I think this was outlined in the first Freakonomics book.
I am constantly fascinated that most recruiters are doing such poor jobs -- examples include bad matching (oh you got java on your CV, do you want this web designer job, it mentions javascript) -- as this is a role that can be eliminated, I would think they would really try to add value, to avoid being replaced by a website.
It is in the 1st Freakonomics book. The post is obviously bait to get traffic.
Recruiters are a middleman; they get approached by people offering jobs, and by people wanting jobs. Some are better than others, just like in every industry.
Not everyone looking for a job is visible to all employers, and vice versa - recruiters fill that gap.
This is very likely a function of recruiters dealing with HR departments or hiring managers who are merely trying to fill a seat with a warm body. Market dynamics work to the extent that the incentive structure is aligned with the "correct" interests. Where incentives diverge, suboptimal results can be expected.
To add my own experience to this thread, recruiters have always come off as used-car-salesmen-y to me. I have been hiring developers for nearly a decade now, and I have yet to think of a reason to use recruiters. They offer rather expensive terms( 30-40% )in exchange for poor candidates( generally cannot even reason about fizzbuzz, let alone implement it ).
I have always had spectacular luck finding candidates on IRC and craigslist.
I am constantly fascinated that most recruiters are doing such poor jobs -- examples include bad matching (oh you got java on your CV, do you want this web designer job, it mentions javascript) -- as this is a role that can be eliminated, I would think they would really try to add value, to avoid being replaced by a website.