[wpietri]

Prices arise through market forces: the competition of buyers for the same goods. If the largest purchasers of a given good agree not to compete, then prices are absolutely harmed.

Understanding where staff is going is reasonable. Making it so that your staff doesn't have opportunities to go anywhere? That's a criminal conspiracy to rig a market.

[cookiecaper]

As a tangent, one could also argue that there's nothing wrong with these compacts, and that market forces would make them untenable if there were truly a dearth of the needed specialized labor to complete the product. Again, that doesn't mean this practice was legal, but the illegality is non-obvious. It's not something that has to strike the average person as fundamentally immoral and socially harmful. If you cast it as an evil plot to steal money from hard-working middle-class Americans, you'll get people fired up, but again, I don't think that's a self-evident conclusion.

[sanderjd]

Do you agree that this is an accurate framing of the issue: a few rich and powerful people were in cahoots in opposition to the best interests of a bunch of far less rich and far less powerful people. If not, in what ways do you view it as being incorrect?

[gojomo]

That's an awful framing. Here's a less-prejudicial, more-correct framing:

Leaders at some major tech companies, responsible for their teams' productivity and often-recognized by their employees as effective and inspirational, turn out to have used reciprocal non-solicitation agreements, now considered illegal, to avoid talent turnover and bidding wars.

This likely reduced some employees' compensation, especially for a few superstar performers, but also may have been a key component to the magical product results their teams achieved, ultimately rewarding everyone involved in those companies (including their satisfied customers). The net effects on employee welfare and total social welfare are unclear, as they've not been carefully studied.

[sanderjd]

I think it's lame that your comment was downvoted, and you're right to question my assertion that these policies were definitively opposed to employee interests, but none of your adjectives debates the existence of a major wealth and power disparity between the two sides. Any exploitation of that sort of disparity is pretty suspicious, regardless of the outcome.

[JackC]

> one could also argue that ... market forces would make them untenable if there were truly a dearth of the needed specialized labor to complete the product.

It's not a good argument.

There are markets where these agreements work and markets where they don't -- it depends on the cost of entry. But this is probably a market where they work, because, well, they exist. Smart people entered into them despite being on notice that they were probably illegal.

To clarify cost of entry: let's say the employees here are wheat farmers. There are hundreds of wheat farmers and five companies that buy wheat to make bread. Those companies compete to buy as much wheat as possible so they can enter as many markets as possible while still making a profit. So they drive up the price, and end up paying roughly as much for the wheat as the value it contributes to the bread-making enterprise. Those are market forces, and the capitalist notion is that they fairly distribute profits among all the people involved -- but they reduce the profits of the five companies.

So let's say the five companies get together and agree to split up the wheat and only pay 80% of the market price. All of their profits go up, all the wheat farmers' profits go down, market forces are no longer operating -- and therefore the agreement is illegal. It's cool if that isn't obvious to everyone, since it's not exactly relevant in most of our lives -- but anyone who's allowed to run a market-leading company has probably had the concept mentioned to them at some point.

But so now the other market forces you're referring to come into play: the five companies have created an opportunity. If some sixth player (like Sony Bread Co.) is willing to come into the market and pay 90%, they can get all the wheat at below market price. This is great for Sony because they get cheap labor without even having to break the law, but it doesn't solve the problem for the wheat farmers. Only if a lot of other players have the same idea will they drive the price back up to the free-market level.

But that assumes the 20% entry bonus created by the illegal cartel is enough to overcome their competitive advantage from already being in the market. Becoming Disney isn't free -- and this kind of cartel is something, pretty much by definition, that you would only go for if you thought you and your compatriots had the market locked down. And you would only drive the price down as far as you thought your competitive advantage could defend.

So, no -- market forces are not a magic wand to make agreements designed to nullify market forces OK.

[cookiecaper]

Your analogy stops short. There's no reason there can't be entrants besides "Sony Bread Co.". As long as the price is below market rates, there is an opportunity waiting to be seized, and someone will come along and seize it, at which point the cartel previously described will be forced to follow suit and pay full market value or lose all of their employees.

It could even be argued that the trust-busters in your analogy are really just anti-entrepreneurial and are attempting to close a rare market opportunity to protect the extant oligopoly. Many laws and regulations actually are written by the dominant powers in a field specifically to heighten the barrier to entry and prevent innovative new services from presenting a threat by burying them in paperwork and compliance expenses.

[cookiecaper]

I agree that a likely effect was artificial depression of employee salaries, but I don't think we've seen it adequately demonstrated that that was the primary intended effect and not just an unintentional or tertiary side effect of the agreement. Frequent poaching is often considered unsportsmanlike competition by business people; I know several of the companies I've been affiliated with have felt that way. It's possible that Pixar et al had the best intentions when establishing this protocol.

It doesn't really leave the employee without somewhere to go, it just makes it harder for them to find employment at a direct competitor while still employed. I would bet that most people who would've been poached would've been hired by a competitor within hours of resigning at their current employer.

That doesn't make it OK, and like I said, it's very possible all of this was illegal from the get-go. I'm just saying there's no need to jump to the conclusion that malice and conspiracy were the primary motives behind these compacts, and there's no need to drag someone's name through the mud when definitive evidence doesn't exist.

[potatolicious]

> " but I don't think we've seen it adequately demonstrated that that was the primary intended effect and not just an unintentional or tertiary side effect of the agreement"

Do we need to demonstrate intention? You brought up mens rea elsewhere in the thread but it hardly seems relevant at the end of the day. Someone with a clear intent to screw his employees certainly is more despicable and villainesque, but the practical impact on the employees is the same even if he did so unintentionally.

And we can frown upon it all the same, because it's not as if he did something innocent with unforeseen side effect - the agreement was illegal, and the fact that it was secret suggests everyone involved knew this.

So yeah, I'm maybe willing to believe that Ed Catmull didn't go out there with the explicit intent of screwing his employees. He may have engaged in this agreement in protection of his company, or of his work, but ultimately he (and every other SV CEO involved) kept it hush-hush because they knew it was illegal and immoral, and that the wider world would cry foul at what they were doing.

Mens rea would make the morality of this more open and shut, but I do not believe it is critical to our ability to judge the impact and legacy of these actions.

> "Frequent poaching is often considered unsportsmanlike competition by business people; I know several of the companies I've been affiliated with have felt that way."

But yet this isn't a game. These are people, not basketballs. It's careers, not the soccer field. It's families, children, vacations, dreams, plans, not points in to be scored against your opponent.

You're being unfairly downvoted IMO and you've brought up some good points, but what you're seeing (some have stated this explicitly) is backlash against business folk who are so concerned about the high-level game being played that they've forgotten that the pieces on the board are people.

The mistake here is the belief that this is somehow unique to Ed Catmull, Eric Schmidt, Steve Jobs, et al. The demonization of him I'm seeing in this thread is disappointing because a large percentage of the people doing the pitchfork-waving would have done the exact same thing in his position. All sufficiently complex systems (the movie industry certainly one of them) evolve complex rules and strategies, and it's remarkably easy to get lost in them and forget that these systems are built on top of people.

It's tempting to think of people who do bad things as "evil men", because it gives us security: "I'd never do something like that, phew". In reality though there are few evil men, but many men who do evil things. The notion that some people are capable of evil while others are not is hubris, and is a great way to end up on the wrong side of the morality scale without even knowing it. I personally doubt Ed Catmull ever got out of bed in the morning and decided he was going to screw a bunch of animators and inhibit their careers, but yet it happened, and I'd encourage all the pitchfork-wavers in this thread to consider that they themselves can just as easily end up in that position, especially if they approach life with the assumption that they're one of the Good Guys.

[cookiecaper]

>And we can frown upon it all the same, because it's not as if he did something innocent with unforeseen side effect - the agreement was illegal, and the fact that it was secret suggests everyone involved knew this.

Correct me if I'm wrong, but aren't most corporate agreements like this secret by default? It's an internal business mechanic and can be considered proprietary based on that. The press releases only come out when a company thinks something is of low enough tactical value that it can be revealed without harming the company and high enough PR value that it can be used to woo investors or consumers.

I don't think there's any inference that the pacts were considered immoral by the signatories in the fact that they weren't publicly declared. There were obviously many people between all of the participant companies that knew about these pacts, and it doesn't sound like it was considered super-duper-top-secret and could only be mentioned behind the closed doors of the CEO's office.

As I stated elsewhere, we should also consider the DOJ's angle on this. Prosecutors want to make a name for themselves and it's in their interest to portray all of their defendants as scoundrels. They want to blow open a big public scandal. They want to leave a legacy before the next president comes in and restocks the department with his own people. The prosecutor's job is practically to convince everyone that the defendants are evil, but in cases like this, it's rarely true. We need to acknowledge these perverse incentives as we read about this case, too.

>what you're seeing (some have stated this explicitly) is backlash against business folk who are so concerned about the high-level game being played that they've forgotten that the pieces on the board are people.

I don't think that's a fair characterization either. An executive's concern for everyone on his staff causes him to act in the best interest of the company as a whole, and not just the best interest of a specific individual or a specific type of employee that may be in greater demand. If bidding wars and poaching becomes disruptive, it's natural to seek a remedy. Catmull states several times in these articles that poaching is "bad for everyone" and seems sincere in that belief. He believes it's bad for executives, employees, competing studios, etc., and one can see the logic in that belief. He tried to stop a practice that he viewed as parasitic. In Catmull's view, even if an animator got poached with a big raise, this practice is still a net negative, presumably because it destabilizes the industry and potentially decreases the longevity of that career.

Maybe he was wrong and maybe he broke the law. But it doesn't mean that he forgot that his employees were real people.

I appreciate the rest of your post, which acknowledges that Catmull is probably not irredeemably evil.

[mullingitover]

> It doesn't really leave the employee without somewhere to go, it just makes it harder for them to find employment at a direct competitor while still employed.

They stopped being direct competitors the minute they agreed to collude. The term you're looking for is 'fellow cartel member.'

[chrismcb]

Did you miss this part: “…even raiding other studios has very bad long term consequences [i.e., higher benefits for employees, lower profits for companies and executives—M.A.].”

It looks like the primary intended effect was to keep salaries and benefits low

[cookiecaper]

The brackets are editorial from the editor of the post. They're not in the original email. That's the author's opinion on the bad consequences that Catmull is referencing.