Wait so it's illegal to agree not to cold call each other's employees and let them apply for a job if they want?
If that's all they did, what would be illegal? How is that price fixing?
That's like saying stores agreeing not to advertise inside each other's premises are a cartel. Those companies can still advertise their openings just not actively poaching each other's employees.
Not at all. To advertise inside each other's premises, you have to enter somebody else's private property, and with some exceptions, right to refuse entry or forbid certain activities on your property is not just allowed, it is what private property actually means.
However, I am not the private property of my employer, so unlike this store analogy you need nobody's consent to advertise your job to me. You just call me. This isn't Saudi Arabia where you have to consult my mahram before you offer me a job.
Now under the legal theory we have discussed so far, you may imagine that two companies could voluntarily draw up a contract not to hire me just cause that's what they want to do. However, in the United States we don't allow certain types of contracts, even if all the parties to the contract consent. For example we don't allow murder-for-hire contracts, even though both parties have consented to the contract.
Similarly, this type of contract is one that is prohibited by law even though both of the parties may agree to it. Specifically the Sherman Antitrust Act prohibits "any contract... in restraint of trade or commerce among the several States". That language is kind of vague but the case law for the last 120 years is clear that this sort of contract is the kind that is prohibited by the act.
Essentially, think of the reason for Google to want this. They essentially want to keep their engineers with them for a lower price while preventing other companies from offering more attractive positions/salaries which would mean either Google would have to match the salary, or they'd lose the engineer.
A lot of hires and promotions are made through these sorts of offers. Steve Jobs famously courted John Sculley from Pepsi. Do you think Marissa Mayer applied for her role at Yahoo?
These sort of agreements restrict the market and are unfair to engineers.
Ok I guess if the market gets out of control with everyone poaching each other's customers blatantly, then any agreement to scale back is considered an illegal cartel?
So if for example stores advertise massive discounts in front of each other's premises specifically for the customers about to make a purchase at the competing store, then two stores agreeing to stop and go back to simply letting shoppers DO THEIR OWN RESEARCH is a cartel?
I get the feeling you're being rhetorical, but if I remove the tone in my head then: yes, clearly.
> out of control with everyone poaching each other's customers blatantly
Corporations shouldn't own customers... Like, the way you poach one is by offering a better deal (more features, better price, better service, etc). I think the way an economist would see the situation you are describing there is a "functioning market" -- the way that an economy improves customers life.
If AMD releases a new processor and "steals" a ton of Intel customers that's a good thing. The customers get better processors which they use in their own economic contributions. If Intel steals them back by releasing an even better processor, that's also fantastic. If that process repeats it's not "out of control" -- it's the world becoming better.
This dynamic (competition) is the reason why capitalistic societies have done so well in the last two centuries. It's the reason why the quality of the goods you use continues to increase while the price drops.
When corporations make an agreement to stop competing on any dimension, that dimension suffers. Maybe you're saying you don't care about this particular dimension. If that was true in general (ie no consumers care about the dimension), then the agreement wouldn't be necessary since competing on that basis would have no effect.
I guess our disagreement is in the word "offering".
I can advertise an offer in many places, but just because I agree not to advertise an offer in a particular place (eg right outside a rival movie theater, and vice versa) doesn't mean I don't OFFER something. It may mean that we agree not to degrade the experience for one another's customers.
Are you saying that a world where people are hit with AMD ads as soon as they exit the Intel store is a better world? Well why don't companies go the other way then -- agree to tell each other every time you purchase something and share your purchase data without your consent. I hope you like to receive spam mail every time you buy something, from competitors.
Please explain why men seducing each other's wives at every opportunity would lead to better deals for wives.
> Are you saying that a world where people are hit with AMD ads as soon as they exit the Intel store is a better world?
Assuming the ad runs profitably, yep. Customers are changing their buying patterns for a reason.
> Well why don't companies go the other way then -- agree to tell each other every time you purchase something and share your purchase data without your consent.
You answered your own question by including "without your consent". The with consent version does happen though -- it's not unheard of for a knowledgable salesperson to recommend a different product than the one they are selling.
> I hope you like to receive spam mail every time you buy something, from competitors.
This is quite a leap from your previous example. Did you grow tired of it?
> Please explain why men seducing each other's wives at every opportunity would lead to better deals for wives.
>> Please explain why men seducing each other's wives at every opportunity would lead to better deals for wives.
>Please explain why women get remarried.
Answering a question with a question? This is a non-sequitur. While there are many reasons for women to get remarried, to make your point you have to show that it's better for women when men actively try to seduce each other's wives at every opportunity. After all, women are perfectly capable of discovering other men themselves, especially if the men advertise their availability and offers in various well-known places. The men don't need to cold-call other men's wives specifically trying to poach them. There's a big difference.
Illustrate to me economically why the world where men are specifically cold-calling other men's wives is a better world due to the increased "competition" by men.
If we take this logic even further, perhaps ever-more-clever ways of men sabotaging the others' relationships with their wives would have even BETTER results for the wives, because they are more "competitive"? Doesn't this have diminishing returns?
> to make your point you have to show that it's better for women when men actively try to seduce each other's wives at every opportunity
Not really. The point actually should read "men making an agreement not to flirt with married women would be worse for married women as a whole".
Note this differs from your version in two important ways:
A1. The group that is benefited is not women, but married women
A2. "Every opportunity" is replaced with "where the man in question believes it is a good idea"
And the version with those modifications is clearly true.
High level argument:
B1. the cost to happily married women isn't particularly high (they stay in their relationship, feel flattered, have a fun conversation, etc)
B2. the cost to unhappily married women would be particularly high (since they have less knowledge about potential alternatives / may stay in a bad situation longer due to lack of information)
I'm not sure what the exact population sizes are for those two groups, but by using the divorce rate as a quick proxy we can see it's a high enough ratio to be net positive. Hence it would be better.
(If you are thinking about talking about obnoxious flirting, I will point you to A2 above)
FWIW "Please explain why women get remarried" is just a shorter version of the above argument -- the reason men not flirting with married women is bad for married women as a whole is because some would get remarried.
> If we take this logic even further, perhaps ever-more-clever ways of men sabotaging the others' relationships with their wives would have even BETTER results for the wives, because they are more "competitive"? Doesn't this have diminishing returns?
You talk about straw men in other threads. Do you really not see the straw man in your last two replies to me? No one is arguing that Apple should seek to harm the way that Google's employees feel about Google except in true ways ("Google is paying you 20% less than market" is good if true in much the same way as "Greg is cheating on you" is good if true. Both are of course bad if false)
Well let's take this context of married women for example. The reality is that there are many men who do not have any qualms about "trying to seduce" a married woman.
These men do not "respect" the institution of marriage or the religious views on adultery etc.
There are entire forums on the internet devoted to "how to get a girl in a relationship" with "boyfriend destroyer routines" or whatever.
The idea is that an institution employing experts with lots of experience in poaching employees, is going to have an unequal advantage over the employee, and is likely to entice them either through souring their relationship with their current employer (maybe telling an employee about how Apple's workers are treated in China, for example) as well as using psychological tricks to lure them away.
Flirting is one thing. Blatantly propositioning in front of the husband when he's ware of it is something else. Most people draw a line not because they want to flaunt some antitrust law, but because of biological / economic emergent actions.
So you're saying in your mind accepting a job is like committing to a marriage? "Till death do us part" and all that?
You can moonlight as an employee, so at the very least you have to agree it's like a swinger/open marriage. I don't know the protocol there, but I'm guessing blatantly propositioning someone in an open marriage falls in to a different category than a closed one. It's much closer to talking to someone who's single.
re: unequal recruiting skill level vs the employee. Are you now taking the position that recruiting is immoral in and of itself?
Recruiting involves many things and what is considered moral is relative. An HR dept will pay recruiters to advertise in APPROPRIATE places and screen candidates, do background checks, set up a pipeline etc.
If the recruiter is instructed not to advertise the company's openings in strip clubs or porn sites, that isn't illegal or immoral. This is how I view instructing the recruiters not to advertise on their competitor's website or target other company's employees. Perhaps they think the cost of bad reputation or reprisals from those companies was too high. It doesn't have to be a "conspiracy". As I posted, an arxiv article shows that cartels are a natural emergent phenomenon of markets.
As far as marriage - there was a time when people worked decades for a company and earned a pension. These days esp in the tech industry those days are long gone. Poaching is an additional cost of hiring employees. You want to increase this cost - fine, and it will be passed on to the employees and depress their salaries. Your argument that the correlation is the other way is sofar without basis. I am not arguing that it is not illegal - the courts should decide that. I am saying this enforcement goes contrary to the purpse of the law and no one wins.
Yes if we're still talking about poaching, it creates downward pressure on the salaries of everyone else.
There are certain costs associated with hiring someone. Such as:
1) Recruiting
2) Interviewing
3) Onboarding and introducing to team
4) Provisioning equipment, office, etc.
5) Ramping up and getting integrated
Now, if these costs are paid per employee, then the longer this employee works with us, the more valuable they become and the more money they can make.
BUT
Those employees that get poached, or "fail upwards" into other companies, or whatever, actually make that position cost more. Way more. And I am not just talking about the fact that they might leave mid-project or have a moral hazard of screwing up a project knowing they'll have their next job to fail upwards into. But something even more basic.
For example if I have to pay the cost of 1-5 once every 3 years, that's 3 times less than if I have to pay it every year. So will I bear the full cost of 1-5 every time or pass it on to the employees I hire into that position? Of course I would pass it on, and moreover I can justify it by saying that they don't have "seniority within the organization" or that we are a meritocracy.
So you are completely neglecting this side of the phenomena, and blindly claiming that salaries will go up because poaching increases. It's not at all obvious that they would!
You're neglecting the fact that not every "poaching" attempt is successful and the fact that companies like Google have an incentive to keep salaries high in order to prevent poaching.
I didn't neglect that. How do these facts rule out that successful poaching imposes an additional cost per employee on companies? Paying employees a larger salary doesn't prevent poaching if your opponent can do the same. People are more likely to fail upwards and projects are more likely to cost more and be finished later because of successful poaching. Who bears this cost and how?
Are you seriously advocating for companies to collude to suppress salaries if they can't handle the heat of market forces? How much, exactly, do you think engineers deserve to get before it becomes "too much", how did you arrive at that number, and do you have a similar number for how much companies should be allowed to make before we just start confiscating it all with a 100% tax rate?
Looks like you're attacking a straw man. I am not quite sure how you get from companies advertising jobs and accepting employees (but not calling them while they are at work at another company) to salaries being depressed.
Can you elaborate on a specific case? Say Jane is happy at company X, but wants to see if she can get a higher salary. She goes outside or surfs online and bam, company Y is hiring. She INQUIRES and APPLIES and says she wants a higher salary. She is offered this salary by company Y. She quits and gets a higher salary.
Are you saying salaries are depressed from being EVEN HIGHER from companies actively calling employees of other companies so they can disrupt their projects midstream and lure away those employees?
If men actively tried to seduce each other's wives every chance they got, would that improve the deal of the wives?
They were specifically agreeing not to engage in normal competitive practices against one another. They were agreeing not to compete with one another for engineers.
Jane might be free to offer her services to other companies, but what if she hadn't gone looking? She might not even know it was likely that she could get a better salary, or she might not have spotted a job posting particularly suited to her.
The companies suppressed a form of competition to further their own interests, with the inevitable effect that salaries were also suppressed, because the market was not as competitive as it would otherwise have been. That is illegal, and has been for more than a century.
You haven't explained why men seducing each other's wives at every opportunity would lead to better deals for them and their wives.
It's not about offers it's about advertising in unwelcome places. You are claiming that ANY agreement not to engage in unwelcome behavior decreases competition and therefore leads to a worse deal for the other parties. So basically can you take it to its logical conclusion... us agreeing to not destroy each other's reputation through NSA-type sabotage is actually a cartel? Us agreeing not to sabotage each other's operations through corporate espionage before 1995 and other legal means is a cartel?
He hasn't explained because it is a ridiculous comparison. Husband and wife relationships are long term loving partnerships. Employer-employee relationships are business transactions.
A good husband/wife shares rewards fairly equally. An employer rarely distributes profit equally.
A good husband/wife team both have a large degree of autonomy and decision making power. In an employee-employer relationship this power predominantly resides with the employer.
A good husband/wife stands by their partner in times of trouble. An employer will happily jettison under-performing employees.
A good husband/wife will sacrifice some level of material comfort in order to help their partner improve themselves. Employers will not provide training etc unless it is in their best short term interests.
Etc etc etc. Fact is jobs are nothing like marriage.
Likewise it is not about advertising in unwelcome places. Google is not advertising to Apple; they are advertising to individuals who happen to work at Apple. The party, Apple, that considers it unwelcome is a third party to the advertising. It is frankly none of their business. It is unwelcome to Apple because it stops them from underpaying their staff.
And finally there is a big difference between actions that enhance the market and allow it to operate efficiently and negative market actions. If you are worth $200,000 to Apple but only $100,000 to Google then it is a better allocation of capital for you to work at Apple. If you are worth that money to Google then they can easily counter offer. This aids market efficiency which is the driver of all our economic growth.
This is completely different from trying to steal key players simply to harm your competition. But stopping this key player theft is actually easy via legal and ethical market mechanisms (e.g. vesting options, bonuses on successful completion of key deliverables, fully funded non-competes, actually paying market wages etc).
sheepmullet - I appreciate your thoughts above but let me highlight the issue in simple terms
And finally there is a big difference between actions that enhance the market and allow it to operate efficiently and negative market actions.
You see, Google and Apple can very easily advertise openings GENERALLY TO EVERYONE, let's say on a job board. Advertising a position doesn't mean you have to offer it to anyone -- this is technically called Invitation to Treat.
Moreover, Google and Apple and any other companies can widely publicize these opportunities. Any employee who is interested in looking around is able to go to a job board or some other marketplace and see the job listings posted there, the same way real estate agents post in MLS.
But just like real estate agents would get real pissed off if rival agents hang around their showings and try to poach their clients, the same is true of companies. (Actually, although you say that marriage is completely different, actually the same mechanisms that lead to jealousy and guarding from 3rd parties are in effect.)
This is completely different from trying to steal key players simply to harm your competition.
THAT IS EXACTLY THE ISSUE.
Basically when companies TARGET specific people in other organizations to lure away, it might not be taken kindly. How do you know that Google isn't trying to lure a key member of the Apple team away and pay them a huge salary boost just so Apple's product is now going to have a harder time competing?
This is after all competition! But who is it good for? It is good for the small number of people who make themselves indispensable in a company. But it destabilizes the very teams that are building the products that help the public, so the vast majority of people is harmed by this practice. Or at the very least it's not clear that they benefit enough to make a law banning agreements to scale back poaching key people.
The companies are free to stop cold-calling people entirely of their own volition. That isn't what happened here. A subset of companies agreed among themselves to not cold call eachother's employees. This is a conspiracy in restraint of trade that helps these companies at the expense of employees and other companies not involved in the conspiracy. They are specifically agreeing amongst themselves to not target certain people in violation of normal competitive practices in the relevant market, while continuing the practices with regard to others outside the conspiracy.
Much of the time, the distinction between a lawful practice and an unlawful practice is whether two or more companies got together and agreed to engage in the practice. The distinction is important, because independent adoption of a practice by multiple entities is a sign that they are responding to market forces, while collusive adoption of a practice is a sign that they are attempting to distort market forces.
This was unambiguously an attempt to distort market forces.
I am saying that the basis for law itself seems to not be invoked here. The government is the one distorting market forces, what you are describing is emergent behavior which comes out of market forces - companies agree to all sorts of arrangements including buying selling, exclusive service contracts and more. The govt has a rationale for this. The rationale is that most people will benefit from companies competing. I am saying that it hasnt been shown that most people will benefit from companies excessively disrupting each other's teams. The workers are still able to find jobs by SIMPLY BROWSING A MARKETPLACE. We are talking about agreements not to advertise the offers in certain places. The government restricts advertising all the time - for example in south american cities advertising in public places is now illegal. Is that distorting market forces? Well it sets the rules for the market. Here the rule is that companies cannot agree not to cold call each other's employees. I call bullshit on that benefiting anyone but a small group of employees. The teams suffer and the companies suffer and they pass on the cost to everyone.
NO IT ISN'T. Most companies in most industries can hold onto key staff without breaking the law because there are legal mechanisms to keep these staff.
This is about trying to keep an entire category of employees (the ones not currently seeking new opportunities) in the dark about market wages and conditions in an effort to hold down general employee wages.
Keeping your eye on the market takes time and effort; time and effort that I personally would rather spend with my family. So if somebody is willing to actively search the market for employers paying less than market rates and offer those people a job it is a good thing.
But just like real estate agents would get real pissed off if rival agents hang around their showings and try to poach their clients, the same is true of companies.
And while they might get pissed this is basic competition and is good for the market. It helps make sure real estate agents do not price/service gouge their clients. After all if the rival cannot offer a better deal then no harm done.
Actually, although you say that marriage is completely different, actually the same mechanisms that lead to jealousy and guarding from 3rd parties are in effect
You are trying to suggest that because something applies to marriage that it should somehow be ethical in an employer-employee relationship. The leap simply put does not make sense.
Or at the very least it's not clear that they benefit enough to make a law banning agreements to scale back poaching key people.
It is clear that it distorts the market and holds down wages for employees. There are many legal mechanisms to keep key staff. The fact that these companies resorted to illegal means suggests that they were in fact trying to stop the poaching of normal employees and not just "key staff". Again this behavior is bad for the market.
Once again I am not saying what these companies did was legal. Google for example had an internal email instructing people to TURN AWAY APPLICANTS from Apple. That's completely different than agreeing not to target them for solicitation.
This is about trying to keep an entire category of employees (the ones not currently seeking new opportunities) in the dark about market wages and conditions in an effort to hold down general employee wages.
No it's not. It's easy to find the market salaries today, on glassdoor and other means. You have a very unrealistic opinion of workers if you think that they are "in thee dark" about publicly available information that's easily obtainable until a recruiter finally calls them and informs them that they can get a slightly bigger salary (in fact taking 20% for themselves).
The way I see it is - you can instruct your HR to work only with recruiters, you can instruct the recruiters to not advertise on porn sites because you don't want the reputation cost, and you can ask recruiters not to cold call a rival's employees because you don't want to bear the reprisal cost. This isn't a cartel. A cartel is when you REFUSE TO OFFER a better deal than your competitors thanks to internal agreements. Here you offer whatever you want! You simply are judicious where you advertise it. That is not a cartel sorry. There is no price fixing.
You know if we're going to take this to its logical conclusion, it should be illegal for companies to collude with recruiters and all applicants should be able to bypass a recruiter and apply directly to the company, asking for a 20% greater salary. But somehow many companies I know don't accept such applications. Please tell me why they can collude and not compete with recruiters. Isn't that a REAL cartel since their HR dept will NOT OFFER you a job unless you are referred through a middleman. The HR dept refuses to compete with the recruiter even if you did the work for them and applied! And even if you don't agree this a cartel, it certainly imposes a 20% tax on the salaries of applicants.
It is clear that it distorts the market and holds down wages for employees.
No, regula market operation doesn't distort a market, outside regulation distorts markets. Government regulation distorts markets.
It is also not clear that more successful poaching will drive up wages for employees. It is clear it drives up COSTS of hiring and training employees since poached employees make you start over, delay and cancel projects etc. This may very well lead companies to hire contractors instead or pass on the costs to their OTHER employees - the majority who werent poached successfully - in other ways.
So no it's not clear what companies will do, this isn't basic supply and demand.
Well, inside the store is a bit different, but an analogous situation might be two stores agreeing not to buy out ad space in front of each other. And I agree, to me that seems rather innocuous, as does agreeing to not poach from each other.
If that's all they did, what would be illegal? How is that price fixing?
That's like saying stores agreeing not to advertise inside each other's premises are a cartel. Those companies can still advertise their openings just not actively poaching each other's employees.