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Comment by jacobheller | Hacker News Reader

A really good book to read on the subject is AnnaLee Saxenian's Regional Advantage: Culture and Competition in Silicon Valley and Route 128 (http://www.amazon.com/Regional-Advantage-Culture-Competition...). It discusses why Route 128 failed while Silicon Valley flourished. A major part is that under California law, non-competes are not enforceable in California. As people moved freely between competing companies, their ideas, information, and best practices traveled with them. The diffusion of good ideas gave the region as a whole a competitive edge.

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Yes - this is an instance where a law can help an ecosystem at the expense of individual players. In aggregate though, it's net neutral for most companies, since they benefit from being able to hire from competitors. The companies doing interesting things probably benefit, while the ones doing boring things get a little hurt.

The (largely untrained) economist in me says that mobility of labor is very important for growth and economic efficiency, as systems work best when the best people flock to the most important well funded ideas.

Thanks. You touch upon one of my pet peeves. A huge amount of legislative energy is spent to ensure that capital can move around unfettered. On the contrary, movement of skill and intellectual property seems purposefully hindered. Implicitly it says that capital is much more important than the others, I simply disagree.

It helps for capital to have cheaper labor, and vice versa. :-) The system grows best when both are free. (Incidentally, this is also why I'm ok with stock buybacks. If companies can't put their money to good use, retire the stock and let people invest it elsewhere)

It's less that capital is more important and more that it's inherently more concentrated, and hence, more capable of expressing its political will.

A dynamic pointed out quite explicitly by Adam Smith in Wealth of Nations.

There's an economics term for this, though I'm spacing on the name. It's the same reason the taxi lobby is so strong - it's a subset of 1 issue voters with concentrated financial support of key issues. It's also behind why tax loopholes are so hard to close - a small subset cares a lot, but the masses less so.

There are several. Smith noted Hobbes's truism: wealth is power. You might be thinking of the logic of collective action, Mancur Olsen.

Yes - Mancur Olson it is. Thanks! It's more subtle than just Wealth is Power, as it also explains some counterintuitive results.

https://en.wikipedia.org/wiki/The_Logic_of_Collective_Action

Quite. A personal fave.

Yes! Imagine if these trade deals were also about allowing the unfettered movement of people.

Completely agree with your awesome comment except for one niggle...

> it's net neutral for most companies

My take is that if there were only two companies this would be true. Considering that no company employs more than a tiny fraction of the skilled labour market the vast majority of labour innovation occurs elsewhere.

A company would have to be doing an immense amount of innovation in order to not have a net benefit from free movement of labour.

We could talk about whether the Googles, NSAs, or Amazons of the world hit this threshold, but I'd argue that nobody else does.

It's not a net neutral for most companies. It's a huge benefit for all the companies in that area. Skilled professionals have a choice of region and company to work in. IF they choose one with better terms for them, then that region will have a more skilled pool of workers. This benefits companies in that region. One could argue that the stronger ecosystem and pool of employees creates significant benefits that outweigh any corporate advantage due to restricting employee mobility. That's what the above reference is arguing.

Which is a good argument for taking employment law away from the states having 52 slightly different sets of laws is not efficient.

Of course this would probably reduce the number of HR roles but hey you cant make an omelet without breaking some eggs :-)

And in response, California firms repeatedly engaged in (illegal) noncompete and anti-poaching collusion to both drive down wages and limit labour mobility.

Then the responsible directors should have been banned for life as not fit and proper persons to be directors of a company.

I'd definitely like to see some personal penalty. Though Jobs is already dead.

Worth noting: much as I despise Facebook, Zuckerberg did the Right Thing here and didn't play along (though it's not clear whether or not FB reported the collusion).

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