#1 Yes non-compete clauses benefit monopolies and hurt employees -- very rich employees, the super-stars. Don't waste your time on them.
#2 There's a myth that "busting monopolies" is the answer to monopoly capitalism because ... Teddy Roosevelt! That's just wrong. After breaking up Standard Oil (actually it was Taft that did the job for him) a few years later he concluded --That didn't work; all the pieces are colluding tacitly and making just as much, maybe more.
#3 Around that time we learned from the electric industry that monopolies have a good side (wait, I'll get to how Teddy fixed the bad side). There were sometimes 4 power companies building power lines down the same street. This made a dangerous expensive mess. Now you notice, this is Never the case. We make sure to have monopoly power companies at least for delivering power.
#4 But monopolies are still a problem and fixing that was TR's big accomplishment that you don't hear about because it doesn't sound as cool as busting the big banks (which he didn't). His answer was to regulate them, and he put in place the apparatus needed to collect the info to regulate them. That's still going strong (I forget, but is it the FTC?)
#5 Maybe you like socialism. Why? Because that has the efficiency of monopoly plus complete regulation. Now I'm not advocating that. But my point is Monopolies can (not always) have huge efficiencies. So we regulate electricity, water, most road building, etc.
#6 Regulation can be done very badly, and it's tricky, but don't forget it. That's what TR was most proud of doing, Not Busting Monopolies
This is not wrong, but it is basically an ad hominem attack, and not appropriate for Persuasion. Teddy, did have a big ego and crave attention. But he was also an unusually decent and dedicated human being, which is opposite to Trump.
Government regulation, however necessary, does have the effect of reducing competition by raising the bar for entry into the marketplace. This is true in mature industries and especially true in highly regulated industries such as pharmaceuticals in which the costs of coordinating product development and manufacture with regulatory compliance become prohibitively expensive for all but the largest companies. Government regulation is necessary especially for industries like pharmaceuticals, medical devices, pesticides and aircraft manufacture, but we have to recognize that small companies find it almost impossible to bring a product to market in these industries without at least partnering with a major player.
Although eliminating non-compete agreements may be justified by increasing competition for workers, I do not understand how the move would increase competition in the marketplace for goods and services.
#1 The predecessor of the FTC, the Bureau of Corporations, Feb 14, 1903, is what I was thinking of. Check Wikipedia. TR did that and gets the credit!
#2 No I am not conflating utilities with monopolies. I have a Ph.D. in Econ from UC Berkeley, and I worked in the area of regulating and deregulating elect. utilities. They happen to be excellent examples of "network industries" which often need regulating and can easily become monopolistic. They were at the center of the debate over "natural monopolies" around 1900. And the whole debate over turning them into utilities revolved around whether we should leave them competitive or make them monopolies and regulate them. They are now private corporations with extreme monopoly power. So we regulate that away.
#3 As to TR, Check Wikipedia (at least): "For his aggressive use of the 1890 Sherman Antitrust Act, compared to his predecessors, Roosevelt was hailed as the "trust-buster". But in reality he was more of a trust Regulator."
#4 You might spend some time wondering if Google, Amazon and Facebook might have similarities to network industries. Amazon has incredible efficiencies because it can run one truck down your street and do ~80% of the package deliveries. If 5 companies were doing that it would take 5 times the gas and C02. Regulation might make more sense than busting them up for the same reason we did that with power lines.
Unless I missed it, did the article state how far down the chain this goes in that as a small businessman owning a medical practice my non-competes were absolutely necessary as would be true for many small to medium sized professional groups where the employees get a bunch of my long term clients at my behest and it would be unfair that they could then leave and take them with them. That was why I had a non compete limited to 50m radius and one year.
I am very much against noncompetes- for most. However one of the arguments in favor of certain non compete clauses is to protect intellectual property. When a migratory employee with proprietary knowledge of how a better mousetrap is built goes to work for a new company and shares it, arguably both are engaged in industrial espionage. This article blithely fails to address that crucial sticking point.
#1 Yes non-compete clauses benefit monopolies and hurt employees -- very rich employees, the super-stars. Don't waste your time on them.
#2 There's a myth that "busting monopolies" is the answer to monopoly capitalism because ... Teddy Roosevelt! That's just wrong. After breaking up Standard Oil (actually it was Taft that did the job for him) a few years later he concluded --That didn't work; all the pieces are colluding tacitly and making just as much, maybe more.
#3 Around that time we learned from the electric industry that monopolies have a good side (wait, I'll get to how Teddy fixed the bad side). There were sometimes 4 power companies building power lines down the same street. This made a dangerous expensive mess. Now you notice, this is Never the case. We make sure to have monopoly power companies at least for delivering power.
#4 But monopolies are still a problem and fixing that was TR's big accomplishment that you don't hear about because it doesn't sound as cool as busting the big banks (which he didn't). His answer was to regulate them, and he put in place the apparatus needed to collect the info to regulate them. That's still going strong (I forget, but is it the FTC?)
#5 Maybe you like socialism. Why? Because that has the efficiency of monopoly plus complete regulation. Now I'm not advocating that. But my point is Monopolies can (not always) have huge efficiencies. So we regulate electricity, water, most road building, etc.
#6 Regulation can be done very badly, and it's tricky, but don't forget it. That's what TR was most proud of doing, Not Busting Monopolies
This is not wrong, but it is basically an ad hominem attack, and not appropriate for Persuasion. Teddy, did have a big ego and crave attention. But he was also an unusually decent and dedicated human being, which is opposite to Trump.
If you're interested in the issue of monopolies, Matt Stoller's blog Big is really good: https://mattstoller.substack.com/
Government regulation, however necessary, does have the effect of reducing competition by raising the bar for entry into the marketplace. This is true in mature industries and especially true in highly regulated industries such as pharmaceuticals in which the costs of coordinating product development and manufacture with regulatory compliance become prohibitively expensive for all but the largest companies. Government regulation is necessary especially for industries like pharmaceuticals, medical devices, pesticides and aircraft manufacture, but we have to recognize that small companies find it almost impossible to bring a product to market in these industries without at least partnering with a major player.
Although eliminating non-compete agreements may be justified by increasing competition for workers, I do not understand how the move would increase competition in the marketplace for goods and services.
Dear Erik,
#1 The predecessor of the FTC, the Bureau of Corporations, Feb 14, 1903, is what I was thinking of. Check Wikipedia. TR did that and gets the credit!
#2 No I am not conflating utilities with monopolies. I have a Ph.D. in Econ from UC Berkeley, and I worked in the area of regulating and deregulating elect. utilities. They happen to be excellent examples of "network industries" which often need regulating and can easily become monopolistic. They were at the center of the debate over "natural monopolies" around 1900. And the whole debate over turning them into utilities revolved around whether we should leave them competitive or make them monopolies and regulate them. They are now private corporations with extreme monopoly power. So we regulate that away.
#3 As to TR, Check Wikipedia (at least): "For his aggressive use of the 1890 Sherman Antitrust Act, compared to his predecessors, Roosevelt was hailed as the "trust-buster". But in reality he was more of a trust Regulator."
#4 You might spend some time wondering if Google, Amazon and Facebook might have similarities to network industries. Amazon has incredible efficiencies because it can run one truck down your street and do ~80% of the package deliveries. If 5 companies were doing that it would take 5 times the gas and C02. Regulation might make more sense than busting them up for the same reason we did that with power lines.
Cheers,
Steve
Unless I missed it, did the article state how far down the chain this goes in that as a small businessman owning a medical practice my non-competes were absolutely necessary as would be true for many small to medium sized professional groups where the employees get a bunch of my long term clients at my behest and it would be unfair that they could then leave and take them with them. That was why I had a non compete limited to 50m radius and one year.
Several good points and there are historical examples as the Western Pacific Railway Company. However, a even better solution is decentralizion of economy and governance. The USA needs more federalism, smaller national government and more local initiatives https://vladanlausevic.medium.com/sharing-green-economy-a-case-for-green-cryptocurrencies-and-decentralized-climate-actions-b817f238354f
I am very much against noncompetes- for most. However one of the arguments in favor of certain non compete clauses is to protect intellectual property. When a migratory employee with proprietary knowledge of how a better mousetrap is built goes to work for a new company and shares it, arguably both are engaged in industrial espionage. This article blithely fails to address that crucial sticking point.