I'd never get involved in Russia, for instance -- never can tell when the ruling party might decide just to take over your entire business. You can't have a highly-functioning society like that.