Capitalists Clean Up

Mike Schilling

Mike has been a software engineer far longer than he would like to admit. He has strong opinions on baseball, software, science fiction, comedy, contract bridge, and European history, any of which he's willing to share with almost no prompting whatsoever.

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33 Responses

  1. Oscar Gordon says:

    Oh FFS! For all capitalists whine about regulations, they sure are good at doing things that beg for more.Report

  2. Aaron David says:

    Using Capitalist in this situation is wrong, as it fundamentally misidentifies the employer and their mindset. They are mercantilists. They simply want to make money for themselves, not foster competition.Report

    • James K in reply to Aaron David says:

      The real issue here is that the term “Capitalist” itself it useless.

      Capitalism is a term created by socialists to describe all post-feudal, non-socialist economic orders. Trapped by the framework of the Marxist Dialectic the reasoned that you either had to be pro-society (socialist) or you had to be pro-capital (capitalist).

      But socialism is dead, and their stupid framework should be dead as well too. As it stands the old dialectic just gives rhetorical cover to corporations who want government to tip the scales in their favour. After all if the only options are socialism and being pro-corporation, and socialism is a failure, why not embrace pro-corporate laws?

      The distinction we need to be drawing here is pro-business vs pro-market. Markets thrive on competition, but businesses would rather do without it. This is the distinction Adam Smith made a focus of the Wealth of Nations, and it’s a distinction you can find throughout modern economics as well. But it’s a distinction that terms like “capitalist” conceals.Report

      • Saul Degraw in reply to James K says:

        The issue though is that plenty of people rush to the defense of Capitalism without making this distinction. Alleged Pro-market think tankers and business titans are united in their hate of the left. They all talk about the importance of Capitalism.Report

    • That makes them capitalists. Competition is supposed to be the result of the system; the individual players want to maximize profit and minimize risk.Report

      • Aaron David in reply to Mike Schilling says:

        It is supposed to be the result of capitalism, but using the gov’t to interfere via legal rules and regulations, imposed due to the companies political influence, takes it out of the idea of capitalism*. Absent the boot on the neck imposed by the gov’t, you would see competition.

        *I am with JamesK here, we shouldn’t be using a term coined by a discredited philosopher to denigrate things he didn’t understand. I would rather we used Economics or somesuch to describe something as natural as commerce.Report

        • Mike Schilling in reply to Aaron David says:

          The libertarian default is that all freely entered contracts are valid; it’s outlawing (or refusing to enforce) these damned things that would be “the boot on the neck”.Report

          • Aaron David in reply to Mike Schilling says:

            Calling this capitalism is as correct as calling Venezuela socialist. It makes a nice rallying cry but isn’t close to the truth. Allowing contracts to cover a period where the worker no longer is under the control of the employer is not capitalism. It is cronyism. And that is the boot of the gov’t.Report

            • Mike Schilling in reply to Aaron David says:

              It’s a freely entered contact (well, free unless you think the difference in economic power amounts to coercion, but that’s a liberal/leftist view). Refusing to allow adults to enter into them is nanny-statism. And the one function of government that libertarians agree on is enforcement of contracts.

              I mean, I agree with you that uncompensated noncompetes are evil. But our allies are on the left, mushy or otherwise; the Bryan Caplan’s of the world think they’re cool.Report

              • Aaron David in reply to Mike Schilling says:

                You are confusing Libertarianism with Capitalism. They aren’t synonymous. Nor are Libertarianism and Anarchy the same.

                Also, allowing one to enter or causing one to enter a contract that one has no provenance over is not Libertarianism. I can write a contract saying that my brother is going to clean your house, but that has no bearing on anything. Likewise, a contract that you have with me once you leave my employment.

                I can understand a compensated non-compete period, the keyword being compensated.Report

              • Mike Schilling in reply to Aaron David says:

                There’s nothing in contract law that prevents them from continuing to apply after a relationship ends, e.g. part of the tuition for a professional school being N% of your salary for M years after graduation.Report

              • I think “the boot of the gov’t” enters into it when and if the contract is enforceable by the government. If it is enforceable, then that’s when the “boot” is wrong. Even if it’s not enforceable, I think such contracts are wrong for most workers in most circumstances, because the workers in question probably won’t have the legal resources to advise them on what’s enforceable and what’s not.

                I agree with James K and Aaron David here in their warnings about the term “capitalism” and about not conflating “capitalism” with, say, libertarianism. I’m not sure I could define “capitalism,” but if I did, I’d describe it as a state of affairs or a way to organize an economy/polity and not as “freer markets” or “proto-democracy.” (I might be in a minority on this one. And there’s no shortage of apologists for something called “capitalism” who claim that it is indeed pro-competitive and even proto-democratic. So maybe I’m no-true-Scotsmanning things a bit.)Report

              • (((Of course, if I had bothered to read the article, or even the excerpt Mike quoted in the OP, I’d have known the company had actually commenced a suit against the worker. Whether the company would have retracted had the WaPo article not been written isn’t important. The fact they started the suit at all is reprehensible. Bu that underscores my other point about such non-compete agreements being mostly wrong: even if such an agreement isn’t enforceable, the attempt or threat to enforce it harms the workers enough already.)))Report

              • Mike Schilling in reply to gabriel conroy says:

                And they couldn’t have sued him if he hadn’t had to sign a noncompete in the first place; that he did is already a problem.Report

            • Saul Degraw in reply to Aaron David says:

              It is not because of the boot of the government. California is known for being very anti non-compete agreements. They are so because of a single section of the Business and Professions Code. Section 16600 states:

              “Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.”

              Here it is government preventing the use of non-competes quite effectively.Report

    • LeeEsq in reply to Aaron David says:

      Nearly everybody who goes into business does so to make a lot of money for themselves rather than practice some sort of free market capitalism as a spiritual discipline. Most people really into the idea of free market capitalism in its’ purest form do not run businesses at all. They work as academics. Oddly enough, socialism turned out the same way. The theoreticians ended up in academia and the practitioners in the field adopted more impure practices than the theoreticians wanted.Report

  3. Chip Daniels says:

    I am to the point of thinking we are trapped in the framework of the 20th century, where economic structures were assumed to be as determinative as the laws of physics.

    As in, the central determining factor of how a society turns out is economics, and economic structures work the same way everywhere and always.

    But it wasn’t always this way. People have only thought this way since around the 18th century. For example no one in the 15th century was arguing over whether the sewers should be private or publicly financed.

    And even our modern empirical evidence shows us that even nations with similar economic structures can have remarkably different outcomes.Report

    • A good exposition of Chip’s point is Alfred Chandler’s Scale and Scope (ca. 1990). Chandler’s main goal (in his work taken as a whole) is to document how some industries provide strong incentives for firms to organize themselves along hierarchical, bureaucratic lines. In that way, he’s often accused of being a technological determinist, or at least too single-focused on a certain type of firm.

      In Scale and Scope, however, he discusses how competition and firm structure differed in the US, UK, and Germany even though what he finds still (in his view) reaffirms his general claim about large, hierarchically defined enterprises (The time period, by the way, is roughly 1870 to 1914.)Report

  4. James K says:

    That sounds about right – our politics is stuck using a mid-industrial model to argue about how to improve a post-industrial society.

    I wonder how much of this is due to our media – our conception of the modern press evolved in the late 19th and early 20th Centuries.Report

    • Mike Schilling in reply to James K says:

      There’s nothing post-industrial about this. It could equally apply to factory or even agricultural labor.Report

      • Chip Daniels in reply to Mike Schilling says:

        Not for nothing, were the 18th century complaints about the aristocracy much the same as this, where they used their power to enact fees and taxes and favoritism to extract wealth from the peasants and colonials.

        And the counterargument was that the peasants were actually better off on average because of this arrangement, since the power of the state brought more economic activity than otherwise.

        In other words, we are having the same issues with the same arguments, but now we are tangled up in abstract ideology.Report

        • Rufus F. in reply to Chip Daniels says:

          I’m going to agree with this. The terms “socialism” and “capitalism” seem so overused and misused as to be worthless at this point. The old academic joke: “Sure, it works in practice, but does it work in theory?”

          I co-run a small business here and it’s been called “punk rock capitalism” before, which is fine but not accurate. I’d call it entrepreneurship. If that.

          I’m not really fond of “free market” versus “cronyism” for the same reason- they’re okay to a small extent, but really just ideological buzz words. We need a myriad of terms for businesses and for those social institutions that aren’t exactly businesses, and we keep getting stuck with these overly simplistic dialectics. it’s so simple and you just don’t get it! But it’s not simple. Life ain’t for wimps or theorists.Report

          • LeeEsq in reply to Rufus F. says:

            There are plenty of technically for profit businesses like famous department stores or sports teams that end up as cultural institutions that people emotionally invest in whether they like to or not. Its why there was so much hand-wrangling and crying when the Brooklyn Dodgers moved to Los Angeles, something that certain Baby Boomers and Silent Generation members feel some pain about. We really don’t have a term to deal with these institutional businesses but they exist.Report

  5. Most of us here at OT (or at least those who have commented so far) are probably against these non-compete agreements, especially as applied to lower-level workers. A point of discussion we should have, however, is what would a solution to the problem look like? Here are my thoughts:

    1. Create strict standards for when and how such agreements are allowable. I’m not sure what that would look like. But I’d say these agreements should be more allowable for someone like, for example, a high-level player (e.g., someone who earns six figures for a public-facing role in a company) than it would be for a lower level middle-income or lower-income employee. Maybe the criteria for allowability would be focused on some combination of the employee having formally acquired skills, the employee having some particularly highly in demand skills, the employee having a meaningful chance to be an equal party during the process of negotiating the agreement, the employer having some clearly identifiable and legitimate interest in curbing competition, and the length of the agreement being no longer than necessary to achieve any of the employer’s goals. (Maybe rules of this sort already exist, but perhaps they need to be tightened.)

    2. Make all non-compete agreements presumptively unenforceable. In other words, the employer would always have to shoulder the burden of proving that the agreement was allowable under whatever rules are listed in point no. 1.

    3. Make employers who push non-allowable agreements subject to a fine or other criminal sanction.

    4. Make employers who sue to enforce non-allowable agreements liable to pay all the expenses of the person being sued as well as treble damages for the employee’s lost work time.

    5. While I have many, many reservations about unions, I think union protection can somehow enter the mix here in empowering workers to resist such non-compete agreements.

    None of the above would be a panacea to the problem. But I think something like it would help address the problem.Report

    • Saul Degraw in reply to gabriel conroy says:

      The solution looks like California Business and Professions code section 16600:

      “Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.”Report

  6. Jaybird says:

    There are a handful of situations where a non-compete makes sense. Like, a handful.

    Pierce Brosnan, for example, is not allowed to wear a black-tie tuxedo in any movie that is not a Bond movie. (Remember that awful white tie he was wearing in the Thomas Crown Affair? That’s why!)

    I’m sure that I can come up with a list of examples that would get you to nod and say “yeah, I can see why a non-compete would be appropriate in that case.”

    That list would probably cover about 1% of the non-competes out there. Maybe less than 1%. In that other 99%, I don’t think that the non-compete should be recognized by the law.

    I’d be interested in hearing arguments against the proposition that more harm would be done by outlawing non-competes than keeping them.Report

    • gabriel conroy in reply to Jaybird says:

      On the other hand, Pierce Brosnan should never be allowed to sing [Safe for work but hard on the ear].Report

    • gabriel conroy in reply to Jaybird says:

      The reason I offered my convoluted comment above instead of advocating wholesale outlawing such agreements is partly my belief that non-compete agreements can sometimes be justified (say, in the examples you might point out), but it’s mostly my belief that outlawing them wholesale wouldn’t work, or that it wouldn’t be as simple as merely outlawing them.Report

      • Jaybird in reply to gabriel conroy says:

        Yeah, it probably wouldn’t be as simple as merely outlawing them…

        I mean, in that less than 1% of cases, it makes a lot of sense to have them.

        Like you said, “Make all non-compete agreements presumptively unenforceable” would probably work. In 99% (or more) of the cases, making them presumptively unenforceable would take them off of the table.

        Why in the heck should someone working at Subway sign a non-compete that would prevent them from working at Jimmy John’s?

        In the less than 1% of cases, though, they could probably come up with compelling reasons to keep them. Hey, it makes sense that Pierce Brosnan can’t wear a tux anymore.Report

    • dragonfrog in reply to Jaybird says:

      The only real case i can see for non competes is where the employee has knowledge of trade secrets. In which case hiring them away may be not really about getting their skills but basically the book keeping format for corporate espionage.Report

      • Alas, though: I fear the “trade secrets” idea can be abused, too, and in similar ways. (You’re not saying otherwise, but I wanted to put that out there.)

        Recently I read about an example of such abuse, but the details (and even whether it’s current or something that happened a while ago) are escaping me now.Report

      • This is certainly on the short list, and often extends down to surprisingly low levels. Proving theft of some trade secret tech for integrated circuits is much harder than proving violation of a non-compete that keeps the employee at arms-length from anything to do with ICs for two or three years. It is surprising how valuable some seemingly minor piece of information can be. Granted, there’s a fuzzy line between what’s a trade secret and what’s general knowledge gained by virtue of working in a specialized field.

        NDAs can have the same sort of problem. When I was doing technology intelligence and due diligence, I had a locked file drawer where I kept the NDAs I had signed and the material that they covered. I also kept, in each file, a paper trail that showed how much of that information I could have obtained from public sources. Same sort of fuzzy line — how much of the public information would I have collected and put the pieces together if I didn’t already know that they could be put together into something interesting?Report