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> I don't understand why there's so many people in the comments defending non-competes. They have literally no value to society, or to individual employees. To

by tjic 10y ago

> I don't understand why there's so many people in the comments defending non-competes. They have literally no value to society, or to individual employees. To go meta for a moment: I think that this sort of statement exposes a flaw that many of us have in debates. It's related to the "argument from ignorance" fallacy, but is not exactly the same thing. I take it as one of my priors that people at news.yc are intelligence. When lots of intelligent people argue for X, and X makes no sense at all for you, you should ponder with some real seriousness that perhaps N intelligent people are not insane, but, instead, you are missing something. In this case, you say "They have literally no value to society". This is not an argument. This is a conclusion, or an axiom. Let me explain why I think non-competes are a good thing: 1) deontological: freedom to contract is always a good thing. It is a human right, and government has no legitimate moral power to remove that right from people. 2) Hayekian / information theoretic: I have local knowledge regarding both my costs and my benefits from signing a non-compete contract. Government legislators and bureaucrats, at some great remove, has almost no knowledge of either my costs or benefits. 3) pragmatic (overlaps #2): perhaps I am desperate to break into career field X and would pay almost anything to get in. Or perhaps my skills are much lower than other competitors. What can I offer employers that my peers can not? My willingness to sign a non-compete. Or perhaps I know that I will be moving in three years, and thus a geographic non-compete has no downside to me. Etc. > you have literally no incentive to support non-competes...There is no rational basis...mystic powers Your entire approach here is quite arrogant. Consider, for a moment, that the other people on news.yc are not idiots.

nothrabannosir 10y ago
1) deontological: freedom to contract is always a good thing. It is a human right, and government has no legitimate moral power to remove that right from people. That's not a strong argument either. You could substitute "contract" with anything. I say this as a staunch libertarian. Government restrictions aren't bad because "government", but because restrictions. The free market works best when government restricts the freedom to restrict freedom. That's why cartels being illegal is good (they restrict competition), bans on insider trading are good (they restrict fair competition), etc. Non-compete restricts the freedom on the labor markets. If you let people do anything they want because freedom, you don't actually get freedom.
- supercanuck 10y ago
  I am in favor of banning non competes, but only because we lack the freedom due to lack of competition. I think the evidence of that is when Jimmy John's can have force fast food workers to sign them. To me it seems, banning non-competes, will create more competition.
- jedrek 10y ago
  The logical conclusion of a regulation-free system is of corporations large enough to destroy competition before it starts.
  - omouse 10y ago
    That's not the logical conclusion. Have you ever seen a large corp and how inefficient they are? The only reason they can remain large is because they can afford to buy politicians and legislation to keep their competitors small. Big Corp creates new regulations to protect their business, the most clear examples are in telecommunications and the music/movie/copyrightable industries. If we removed more regulations today, the big corps would try and place them back to destroy their competition.
    - jandrese 10y ago
      It doesn't really matter how inefficient you are if you have the cash to buyout any potential competitors before they have a chance to threaten your bottom line. In a purely capitalist society wealth (power) accumulates at the top. Money creates money so whomever starts out with the most money tends to win. This is why highly capitalist societies turn into Dubai, with an ultra rich ruling class and a serf/slave class with little in between.
      - selestify 10y ago
        Seriously, has no one on here heard of the Gilded Age? Of anticompetitive practices by Standard Oil before regulation was brought in?
dozzie 10y ago
1) and 2) both go out of the window if you add to the equation this little fact that company almost always has an upper hand over a single (soon-to-be) employee. Freedom of contract would be "always a good thing" if the parties held the same power in their relationship.
jhardcastle 10y ago
The fact that the grandfather comment is the top-rated comment (as of this writing) in the thread to me suggests that a great number of people agree with him/her, which sort of contradicts your "argument from ignorance" point. Just because thousands of HN readers are intelligent engineers, founders, scientists, marketers, etc. doesn't make them legal experts, or political experts. You assume that "freedom to contract" means that both parties enter with equal knowledge and equal bargaining power. In an environment with high unemployment (like we were not to long ago) it could mean that employees would jump at any job they were offered, out of necessity, even if it came with a nasty non-compete. Government regulators can look at an overall picture and see that, statistically, in great numbers, there are overarching problems with the non-competes, like their being used with employees who don't have trade secrets.
- tjic 10y ago
  My "argument from ignorance" comment seems pretty rock solid, given that the original comment began with the words "I don't understand why..." That is literally the definition of an argument from ignorance.
  - viewer5 10y ago
    He's saying "I don't understand why..." shouldn't be followed with a conclusion or statement (here, "They have literally no value to society"). That it should instead be followed with "could someone please explain this?"
- tjic 10y ago
  > You assume that "freedom to contract" means that both parties enter with equal knowledge and equal bargaining power. No, it doesn't. I'm Hayek-friendly, so I don't think two entities EVER have the same knowledge. "Freedom to contract" no more implies equal knowledge than "freedom to drink" implies equal knowledge of brewing, or "freedom to date" implies equal attractiveness.
  - cmdrfred 10y ago
wccrawford 10y ago
Non-competes do have value to employers. But if they really don't have value to employees or society, what exactly is he supposed to argue with? There's no way to prove the non-existence of something. He could prove they're detrimental in some way, but that's different than proving that they have no positive aspect for those groups. It sounds to me like he has already stopped and pondered it, and came away with nothing. Then he posted here, offering people a chance to correct his ignorance. So far as I can tell, he's done everything correctly.
quantumhobbit 10y ago
1) There are limits to the freedom to make contracts. I can't sell myself into slavery and that is a good thing. 2) maybe I have better information than the government, but my potential employer has better information than either of us. I won't have a better picture of the local employment market than a business so I will easily get swindled. 3) allowing the desperate to sign a contract no wants to sign leads to a race to the bottom where everyone has to sign a non-compete. How can I refuse to sign if 99% of applicants will sign even if I am the best applicant? They will just say no to me and take the #2 applicant. The only way to fight non-competes here would be a union to form collective bargaining at which point we have lost the ability to make our own contracts as individuals entirely.
tristor 10y ago
> Your entire approach here is quite arrogant. You're right, it was unintentional but I can see how what I wrote could be perceived this way. My apologies. I am clearly acknowledging the intelligence of other posters by attempting to make a clear case for my position. If I did not believe that other posters were intelligent I would not engage in the discussion at all. > 1) deontological: freedom to contract is always a good thing. It is a human right, and government has no legitimate moral power to remove that right from people. Freedom to contract implies that both parties to the contract have bargaining power. In an employee/employer relationship this is mostly untrue. The only bargaining power that the employee has is simply to walk away. Legally any term of a contract is supposed to be met with "due consideration". In an employment contract, typically the offer of employment is treated as "consideration". I argue that a non-compete is so onerous as to require additional consideration beyond a mere offer of employment, however this is rarely if ever given. As an employee you may only choose to accept it or walk away, unless you individually have some unique position which grants you bargaining power. While I am generally opposed to government regulation, if we had an absence of all regulation it leads to less freedom for individuals, not more. Or rather, it leads to less freedom for the majority of individuals in favor of more freedoms for a small number of individuals. This is not beneficial to society, and thus this argument does not refute my statement "They have literally no value to society." > 2) Hayekian / information theoretic: I have local knowledge regarding both my costs and my benefits from signing a non-compete contract. Government legislators and bureaucrats, at some great remove, has almost no knowledge of either my costs or benefits. This is possible, but isn't a societal argument. This is an argument that says there may be value to you as an individual employee due to local knowledge, but it doesn't mean there's a larger value to society. I accept that it's possible to have local knowledge that gains you a benefit from the non-compete. Such as: You have some special skill that is required by the employer. You are one of the few people with that skill. The employer both /must/ hire you and /must/ keep the non-compete in the contract. This provides you local knowledge which could allow you to bargain for an outsized salary or bonus compared to others in your field, or to get special severance arrangements to counter-balance the non-compete. In this case, it might be possible that the insistence of the employer on the non-compete provides you individual value. Although, I'd also argue that the terms of the non-compete are not valuable to you, it's the fact your opponent in the negotiation won't let it go and your knowledge of what that is worth that lends it value. In either case, it doesn't give it value for society as a whole, so this does not refute my statement "They have literally no value to society." > 3) pragmatic (overlaps #2): perhaps I am desperate to break into career field X and would pay almost anything to get in. Or perhaps my skills are much lower than other competitors. What can I offer employers that my peers can not? My willingness to sign a non-compete. Or perhaps I know that I will be moving in three years, and thus a geographic non-compete has no downside to me. Etc. In this case, your desperation as an individual implies you don't have the bargaining power necessary to negotiate a contract fairly. Your willingness to agree to a coercive term is a sign of desperation, not value. This argument establishes neither a societal value or an individual value to the terms of the non-compete. If your skills are lower than your peers, then other employers are less likely to hire you away. If the company hiring you is trying to get you to agree to a non-compete because they intend to train you to increase your skills, then a fairer method would be to increase your compensation as your skills increase with the understanding that your increased skills increase your value as an employee. The non-compete is unnecessary and exists again only to provide coercive action against you. This argument neither establishes a societal value or an individual value for the non-compete. If you know you're moving in three years and the terms of the non-compete are strictly geographic, then you have local knowledge which means the non-compete cannot harm you. It doesn't provide any additional value you for you, but you've managed to nullify its downsides for you individually. I'll concede this one neutrally on an individual level that this provides some level of local knowledge (in the vein of your 2nd argument) that assists you in contract negotiation. This argument though fails to establish a societal value. Again, this argument fails to refute "They have literally no value to society." I cannot prove a negative, but I spent quite a bit of time thinking about why they exist before I wrote my original post. I could not come up with any reason why non-competes are valuable to society. I could not come up with any reason why they are valuable to employees. I could only come up with reasons why they might be valuable to an employer and narrow cases where an employee might use them as a bargaining chip but only in a way which nullifies their downsides. There is no upside to an employee for a non-compete. None. They restrict freedom of movement in the labor market and arguably lower the overall innovative output of a society. I reiterate my original statement. "They have literally no value to society."
coldtea 10y ago
>To go meta for a moment: I think that this sort of statement exposes a flaw that many of us have in debates. It's related to the "argument from ignorance" fallacy, but is not exactly the same thing. I take it as one of my priors that people at news.yc are intelligence. When lots of intelligent people argue for X, and X makes no sense at all for you, you should ponder with some real seriousness that perhaps N intelligent people are not insane, but, instead, you are missing something. That's a strawman, since it assumes that only insanity or ignorance makes people favor a position that's bad for the general public. There are much more probable causes for such a view, such as personal interests. >1) deontological: freedom to contract is always a good thing. It is a human right, and government has no legitimate moral power to remove that right from people. This is not an argument. This is a conclusion, or an axiom. ("Because human rights" are not an argument either. See where how deep this rabbit hole goes?). Second, it can be argued that freedom to contract is NOT "always a good thing". It's a good thing only when one side is not far more powerful than the other to the point of forcing the contract. When one side is coerced to sign (because e.g. else they cannot find employment in SV because all employers require non-competes), then it's not a freely chosen contract clause anymore, nor a free job market. Third, even if freedom of contract was "always good", still what's good thing for an individual, is not necessarily a good thing for society. Stealing and cheating, for example, can be good for the person doing it, but it's not good for society (and even less so in many people start doing it). >2) Hayekian / information theoretic: I have local knowledge regarding both my costs and my benefits from signing a non-compete contract. Government legislators and bureaucrats, at some great remove, has almost no knowledge of either my costs or benefits. That's a naive view that assumes government as some removed from society enemy entity. In a democracy a government is the representation (imperfect as most human creations are) of the will of the people, and laws are based on historical experience and reasoned arguments, with input from people "in the field" in drafting them. Also, government has much more complete information and view of the overall societal cost of non-competes, whereas you as individual mostly have your local knowledge to go by and personal gain as your guide (assuming of course you're freely entering the contract out of calculation, and not because employers have created a trust on the issue, and you are left with no other option). >3) pragmatic (overlaps #2): perhaps I am desperate to break into career field X and would pay almost anything to get in. Or perhaps my skills are much lower than other competitors. What can I offer employers that my peers can not? My willingness to sign a non-compete. Or offer to have sex with them. This rabbit hole also goes very far...
teh_klev 10y ago
> Your entire approach here is quite arrogant. Seriously? There's nothing arrogant about the OP's post which expresses dismay that others as employees (not founders or CEO's) would support having such restrictions put on their careers. > Consider, for a moment, that the other people on news.yc are not idiots Parent didn't accuse anyone of being idiots, nor did they frame their concern in terms of intelligence or likewise.. Your post is thought provoking, but you ruin it in those last two sentences.
EliRivers 10y ago
freedom to contract is always a good thing. I disagree. In an unbalanced relationship, the more powerful can take advantage of their power and impose contracts that leave the less powerful significantly worse off. If your choice is, for example, to contract to surrender your statutory rights or be unemployed, the freedom people have is the freedom to be worse off or much worse off. I wouldn't say this is a good thing. We rely on government and (if we're lucky) unions to prevent this freedom.
RodericDay 10y ago
The "flaw" you talk about here has an exact opposite, which is a reactionary knee-jerk defense of the status quo just because it must have been arrived to optimally. Often called "Panglossianism" as per Voltaire's character in Candide: > Dr. Pangloss was the pedantic old tutor in Voltaire's satirical novel Candide. Pangloss was an incurable, albeit misguided, optimist who claimed that "all is for the best in this best of all possible worlds." So persistent was he in his optimism that he kept it even after witnessing and experiencing great cruelty and suffering. The name "Pangloss" comes from Greek pan, meaning "all," and glossa, meaning "tongue," suggesting glibness and talkativeness. The idea that there's always a good reason for every societal practice that we currently observe is arrogant too, just in a different way.
- HarryHirsch 10y ago
  The alternative way of looking at it is that there is a good reason for many of the societal practices we observe - it's just that it's not you who profits. Considering the number of defenders of non-competes, it seems that the propaganda works very nicely.
panglott 10y ago
The Jimmy John's burger flippers had the power to individually negotiate their contracts? Here your #2 conflicts with your #3. If a person is so desperate to find entry-level minimum-wage work that she would pay any price to do so, then she doesn't actually have the freedom to negotiate contracts.
jedrek 10y ago
> freedom to contract is always a good thing Hardly. Freedom to contract would be a good thing if we could assume that the sides stand on more or less equal footing, which is almost unheard of in the case of corporations and people.
Avshalom 10y ago
In addition to every one else: >I have local knowledge regarding both my costs and my benefits from signing a non-compete contract. No, you don't. The non-competes don't cost you anything until an uncertain time in the future. Unless you can predict the labor market that will exist when/if you leave the company (and you can't) you can't actually know what the cost will be.
hitekker 10y ago
This reads like someone who feels that while they were studying the works of Ayn Rand, the rest of the world was eating Oreos and watching Jersey Shore.
- eli_gottlieb 10y ago
  Aren't those roughly equivalent activities?
  - unclenoriega 10y ago
    I don't know. I'd rather be fat and entertained than an asshole.
omouse 10y ago
First you're assuming a certain level of intelligence and then using that to argue from authority; that the arguments put forth on news.yc are somehow "better" because of this assumed intelligence of the news.yc commenters. I'm sorry but each comment and argument must stand on its own merits and the facts, it cannot rely on the supposed intelligence of the commenters. Now let's get down to the real business of your arguments. > Freedom to contract is always a good thing This is only true if the people signing the contract are not coerced, whether by force or by poverty into signing that contract. > Freedom to contract is a human right So then you agree that it's a human right when it's not coerced yes? > Government has no legitimate moral power to remove that right from people It does if you follow the social contract. It does not remove the right but it does impose restrictions that follow from other human rights. It definitely has a legitimate moral power to impose restrictions. Whether you consider governments in general to be legitimate or moral is up to you but in this case? We have loads of precedent showing that in certain cases it has been absolutely necessary for governments to impose restrictions on contracts. Not to mention that we have courts, which you do not address. Are courts the only place where the judge or jury of your peers has a legitimate moral power to remove or impose restrictions on contracts? > I have local knowledge regarding both my costs and my benefits from signing a non-compete contract. Quite an assumption to make. > Government legislators and bureaucrats, at some great remove, has almost no knowledge of either my costs or benefits. I can agree with this though it would have to be supported; they do collect all sorts of data so they may have some knowledge, greater than "almost no knowledge". The argument against non-competes is that they place limits on freedom of speech and freedom of expression. They put a limit on employment options as well and are harming my future earnings which are very much real in contrast to the imaginary losses. Willingness to sign a non-compete is not a competitive advantage for employees, it's the equivalent of saying "I am willing to be treated like a slave" or "I will work for free". It's degrading and violates fundamental human rights. You cannot be in support of less restricted commerce and still support non-competes. You cannot be in favour of fundamental human rights and still support non-competes which take away or immensely restrict those rights. Your arguments, in the end, contradict one another. I will not comment on the arrogance of your approach here.
drewcrawford 10y ago
> 1) deontological: freedom to contract is always a good thing. A good thing for whom? It is good for lawyers and others who benefit from writing contracts. Imagine for a moment a world in which you sign a non-compete before ordering a burger. It sounds silly, but sillier clauses are signed in order to purchase far cheaper consumer goods every day. Is the world really a better place because two parties are hypothetically able to achieve their longtime dream of finally combining a legal instrument and a sandwich? Are you excited that you "have local knowledge" and are ready to exploit this knowledge to review legal terms with counsel before ordering your burger OR is this hypothetical benefit dwarfed by a very real huge volume of people who aren't going to hire a lawyer to negotiate a contract of adhesion for a $10 purchase when under social pressure while they're dining with someone else? Freedom to contract is not always a social good. It introduces complexity, and complexity creates friction which prevents people from participating optimally in a market and prevents the market from clearing. Contract innovation is not optimal for the burger market. What is optimal is common law, which is mostly the same everywhere so that an entire society understands how it works. It's how the police know what to do when facing a diner who didn't pay their bill, it's how you know what to do when the order is wrong, it's how a business can hire employees who know all this stuff without training them on custom procedure. Standardization is optimal for the vast, vast majority of transactions, so that people can get on with whatever they do when they're not negotiating legal instruments. The benefit of designing something bespoke for some marginal case is dwarfed by the cost of increased complexity of the transaction and the deviation from the established standard. If you believe that job contracts are so positive and innovative, insist on reviewing one as a condition of doing an interview. If it is really about local knowledge, surely it will be positive for all involved to develop that knowledge early and comparison shop. In reality people will look at you funny and probably decline, because the real function of that contract is to appear after you've decided to take the job and exploit social pressure in order to get a stronger deal for the company.
eli_gottlieb 10y ago
>When lots of intelligent people argue for X, and X makes no sense at all for you, you should ponder with some real seriousness that perhaps N intelligent people are not insane, but, instead, you are missing something. Intelligence is just the ability to precisely handle complex intellectual structures. It doesn't make those structures meaningful or accurate. What's that quote again? Ah, googling found it. “I make mistakes like the next man. In fact, being--forgive me--rather cleverer than most men, my mistakes tend to be correspondingly huger.”
bluecalm 10y ago
Your arguments could be used against worker protection laws as well: 14hours/day workdays, lack of safety regulations. You could even import some slaves from poor countries, many people will sign up as working on a plantation for food and shelter is better than starving. I think history shows that this kind of thinking leads to bad outcomes. The main reason is that there is power unbalance between employers and would be workers. In natural state of the world the workers would just take resources by force and share. As we are guaranteeing that this won't happen (by enforcing property laws) we need to give something back as well to people in worse negotiating position (worker rights, minimum wage, some contracts being illegal are all example of it). -
logfromblammo 10y ago
Freedom to contract is unlimited. You can draw up a contract with any terms you can imagine. Limited government has limited power to enforce contracts. Take, as an example, an assassination contract. You can write one up and sign it. If you or your hit man later breach the contract, you cannot sue each other in any civilized government's civil courts. You may, however, be able to engage a black-market arbiter to resolve your dispute, and that arbiter may allow terms of the contract that are otherwise illegal to be considered in rendering their judgment. This is, in effect, saying that no government court will honor any non-compete clause in a contract. It is not saying that you cannot put such clauses into your contracts. But you won't be able to convince the government's justice services to enforce it for you (at lesser cost) if you do. As government is widely considered a social contract for mutual benefit, a democratic form can certainly alter it such that government power is less readily wielded by those who might use it to harm or exploit the people. Businesses that use non-compete clauses can either assent to the change or start shopping for new jurisdictions. With respect to your #3, having to pay an arbitrary and unnecessary barrier to entry in order to work profitably using a particular skill set is, in my opinion, unconscionable. It is indicative of an environment where the worker has little bargaining power. Any sane group would band together and use their collective power and mutual self-interest to halt that extraction of rents from their members. Since certain types of worker seem to be knee-jerk opposed to collective bargaining organizations, that leaves government edict. Your #2 cannot be generalized. It can only be fairly judged on a contract by contract basis. But when enough unconscionable non-compete agreements cross a legislator's desk, the practice is judged by the worst examples. And the worst examples are when big companies collude to depress worker wages, using agreements that are non-negotiable and provide no tangible benefit to the employee. Some people were abusing it, and the only cost-effective way to stop the abuse also stops many of the legitimate uses.
Spooky23 10y ago
Nobody is calling anyone an idiot, just greedy and amoral. Fundamentally, you should have the freedom to work in your profession without fear. If a Jimmy John sandwich makers skills are precious things, there's an easy way to retain those skills -- pay the worker what they deserve. If you think that's unfair to the business person, that's fine, but don't call yourself a capitalist or a good person.
ScottBurson 10y ago
Against all that is the fact that California -- which, if it were a separate country, would be the world's seventh largest economy -- does just fine without non-competes. Compare the vibrancy of Silicon Valley with that of the Boston area, for example, which has a much older tradition as an intellectual center and is even better supplied with top universities; but Boston's tech economy has been dominated by large, old firms, without the vitality of innovation we have in the Valley. You may not be an idiot, but you do seem to be ignorant of the empirical evidence. Non-competes choke off innovation. It's that simple, and that well established.
- ScottBurson 10y ago
  I can expand on this a bit. Non-competes [0] are a tragedy of the commons. There's no incentive for any single employer, in a jurisdiction that allows non-competes, not to require them of most employees. Any employer who did that would be unilaterally taking a loss (the potential employees they can't hire because they're subject to their current employers' non-competes) with no corresponding benefit. But if all employers require non-competes, we demonstrably wind up with a less vibrant economy. So, what is the libertarian response to a tragedy of the commons? Is it not to create and assign property rights so that someone has a legally defensible interest in protecting the common property? In this case, I would suggest that by outlawing non-competes, California has asserted that workers have a property right to the general skills and knowledge that they acquire by working. The word "general" is important here; companies still have IP rights to their specific techniques and processes. But companies cannot claim ownership of the worker's general knowledge; it belongs to the worker. [0] I'm using the term as shorthand for "non-compete restrictions that don't require the employer to pay at least a substantial fraction of the employee's salary for the duration of the restriction".
st3v3r 10y ago
I'm sorry, but I cannot take any of those arguments seriously. They are all coming from a point of corporate worship, to the point where one believes that a company can do absolutely no wrong.
SilasX 10y ago
I would say this specific fallacy is that of failing to understand that there are upsides and downsides to every policy, that you can oppose a policy even when it has upsides and that it should be a red flag if you can't think of any upsides.

by tjic 10y ago

nothrabannosir 10y ago

1) deontological: freedom to contract is always a good thing. It is a human right, and government has no legitimate moral power to remove that right from people. That's not a strong argument either. You could substitute "contract" with anything. I say this as a staunch libertarian. Government restrictions aren't bad because "government", but because restrictions. The free market works best when government restricts the freedom to restrict freedom. That's why cartels being illegal is good (they restrict competition), bans on insider trading are good (they restrict fair competition), etc. Non-compete restricts the freedom on the labor markets. If you let people do anything they want because freedom, you don't actually get freedom.

supercanuck 10y ago
I am in favor of banning non competes, but only because we lack the freedom due to lack of competition. I think the evidence of that is when Jimmy John's can have force fast food workers to sign them. To me it seems, banning non-competes, will create more competition.
jedrek 10y ago
The logical conclusion of a regulation-free system is of corporations large enough to destroy competition before it starts.
- omouse 10y ago
  That's not the logical conclusion. Have you ever seen a large corp and how inefficient they are? The only reason they can remain large is because they can afford to buy politicians and legislation to keep their competitors small. Big Corp creates new regulations to protect their business, the most clear examples are in telecommunications and the music/movie/copyrightable industries. If we removed more regulations today, the big corps would try and place them back to destroy their competition.
  - jandrese 10y ago
    It doesn't really matter how inefficient you are if you have the cash to buyout any potential competitors before they have a chance to threaten your bottom line. In a purely capitalist society wealth (power) accumulates at the top. Money creates money so whomever starts out with the most money tends to win. This is why highly capitalist societies turn into Dubai, with an ultra rich ruling class and a serf/slave class with little in between.
    - selestify 10y ago
      Seriously, has no one on here heard of the Gilded Age? Of anticompetitive practices by Standard Oil before regulation was brought in?

dozzie 10y ago

1) and 2) both go out of the window if you add to the equation this little fact that company almost always has an upper hand over a single (soon-to-be) employee. Freedom of contract would be "always a good thing" if the parties held the same power in their relationship.

jhardcastle 10y ago

The fact that the grandfather comment is the top-rated comment (as of this writing) in the thread to me suggests that a great number of people agree with him/her, which sort of contradicts your "argument from ignorance" point. Just because thousands of HN readers are intelligent engineers, founders, scientists, marketers, etc. doesn't make them legal experts, or political experts. You assume that "freedom to contract" means that both parties enter with equal knowledge and equal bargaining power. In an environment with high unemployment (like we were not to long ago) it could mean that employees would jump at any job they were offered, out of necessity, even if it came with a nasty non-compete. Government regulators can look at an overall picture and see that, statistically, in great numbers, there are overarching problems with the non-competes, like their being used with employees who don't have trade secrets.

tjic 10y ago
My "argument from ignorance" comment seems pretty rock solid, given that the original comment began with the words "I don't understand why..." That is literally the definition of an argument from ignorance.
- viewer5 10y ago
  He's saying "I don't understand why..." shouldn't be followed with a conclusion or statement (here, "They have literally no value to society"). That it should instead be followed with "could someone please explain this?"
tjic 10y ago
> You assume that "freedom to contract" means that both parties enter with equal knowledge and equal bargaining power. No, it doesn't. I'm Hayek-friendly, so I don't think two entities EVER have the same knowledge. "Freedom to contract" no more implies equal knowledge than "freedom to drink" implies equal knowledge of brewing, or "freedom to date" implies equal attractiveness.
- cmdrfred 10y ago

wccrawford 10y ago

Non-competes do have value to employers. But if they really don't have value to employees or society, what exactly is he supposed to argue with? There's no way to prove the non-existence of something. He could prove they're detrimental in some way, but that's different than proving that they have no positive aspect for those groups. It sounds to me like he has already stopped and pondered it, and came away with nothing. Then he posted here, offering people a chance to correct his ignorance. So far as I can tell, he's done everything correctly.

quantumhobbit 10y ago

1) There are limits to the freedom to make contracts. I can't sell myself into slavery and that is a good thing. 2) maybe I have better information than the government, but my potential employer has better information than either of us. I won't have a better picture of the local employment market than a business so I will easily get swindled. 3) allowing the desperate to sign a contract no wants to sign leads to a race to the bottom where everyone has to sign a non-compete. How can I refuse to sign if 99% of applicants will sign even if I am the best applicant? They will just say no to me and take the #2 applicant. The only way to fight non-competes here would be a union to form collective bargaining at which point we have lost the ability to make our own contracts as individuals entirely.

tristor 10y ago

> Your entire approach here is quite arrogant. You're right, it was unintentional but I can see how what I wrote could be perceived this way. My apologies. I am clearly acknowledging the intelligence of other posters by attempting to make a clear case for my position. If I did not believe that other posters were intelligent I would not engage in the discussion at all. > 1) deontological: freedom to contract is always a good thing. It is a human right, and government has no legitimate moral power to remove that right from people. Freedom to contract implies that both parties to the contract have bargaining power. In an employee/employer relationship this is mostly untrue. The only bargaining power that the employee has is simply to walk away. Legally any term of a contract is supposed to be met with "due consideration". In an employment contract, typically the offer of employment is treated as "consideration". I argue that a non-compete is so onerous as to require additional consideration beyond a mere offer of employment, however this is rarely if ever given. As an employee you may only choose to accept it or walk away, unless you individually have some unique position which grants you bargaining power. While I am generally opposed to government regulation, if we had an absence of all regulation it leads to less freedom for individuals, not more. Or rather, it leads to less freedom for the majority of individuals in favor of more freedoms for a small number of individuals. This is not beneficial to society, and thus this argument does not refute my statement "They have literally no value to society." > 2) Hayekian / information theoretic: I have local knowledge regarding both my costs and my benefits from signing a non-compete contract. Government legislators and bureaucrats, at some great remove, has almost no knowledge of either my costs or benefits. This is possible, but isn't a societal argument. This is an argument that says there may be value to you as an individual employee due to local knowledge, but it doesn't mean there's a larger value to society. I accept that it's possible to have local knowledge that gains you a benefit from the non-compete. Such as: You have some special skill that is required by the employer. You are one of the few people with that skill. The employer both /must/ hire you and /must/ keep the non-compete in the contract. This provides you local knowledge which could allow you to bargain for an outsized salary or bonus compared to others in your field, or to get special severance arrangements to counter-balance the non-compete. In this case, it might be possible that the insistence of the employer on the non-compete provides you individual value. Although, I'd also argue that the terms of the non-compete are not valuable to you, it's the fact your opponent in the negotiation won't let it go and your knowledge of what that is worth that lends it value. In either case, it doesn't give it value for society as a whole, so this does not refute my statement "They have literally no value to society." > 3) pragmatic (overlaps #2): perhaps I am desperate to break into career field X and would pay almost anything to get in. Or perhaps my skills are much lower than other competitors. What can I offer employers that my peers can not? My willingness to sign a non-compete. Or perhaps I know that I will be moving in three years, and thus a geographic non-compete has no downside to me. Etc. In this case, your desperation as an individual implies you don't have the bargaining power necessary to negotiate a contract fairly. Your willingness to agree to a coercive term is a sign of desperation, not value. This argument establishes neither a societal value or an individual value to the terms of the non-compete. If your skills are lower than your peers, then other employers are less likely to hire you away. If the company hiring you is trying to get you to agree to a non-compete because they intend to train you to increase your skills, then a fairer method would be to increase your compensation as your skills increase with the understanding that your increased skills increase your value as an employee. The non-compete is unnecessary and exists again only to provide coercive action against you. This argument neither establishes a societal value or an individual value for the non-compete. If you know you're moving in three years and the terms of the non-compete are strictly geographic, then you have local knowledge which means the non-compete cannot harm you. It doesn't provide any additional value you for you, but you've managed to nullify its downsides for you individually. I'll concede this one neutrally on an individual level that this provides some level of local knowledge (in the vein of your 2nd argument) that assists you in contract negotiation. This argument though fails to establish a societal value. Again, this argument fails to refute "They have literally no value to society." I cannot prove a negative, but I spent quite a bit of time thinking about why they exist before I wrote my original post. I could not come up with any reason why non-competes are valuable to society. I could not come up with any reason why they are valuable to employees. I could only come up with reasons why they might be valuable to an employer and narrow cases where an employee might use them as a bargaining chip but only in a way which nullifies their downsides. There is no upside to an employee for a non-compete. None. They restrict freedom of movement in the labor market and arguably lower the overall innovative output of a society. I reiterate my original statement. "They have literally no value to society."

coldtea 10y ago

>To go meta for a moment: I think that this sort of statement exposes a flaw that many of us have in debates. It's related to the "argument from ignorance" fallacy, but is not exactly the same thing. I take it as one of my priors that people at news.yc are intelligence. When lots of intelligent people argue for X, and X makes no sense at all for you, you should ponder with some real seriousness that perhaps N intelligent people are not insane, but, instead, you are missing something. That's a strawman, since it assumes that only insanity or ignorance makes people favor a position that's bad for the general public. There are much more probable causes for such a view, such as personal interests. >1) deontological: freedom to contract is always a good thing. It is a human right, and government has no legitimate moral power to remove that right from people. This is not an argument. This is a conclusion, or an axiom. ("Because human rights" are not an argument either. See where how deep this rabbit hole goes?). Second, it can be argued that freedom to contract is NOT "always a good thing". It's a good thing only when one side is not far more powerful than the other to the point of forcing the contract. When one side is coerced to sign (because e.g. else they cannot find employment in SV because all employers require non-competes), then it's not a freely chosen contract clause anymore, nor a free job market. Third, even if freedom of contract was "always good", still what's good thing for an individual, is not necessarily a good thing for society. Stealing and cheating, for example, can be good for the person doing it, but it's not good for society (and even less so in many people start doing it). >2) Hayekian / information theoretic: I have local knowledge regarding both my costs and my benefits from signing a non-compete contract. Government legislators and bureaucrats, at some great remove, has almost no knowledge of either my costs or benefits. That's a naive view that assumes government as some removed from society enemy entity. In a democracy a government is the representation (imperfect as most human creations are) of the will of the people, and laws are based on historical experience and reasoned arguments, with input from people "in the field" in drafting them. Also, government has much more complete information and view of the overall societal cost of non-competes, whereas you as individual mostly have your local knowledge to go by and personal gain as your guide (assuming of course you're freely entering the contract out of calculation, and not because employers have created a trust on the issue, and you are left with no other option). >3) pragmatic (overlaps #2): perhaps I am desperate to break into career field X and would pay almost anything to get in. Or perhaps my skills are much lower than other competitors. What can I offer employers that my peers can not? My willingness to sign a non-compete. Or offer to have sex with them. This rabbit hole also goes very far...

teh_klev 10y ago

> Your entire approach here is quite arrogant. Seriously? There's nothing arrogant about the OP's post which expresses dismay that others as employees (not founders or CEO's) would support having such restrictions put on their careers. > Consider, for a moment, that the other people on news.yc are not idiots Parent didn't accuse anyone of being idiots, nor did they frame their concern in terms of intelligence or likewise.. Your post is thought provoking, but you ruin it in those last two sentences.

EliRivers 10y ago

freedom to contract is always a good thing. I disagree. In an unbalanced relationship, the more powerful can take advantage of their power and impose contracts that leave the less powerful significantly worse off. If your choice is, for example, to contract to surrender your statutory rights or be unemployed, the freedom people have is the freedom to be worse off or much worse off. I wouldn't say this is a good thing. We rely on government and (if we're lucky) unions to prevent this freedom.

RodericDay 10y ago

The "flaw" you talk about here has an exact opposite, which is a reactionary knee-jerk defense of the status quo just because it must have been arrived to optimally. Often called "Panglossianism" as per Voltaire's character in Candide: > Dr. Pangloss was the pedantic old tutor in Voltaire's satirical novel Candide. Pangloss was an incurable, albeit misguided, optimist who claimed that "all is for the best in this best of all possible worlds." So persistent was he in his optimism that he kept it even after witnessing and experiencing great cruelty and suffering. The name "Pangloss" comes from Greek pan, meaning "all," and glossa, meaning "tongue," suggesting glibness and talkativeness. The idea that there's always a good reason for every societal practice that we currently observe is arrogant too, just in a different way.

HarryHirsch 10y ago
The alternative way of looking at it is that there is a good reason for many of the societal practices we observe - it's just that it's not you who profits. Considering the number of defenders of non-competes, it seems that the propaganda works very nicely.

panglott 10y ago

The Jimmy John's burger flippers had the power to individually negotiate their contracts? Here your #2 conflicts with your #3. If a person is so desperate to find entry-level minimum-wage work that she would pay any price to do so, then she doesn't actually have the freedom to negotiate contracts.

jedrek 10y ago

> freedom to contract is always a good thing Hardly. Freedom to contract would be a good thing if we could assume that the sides stand on more or less equal footing, which is almost unheard of in the case of corporations and people.

Avshalom 10y ago

In addition to every one else: >I have local knowledge regarding both my costs and my benefits from signing a non-compete contract. No, you don't. The non-competes don't cost you anything until an uncertain time in the future. Unless you can predict the labor market that will exist when/if you leave the company (and you can't) you can't actually know what the cost will be.

hitekker 10y ago

This reads like someone who feels that while they were studying the works of Ayn Rand, the rest of the world was eating Oreos and watching Jersey Shore.

eli_gottlieb 10y ago
Aren't those roughly equivalent activities?
- unclenoriega 10y ago
  I don't know. I'd rather be fat and entertained than an asshole.

omouse 10y ago

First you're assuming a certain level of intelligence and then using that to argue from authority; that the arguments put forth on news.yc are somehow "better" because of this assumed intelligence of the news.yc commenters. I'm sorry but each comment and argument must stand on its own merits and the facts, it cannot rely on the supposed intelligence of the commenters. Now let's get down to the real business of your arguments. > Freedom to contract is always a good thing This is only true if the people signing the contract are not coerced, whether by force or by poverty into signing that contract. > Freedom to contract is a human right So then you agree that it's a human right when it's not coerced yes? > Government has no legitimate moral power to remove that right from people It does if you follow the social contract. It does not remove the right but it does impose restrictions that follow from other human rights. It definitely has a legitimate moral power to impose restrictions. Whether you consider governments in general to be legitimate or moral is up to you but in this case? We have loads of precedent showing that in certain cases it has been absolutely necessary for governments to impose restrictions on contracts. Not to mention that we have courts, which you do not address. Are courts the only place where the judge or jury of your peers has a legitimate moral power to remove or impose restrictions on contracts? > I have local knowledge regarding both my costs and my benefits from signing a non-compete contract. Quite an assumption to make. > Government legislators and bureaucrats, at some great remove, has almost no knowledge of either my costs or benefits. I can agree with this though it would have to be supported; they do collect all sorts of data so they may have some knowledge, greater than "almost no knowledge". The argument against non-competes is that they place limits on freedom of speech and freedom of expression. They put a limit on employment options as well and are harming my future earnings which are very much real in contrast to the imaginary losses. Willingness to sign a non-compete is not a competitive advantage for employees, it's the equivalent of saying "I am willing to be treated like a slave" or "I will work for free". It's degrading and violates fundamental human rights. You cannot be in support of less restricted commerce and still support non-competes. You cannot be in favour of fundamental human rights and still support non-competes which take away or immensely restrict those rights. Your arguments, in the end, contradict one another. I will not comment on the arrogance of your approach here.

drewcrawford 10y ago

> 1) deontological: freedom to contract is always a good thing. A good thing for whom? It is good for lawyers and others who benefit from writing contracts. Imagine for a moment a world in which you sign a non-compete before ordering a burger. It sounds silly, but sillier clauses are signed in order to purchase far cheaper consumer goods every day. Is the world really a better place because two parties are hypothetically able to achieve their longtime dream of finally combining a legal instrument and a sandwich? Are you excited that you "have local knowledge" and are ready to exploit this knowledge to review legal terms with counsel before ordering your burger OR is this hypothetical benefit dwarfed by a very real huge volume of people who aren't going to hire a lawyer to negotiate a contract of adhesion for a $10 purchase when under social pressure while they're dining with someone else? Freedom to contract is not always a social good. It introduces complexity, and complexity creates friction which prevents people from participating optimally in a market and prevents the market from clearing. Contract innovation is not optimal for the burger market. What is optimal is common law, which is mostly the same everywhere so that an entire society understands how it works. It's how the police know what to do when facing a diner who didn't pay their bill, it's how you know what to do when the order is wrong, it's how a business can hire employees who know all this stuff without training them on custom procedure. Standardization is optimal for the vast, vast majority of transactions, so that people can get on with whatever they do when they're not negotiating legal instruments. The benefit of designing something bespoke for some marginal case is dwarfed by the cost of increased complexity of the transaction and the deviation from the established standard. If you believe that job contracts are so positive and innovative, insist on reviewing one as a condition of doing an interview. If it is really about local knowledge, surely it will be positive for all involved to develop that knowledge early and comparison shop. In reality people will look at you funny and probably decline, because the real function of that contract is to appear after you've decided to take the job and exploit social pressure in order to get a stronger deal for the company.

eli_gottlieb 10y ago

>When lots of intelligent people argue for X, and X makes no sense at all for you, you should ponder with some real seriousness that perhaps N intelligent people are not insane, but, instead, you are missing something. Intelligence is just the ability to precisely handle complex intellectual structures. It doesn't make those structures meaningful or accurate. What's that quote again? Ah, googling found it. “I make mistakes like the next man. In fact, being--forgive me--rather cleverer than most men, my mistakes tend to be correspondingly huger.”

bluecalm 10y ago

Your arguments could be used against worker protection laws as well: 14hours/day workdays, lack of safety regulations. You could even import some slaves from poor countries, many people will sign up as working on a plantation for food and shelter is better than starving. I think history shows that this kind of thinking leads to bad outcomes. The main reason is that there is power unbalance between employers and would be workers. In natural state of the world the workers would just take resources by force and share. As we are guaranteeing that this won't happen (by enforcing property laws) we need to give something back as well to people in worse negotiating position (worker rights, minimum wage, some contracts being illegal are all example of it). -

logfromblammo 10y ago

Freedom to contract is unlimited. You can draw up a contract with any terms you can imagine. Limited government has limited power to enforce contracts. Take, as an example, an assassination contract. You can write one up and sign it. If you or your hit man later breach the contract, you cannot sue each other in any civilized government's civil courts. You may, however, be able to engage a black-market arbiter to resolve your dispute, and that arbiter may allow terms of the contract that are otherwise illegal to be considered in rendering their judgment. This is, in effect, saying that no government court will honor any non-compete clause in a contract. It is not saying that you cannot put such clauses into your contracts. But you won't be able to convince the government's justice services to enforce it for you (at lesser cost) if you do. As government is widely considered a social contract for mutual benefit, a democratic form can certainly alter it such that government power is less readily wielded by those who might use it to harm or exploit the people. Businesses that use non-compete clauses can either assent to the change or start shopping for new jurisdictions. With respect to your #3, having to pay an arbitrary and unnecessary barrier to entry in order to work profitably using a particular skill set is, in my opinion, unconscionable. It is indicative of an environment where the worker has little bargaining power. Any sane group would band together and use their collective power and mutual self-interest to halt that extraction of rents from their members. Since certain types of worker seem to be knee-jerk opposed to collective bargaining organizations, that leaves government edict. Your #2 cannot be generalized. It can only be fairly judged on a contract by contract basis. But when enough unconscionable non-compete agreements cross a legislator's desk, the practice is judged by the worst examples. And the worst examples are when big companies collude to depress worker wages, using agreements that are non-negotiable and provide no tangible benefit to the employee. Some people were abusing it, and the only cost-effective way to stop the abuse also stops many of the legitimate uses.

Spooky23 10y ago

Nobody is calling anyone an idiot, just greedy and amoral. Fundamentally, you should have the freedom to work in your profession without fear. If a Jimmy John sandwich makers skills are precious things, there's an easy way to retain those skills -- pay the worker what they deserve. If you think that's unfair to the business person, that's fine, but don't call yourself a capitalist or a good person.

ScottBurson 10y ago

Against all that is the fact that California -- which, if it were a separate country, would be the world's seventh largest economy -- does just fine without non-competes. Compare the vibrancy of Silicon Valley with that of the Boston area, for example, which has a much older tradition as an intellectual center and is even better supplied with top universities; but Boston's tech economy has been dominated by large, old firms, without the vitality of innovation we have in the Valley. You may not be an idiot, but you do seem to be ignorant of the empirical evidence. Non-competes choke off innovation. It's that simple, and that well established.

ScottBurson 10y ago
I can expand on this a bit. Non-competes [0] are a tragedy of the commons. There's no incentive for any single employer, in a jurisdiction that allows non-competes, not to require them of most employees. Any employer who did that would be unilaterally taking a loss (the potential employees they can't hire because they're subject to their current employers' non-competes) with no corresponding benefit. But if all employers require non-competes, we demonstrably wind up with a less vibrant economy. So, what is the libertarian response to a tragedy of the commons? Is it not to create and assign property rights so that someone has a legally defensible interest in protecting the common property? In this case, I would suggest that by outlawing non-competes, California has asserted that workers have a property right to the general skills and knowledge that they acquire by working. The word "general" is important here; companies still have IP rights to their specific techniques and processes. But companies cannot claim ownership of the worker's general knowledge; it belongs to the worker. [0] I'm using the term as shorthand for "non-compete restrictions that don't require the employer to pay at least a substantial fraction of the employee's salary for the duration of the restriction".

st3v3r 10y ago

I'm sorry, but I cannot take any of those arguments seriously. They are all coming from a point of corporate worship, to the point where one believes that a company can do absolutely no wrong.

SilasX 10y ago

I would say this specific fallacy is that of failing to understand that there are upsides and downsides to every policy, that you can oppose a policy even when it has upsides and that it should be a red flag if you can't think of any upsides.