5 ms·

I suspect this is bad for California, its lack of noncompetes was a huge differentiation for a while. (how bad? I don't know.)

by benced 2y ago

dbcurtis 2y ago
Eh.... any impact will play out over a long period of time. Everything interesting happens on the margin, so I do agree with you that CA's laws around non-competes has had a beneficial impact on new business formation, and contributed to CA's economic growth. If this gets fully implemented, it will level the playing field with other states, but it will take some time (a decade would be my bet) for the impact to be fully felt.
ballenf 2y ago
I'd guess it will have the opposite effect as companies have one less big reason to avoid CA.
- benced 2y ago
  The reason no non-competes has helped CA is increasing startup formation. California has shown over the last 30-50 years that startup formation > attracting legacy businesses for growth. Unless that changes, California becoming less differentiated for startup formation but getting more legacy businesses is a bad trade for California.
  - Gibbon1 2y ago
    One of the biggest issues I have with economists theory of comparative advantage is it ignores the self sustaining ecosystem aspects of economics. Some places if you need someone to do specialized thing X you can just walk down the street. Most places you'll need to find someone willing to move and and take a big hit on his career options. So that deep bench of skilled labor and business resources is a big deal.
_akhe 2y ago
It's not bad when people are copying you, it signals that California is ahead of the curve on the issue and - upon further examination - others too like decriminalization of cannabis including removing it from background checks and drug testing for most employment, as well as certain tenant and landlord rights other states don't have. Some of those non-competes were ridiculous with their "in perpetuity throughout the ends of the Universe" type wordplay, I'm surprised governments haven't been more vigilant on things like the stifling of entrepreneurial mobility, since it only helps their economies in the long run to do so. Make it possible to disrupt, design economies for entrepreneurs as much as for corporations, and reap the benefits IMO. Let those big evil uglies get disrupted if they can't stay relevant or retain top talent.
- benced 2y ago
  It is bad for a state - at least in relative terms - if it has a good thing and suddenly every state has that good thing. It means that people that might have once moved to California for its laws will no longer do so.
  - _akhe 2y ago
    That mentality is like saying "I'm only rich if others are poor" - you can of course still be well off, even when others occasionally catch up, and maybe better off if the tide lifts all boats. Also what you say doesn't go against the point about signaling. There's something to being on the cutting edge vs not. > people that might have once moved to California for its laws will no longer do so Which is a huge demographic right? After all, most people don't come to California for its incredible beaches, paychecks, food, diversity, entertainment, etc. it's our wonderful laws that attract everyone, right?
    - benced 2y ago
      I am making a diagnostic statement that is true. You are incorrectly inferring that I think this FTC action is therefore bad which I did not say anywhere. > Which is a huge demographic right? After all, most people don't come to California for its incredible beaches, paychecks, food, diversity, entertainment, etc. it's our wonderful laws that attract everyone, right? Yes, that's why I expressed uncertainty on how bad this would be for California.
banish-m4 2y ago
It's not. California isn't the only municipality to have banned NCAs. https://natlawreview.com/article/state-law-restrictive-covenants-update https://natlawreview.com/article/state-law-restrictive-coven...

I suspect this is bad for California, its lack of noncompetes was a huge differentiation for a while. (how bad? I don't know.)

by benced 2y ago

I suspect this is bad for California, its lack of noncompetes was a huge differentiation for a while. (how bad? I don't know.)

dbcurtis 2y ago

Eh.... any impact will play out over a long period of time. Everything interesting happens on the margin, so I do agree with you that CA's laws around non-competes has had a beneficial impact on new business formation, and contributed to CA's economic growth. If this gets fully implemented, it will level the playing field with other states, but it will take some time (a decade would be my bet) for the impact to be fully felt.

ballenf 2y ago

I'd guess it will have the opposite effect as companies have one less big reason to avoid CA.

benced 2y ago
The reason no non-competes has helped CA is increasing startup formation. California has shown over the last 30-50 years that startup formation > attracting legacy businesses for growth. Unless that changes, California becoming less differentiated for startup formation but getting more legacy businesses is a bad trade for California.
- Gibbon1 2y ago
  One of the biggest issues I have with economists theory of comparative advantage is it ignores the self sustaining ecosystem aspects of economics. Some places if you need someone to do specialized thing X you can just walk down the street. Most places you'll need to find someone willing to move and and take a big hit on his career options. So that deep bench of skilled labor and business resources is a big deal.

_akhe 2y ago

It's not bad when people are copying you, it signals that California is ahead of the curve on the issue and - upon further examination - others too like decriminalization of cannabis including removing it from background checks and drug testing for most employment, as well as certain tenant and landlord rights other states don't have. Some of those non-competes were ridiculous with their "in perpetuity throughout the ends of the Universe" type wordplay, I'm surprised governments haven't been more vigilant on things like the stifling of entrepreneurial mobility, since it only helps their economies in the long run to do so. Make it possible to disrupt, design economies for entrepreneurs as much as for corporations, and reap the benefits IMO. Let those big evil uglies get disrupted if they can't stay relevant or retain top talent.

benced 2y ago
It is bad for a state - at least in relative terms - if it has a good thing and suddenly every state has that good thing. It means that people that might have once moved to California for its laws will no longer do so.
- _akhe 2y ago
  That mentality is like saying "I'm only rich if others are poor" - you can of course still be well off, even when others occasionally catch up, and maybe better off if the tide lifts all boats. Also what you say doesn't go against the point about signaling. There's something to being on the cutting edge vs not. > people that might have once moved to California for its laws will no longer do so Which is a huge demographic right? After all, most people don't come to California for its incredible beaches, paychecks, food, diversity, entertainment, etc. it's our wonderful laws that attract everyone, right?
  - benced 2y ago
    I am making a diagnostic statement that is true. You are incorrectly inferring that I think this FTC action is therefore bad which I did not say anywhere. > Which is a huge demographic right? After all, most people don't come to California for its incredible beaches, paychecks, food, diversity, entertainment, etc. it's our wonderful laws that attract everyone, right? Yes, that's why I expressed uncertainty on how bad this would be for California.

banish-m4 2y ago

It's not. California isn't the only municipality to have banned NCAs. https://natlawreview.com/article/state-law-restrictive-covenants-update https://natlawreview.com/article/state-law-restrictive-coven...