7 ms·

Are non-competes somehow acceptable when the supply of potential employees is higher? If the answer to that isn't "Yes" it's clearly not a market failure. This

by DasIch 10y ago

Are non-competes somehow acceptable when the supply of potential employees is higher? If the answer to that isn't "Yes" it's clearly not a market failure. This isn't just theoretical by the way. There are quite a few cases of companies with non-competes forced on low-income employees often without them understanding the ramifications. Non-competes prevent competition and therefore stand fundamentally in opposition to a free(-ish) market. There is no reasonable response but to either ban them completely or force companies to pay employees an income for as long as the non-compete is in effect.

jessriedel 10y ago
> Are non-competes somehow acceptable when the supply of potential employees is higher? If the answer to that isn't "Yes" it's clearly not a market failure. > This isn't just theoretical by the way. There are quite a few cases of companies with non-competes forced on low-income employees often without them understanding the ramifications. There are many more kinds of market failures besides lack of competition. The one you suggest here is information asymmetry. https://en.wikipedia.org/wiki/Information_asymmetry https://en.wikipedia.org/wiki/Information_asymmetry > There is no reasonable response Uh oh. The folks who disagree with you aren't just wrong, they're unreasonable...
- st3v3r 10y ago
  If you believe that a company should be able to have any say whatsoever on what a person does after they've left the employ of that company, then yes, you are unreasonable.
  - marcoperaza 10y ago
    So let's say you're offered $500k a year to work on some cutting edge secret technology, something that improves the relevance of web search results by 50%. The company would be crazy to not have a noncompete. What else stops you from going to a competitor and applying everything you've learned to their product? You're basically calling for the effective end of most trade secrets, that aren't easily enforced directly. Alternatively, you'd have yourself take a huge paycut in exchange for the freedom to quit (or get fired) and live the life for a few years. Edit: I'm rate limited, but the replies below me claiming that China has no obligation to abide by our patents are mistaken. They've signed up to various treaties that do require them to respect American patents. They choose not to, and we mostly choose not to retaliate for it, for many reasons. Maybe we should.
    - sbov 10y ago
      What sort of hypothetical situations that would apply to an insignificant fraction of the work force will we attempt to accommodate to the benefit of corporations and the neglect of the VAST VAST majority of workers? If your scenario were what companies by in large used non competes for then I doubt anyone would have a problem. But in the meantime they're mostly using it to fuck people over en mass. Maybe if they behaved like adults, but in the modern business environment where anything legal is good, sometimes you need to take away the toys from entities that basically act like a bunch of toddlers.
      - marcoperaza 10y ago
        I used an extreme example to counter the argument that any such restriction is always unreasonable, which is what I was responding to. But there are reasonable restrictions for lower-pay workers too. E.g. requiring that your secretary not work at your direct competitors for two years after leaving. Secretarial jobs at your competitors are probably a tiny fraction of the whole market for those jobs. Replying here because I'm rate-limited: Because your secretary might know a great deal about your business strategy and plans.
        Daishiman 10y ago
        I see no reason why the secretary example isn't complete overreach.
        xenadu02 10y ago
        Executive non-compete agreements always include monetary compensation for the non-compete period. Peon (aka almost everyone reading HN) non-competes almost never include any kind of compensation. Companies rarely pay above-market rates or offer to pay anything during the non-compete period. They basically slip it into the employment agreement because they can. What's good for the goose is good for the gander, don't you think? In the legal world it's called "consideration", as in courts often invalidate contractual provisions or whole contracts unless there is some kind of consideration, and especially when the balance of power is tilted.
- DasIch 10y ago
  Information asymmetry isn't a market failure, it causes market failures. The second sentence of the article you linked explains that. I'm sure reading further you'll find more information on the topic. The same goes for lack of competition. There also aren't many kinds of market failures. The market fails when goods aren't efficiently allocated, this and only this is a market failure. May I suggest you learn about economics 101 before trying to discuss it?
  - jessriedel 10y ago
    You're arguing semantics (actually, more like grammar) and didn't respond to the substance of my comment.
  - reitanqild 10y ago
    Your last sentence probably is the one that attracts the downvotes.

by DasIch 10y ago

jessriedel 10y ago

> Are non-competes somehow acceptable when the supply of potential employees is higher? If the answer to that isn't "Yes" it's clearly not a market failure. > This isn't just theoretical by the way. There are quite a few cases of companies with non-competes forced on low-income employees often without them understanding the ramifications. There are many more kinds of market failures besides lack of competition. The one you suggest here is information asymmetry. https://en.wikipedia.org/wiki/Information_asymmetry https://en.wikipedia.org/wiki/Information_asymmetry > There is no reasonable response Uh oh. The folks who disagree with you aren't just wrong, they're unreasonable...

st3v3r 10y ago
If you believe that a company should be able to have any say whatsoever on what a person does after they've left the employ of that company, then yes, you are unreasonable.
- marcoperaza 10y ago
  So let's say you're offered $500k a year to work on some cutting edge secret technology, something that improves the relevance of web search results by 50%. The company would be crazy to not have a noncompete. What else stops you from going to a competitor and applying everything you've learned to their product? You're basically calling for the effective end of most trade secrets, that aren't easily enforced directly. Alternatively, you'd have yourself take a huge paycut in exchange for the freedom to quit (or get fired) and live the life for a few years. Edit: I'm rate limited, but the replies below me claiming that China has no obligation to abide by our patents are mistaken. They've signed up to various treaties that do require them to respect American patents. They choose not to, and we mostly choose not to retaliate for it, for many reasons. Maybe we should.
  - sbov 10y ago
    What sort of hypothetical situations that would apply to an insignificant fraction of the work force will we attempt to accommodate to the benefit of corporations and the neglect of the VAST VAST majority of workers? If your scenario were what companies by in large used non competes for then I doubt anyone would have a problem. But in the meantime they're mostly using it to fuck people over en mass. Maybe if they behaved like adults, but in the modern business environment where anything legal is good, sometimes you need to take away the toys from entities that basically act like a bunch of toddlers.
    - marcoperaza 10y ago
      I used an extreme example to counter the argument that any such restriction is always unreasonable, which is what I was responding to. But there are reasonable restrictions for lower-pay workers too. E.g. requiring that your secretary not work at your direct competitors for two years after leaving. Secretarial jobs at your competitors are probably a tiny fraction of the whole market for those jobs. Replying here because I'm rate-limited: Because your secretary might know a great deal about your business strategy and plans.
      - Daishiman 10y ago
        I see no reason why the secretary example isn't complete overreach.
      - xenadu02 10y ago
        Executive non-compete agreements always include monetary compensation for the non-compete period. Peon (aka almost everyone reading HN) non-competes almost never include any kind of compensation. Companies rarely pay above-market rates or offer to pay anything during the non-compete period. They basically slip it into the employment agreement because they can. What's good for the goose is good for the gander, don't you think? In the legal world it's called "consideration", as in courts often invalidate contractual provisions or whole contracts unless there is some kind of consideration, and especially when the balance of power is tilted.
DasIch 10y ago
Information asymmetry isn't a market failure, it causes market failures. The second sentence of the article you linked explains that. I'm sure reading further you'll find more information on the topic. The same goes for lack of competition. There also aren't many kinds of market failures. The market fails when goods aren't efficiently allocated, this and only this is a market failure. May I suggest you learn about economics 101 before trying to discuss it?
- jessriedel 10y ago
  You're arguing semantics (actually, more like grammar) and didn't respond to the substance of my comment.
- reitanqild 10y ago
  Your last sentence probably is the one that attracts the downvotes.