[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.