Private Government: How Employers Rule Our Lives and Why We Don't Talk about It
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ndpr.nd.edu
There have been companies which really acted like governments to their employees. Ford.[1] Pullman.[2] The US labor movement arose partly as a counter to that. And, for a long time, from about 1930 to 1980, companies backed off on that out of fear of unions and government.
That fear has been lost, and companies are more assertive in employee control. Abuse of non-compete agreements to make low-level workers indentured servants would never have been accepted prior to 1990 or so.
US labor history has been erased from public dialogue in the US almost as thoroughly as Tienanmen Square has been erased from public dialogue in China.
[1] https://www.autonews.com/article/20030602/SUB/306020843/the-...
State legislatures have been doing a great job in preventing non-competes from being banned, because they aren't scared of organized political action by labour.
The bigger question is if you really believe that the "laboratories" / Darwinian process of cities and regulations and states and whatever idea in the first place. It's a conjecture by some credible, mainstream public intellectuals. The biggest evidence for it is cities/states accommodating tax avoidance, which so directly affects the bottom line that it's basically an apples-to-oranges comparison with anything less concrete like non-competes.
Sheesh.
And what would they threaten you with? Bring that lawsuit before a judge and they'd laugh you out of the building.
They'd probably have their corporate lawyer write a mean sounding letter, you'd ignore, no way anything happens beyond that.
If you get stabbed don't the police arrest the person and, the state try and convict them? They don't leave it to the victim to mount a case, surely?
A proper legal system would provide sufficient reward to make it always worthwhile to challenge companies _clearly_ abusing their power in that way.
And even criminal trials end up in plea bargain settlements. The trial and deliberation isn't necessarily expected.
For the individual, challenging a non-compete agreement is probably not worth it. But amortising the cost over everyone who benefits it becomes a very reasonable thing to do.
What employers today seem to want is a workforce which is available and disposable. "Just in time" employees. This is not like being a government. It's being the dominant player in a market. Which, in some ways, is worse. It's power without responsibility. Employers don't want to be bothered with worker control.
Classically, this is Marx's "reserve army of labor".[1] This is why homelessness is useful to business - it's a reminder that, no matter how bad a job is, there's worse.
As opposed to a past period when they wanted a workforce that wasn’t available and disposable? I’m glad you mentioned Marx, because he was calling that out as primary desirable criteria for labor pools in general. A constantly available reserve army of labor and disposable workers is exactly what capital depends on to keep labor costs low. Hence the fundamental need for labor to organize and cooperate to counter the inexorable push of wages to zero (or its subsistence equivalent), or unemployment.
I’ll admit I’m probably unnecessarily nitpicking you saying, “employers today”, though. I don’t think I’m voicing a fundamental disagreement here. I do, however, really like your phrasing of JIT employees.
Or inverted? When I hear people talk of unions in the US, it's about how shitty theyve made everything.
Those features help labor relations when things are strained. But it involves very harsh dog fighting that tends to leave both sides wounded.
These kinds of conspiracy theories about the alleged defeat of the unions at the hands of corporations are on par with anti-vaxxerism. They rely entirely on the instinctive belief that we live in a zero-sum world where the establishment encourages norms to exploit the masses, and that therefore contrarianism empowers the underdog.
The truth is the US Labor movement took complete control over major US industries, from Big Auto, to US Steel, to the passenger rail service, and drove them into bankruptcy or Outsourcing. With the laws that they put in place the U.S. is very inhospitable to manufacturing. Amazon and Tesla, two firms succeeding on a global stage with US-based production, are next on The Chopping Block, as activist types promote putting them under the monopolistic control of unions.
As for the history of the labor movement, people like you conveniently gloss over the extreme violence that was at the heart of it. The labor unions were closely linked with organized crime and on numerous occasions murdered replacement workers and used threats of violence to enforce picket lines. The propaganda that you're promoting now is just a continuation of the campaign of lies that empowered the labor unions in the first place.
Companies have also had ties to organized crime and use intimidation to prevent workers from striking. Plus, a history of hiring "soldiers" to slaughter workers.
Where they did use violence they were usually entirely legally justified, in reacting to illegal violence by unions like picket lines that were violently enforced or trespassing on company property or any other number of thuggish intimidation tactics used by unions.
It is the unionists who needed to violate the right of employers to freely associate with whoever they wanted.
That's why the unions engaged in so much illegal activity and that's why they aggressively advocated to institute laws that restricted the right of employers to freely contract. Unions depend entirely on subverting and restricting the free market. They are rent-seeking institutions and can only gain public support by lying about their history and the nature of a freely agreed to employment arrangement, using rhetoric where Marxist concepts like wage slavery, expropriation of surplus value and other inflammatory demagoguery predominate.
When a human group gets too much power in their area, abuses arise. In fact, that was the core historical analysis of the founding fathers of the US, hence the separation of powers. By separating powers in the US Constitution, they intentionally added all sorts of inefficiency in order to allow for checks and balances.
Unions certainly introduce inefficiency into the free market enterprise, but without them, abuses can and have arisen. Figuring out the right balance of power between unions and corporations should be the goal, but instead we have the current political environment, where unions are demonized because of one sided representations of abuses they led to.
This is the false dichotomy promoted by unions.
While obviously there are instances of unions counteracting corporate abusive, unions by-and-large subvert the right to freely contract and the right to private property and therefore increase abuse.
They do not combat the main forms of corporate abuse like lobbying to restrict competition via regulatory barriers, licensing restrictions, etc.
The NEA for example supported the bank bailout that was a massive subsidy to banking corporations in the form of socializing their losses and risks.
Unions are designed specifically to acquire monopolies over labor forces. They are not like corporations where there are good ones and bad ones. Unions are almost all harmful to the freedom to contract because that's what the union organizational structure was designed to do.
The Teamsters (one specific union dealing with shipping) was linked with organized crime, yes, but it's hardly fair to claim that most unions had anything to do with them.
Unions haven’t fallen out of favor because of evil powerful people, they fell out of favor because they ultimately hurt employees more than they help them
[1] https://www.forbes.com/sites/niallmccarthy/2017/06/20/which-...
Or more to the point: how many startups never happen because the right people are unable to manage the personal risk of leaving defined employment?
IMO this the consideration -- human ability is not really allocated all that well when you're bonded to an employer without cheaper switching costs.
This tips the scales towards the largest employers for labor, how many low paid internships could be replaced by high risk startups?
Before anyone has had a chance to accumulate to many obligations, that is the perfect time to grow by taking a risk and going after something disruptive.
That also would be the time in which many have the energy and optimism to do good rather than for greed or meeting obligations such as feeding/housing a family of four.
No, it was WWII that did it.
> This didn’t stop President Truman from considering and promoting a national health care system in 1945. This idea had a fair amount of public support, but business, in the form of the Chamber of Commerce, opposed it. So did the American Hospital Association and American Medical Association. Even many unions did, having spent so much political capital fighting for insurance benefits for their members. Confronted by such opposition from all sides, national health insurance failed — for not the first or last time.
https://www.nytimes.com/2017/09/05/upshot/the-real-reason-th...
Speaking only for myself, I intentionally lived in a small apartment in order to make sure I had at least a year of income saved. I did this pretty early in my career in the bay area. I believe it’s still quite possible to do this if you are willing to forgo purchases that signal wealth (i.e, live in the smallest manageable apartment, keep driving your beater for a long time, cook instead of eating out).
I'd argue this has more to do with the low salaries expected of startup founders more than anything. Hard to stomach them unless you've got significant savings already or no dependents.
At least this is the only concern I or anyone I’ve talked to about doing a start up has risen. I work at a not quite FAANG company and we all have decent salaries and benefits. I’d give it up in a heart beat if I didn’t have to worry about health care costs.
When I left my job for a year of relaxing health insurance was nowhere near a concern since I just paid the COBRA premiums.
edit: And if you're under 26 you can be on your parent's health plan.
edit2: Also, talking about couch surfing pretty much highlights my point about dependents. I'm guessing neither you nor the people you talked to are old enough to have kids.
Hopefully 0 times. Major changes in your life (like changing jobs, or moving cities, or making large purchases) always require some consideration.
>human ability is not really allocated all that well when you're bonded to an employer without cheaper switching costs.
You're overstating the case especially in market economies. If anything, the issue is more prevalent if your employer is the government, as the government tends to overpay for labour and is slow to adjust if conditions change (i.e. very hard to let people go for any reason).
Having said that, there are problems with movement being too liquid. That is, you lose institutional knowledge if your company (or government department) has a too high of a turn-over rate, which leads to lower quality products/services.
>how many startups never happen because the right people are unable to manage the personal risk of leaving defined employment?
And rightly so. Startups are an incredibly risky endeavour and they always will be. This is why founders tend to be younger, rather than older. If you have dependents and responsibilities you have to think twice about making a high risk bet. I don't know if you want to actually incentivize people to make more high-risk bets.
Governments by definition have a monopoly on force. A government is a government because people with guns say so.
You might want to argue that employees have power, but they are nothing like a government. They don't have force, they don't have jails, they can't enter your home and give you orders. The worst thing an employer can do is to stop employing you. That's hardly coercion IMO.
I've never heard that definition of government. Also, at least in the US (and presumably everywhere else), private citizens have the right to use force under various circumstances.
> private citizens have the right to use force under various circumstances.
Yup, as defined by the government. You can defend yourself in certain circumstances, but you are always subservient to the military and police. They are the ultimate power in the state. If there was a force stronger than the military or police, that power would then be the state.
Can you start a private army to compete (not meaning fight it, but to provide the same services) with the state's army ?
If you have to pay for it (you actually pay for the army to force you to pay for it...), and you can't compete with it for the services it provides, it's not only a monopoly, it's also a tyranny.
https://en.wikipedia.org/wiki/State_(polity)
It is probably the most common definition. As per this definition, the citizens can use force because the state grants them that right.
By your way of thinking, any business is a government.
You now need to spend an undefined amount of time looking for a new job.
You need to find that new job soon, because your old job was tied to important things like health insurance, without which any accident could bankrupt you.
It was also tied to less important benefits like vacation time and seniority, which reset at youe new job. Previously had 3 weeks off available after working for years at the same shop? Back to 6 days. At some places it may also be tied to a car, computer, or phone plan which you have come to depend on.
Not to mention that getting fired is a black mark on your ability to get a new job in the future.
Employers like to structure things such that they can replace an employee with little impact. They have people whose job it is to manage that process. To an employee, even an unusually well prepared one with savings and a plan and a current resume, losing one's job is a catastrophic event that can only be easily withstood a handful of times in a career.
There are many other things and employer can do, such as the aforementioned non-compete "agreements", changing pension and other retirement benefits (threatening to take them away as pressure), colluding with other employers to keep your wages down (https://www.lexology.com/library/detail.aspx?g=f578d157-2b2a...), and more.
Eddie Gonzalez-Novoa, 44, now living in Houston, last year left a full-time job in New York making $88,000 a year plus benefits to help his nephew, a cancer survivor, start a social media and video-gaming site for other teens with the disease.
https://www.denverpost.com/2014/02/10/they-quit-their-jobs-t...
Wage growth in the US and Western Europe has been very stagnant over the last 40 years. Meanwhile wages have tripled over the last 20 years in China.
During the "Gilded Age", which unions and their activists regularly fearmonger about, wages grew at the fastest rate in US history. And unlike the post-war era, this wage growth didn't come at the expense of US industry, where unions extracted enormous unsustainable concessions that culminated in major US companies declining or going bankrupt. The wage growth in the late 19th and early 20th century accompanied massive US industrial growth.
The best way to help workers is to embrace Capital. The worse thing you can do is embrace an anti-capitalist ideology.
Dropping wages in the West would bring a lot of extra work, at the same time, that work would be paying less. The core thing here is that cost of living, and hence a living wage in the West is higher than in e.g. China. Due to globalization, companies can now arbitrage that difference.
Now it perhaps could be argued that white collar workers may take a longer term view when deciding what is in their best interest in comparison to a blue collar worker, but I would argue that those behaviors are in line with how rich/poor people make decisions based on financial pressures.
Considering the amount of back scratching that goes on between government and the private sector, it's a true wonder that there are any consumer protection or labor laws at all, or that powerful politicians or corporate execs ever have to face any consequences.
Well keep watching, because the landscape is getting less wonderful by the day.
Aside: If you like to compare-contrast US<->EU, I found this paper interesting: Why Doesn’t The US Have A European-Style Welfare State? (2001) https://scholar.harvard.edu/files/glaeser/files/why_doesnt_t....
Most importantly, people can switch companies far easier than they can switch governments. Changing jobs is easier than moving between states, let alone countries. Switching costs could be lower (mostly related to health insurance), but overall companies are competing pretty hard for workers. That's why they advertise positions, hire recruiters, and go to colleges and job fairs. Could you imagine governments behaving similarly? The only thing that comes close is the military, and that's because their potential recruits can choose private sector jobs.
They very well could pull you over, revoke your license, and forbid you from driving.... If you were driving on their land or driving their car. They have to provide no justification for these actions either. They can reassign you to do something else or simply lay you off with a short notice.
> Companies don't put me in prison. Companies don't extort me under threat of violence. Companies don't enslave me.
Companies can put you in prison using the state. Companies can and do extort workers on certain terms like withholding paychecks and so on. Companies absolutely enslave people by for instance telling them a myriad of ways in which they can and can not conduct their lives.
Her argument is that companies are communist dictatorships and they are all communist dictatorships, so you can not escape their control no matter who you are working for. Considering that you spend most of your life under control of such governments either one or another, these governments determine most of your life.
And I would say indoctrination to such governments starts with schooling which teaches you to obey and not question such governments.
> Imagine a government that assigns almost everyone a superior whom they must obey. Although superiors give most inferiors a routine to follow, there is no rule of law. Orders may be arbitrary and can change any time, without prior notice or opportunity to appeal. Superiors are unaccountable to those they order around. They are neither elected nor removable by their inferiors. Inferiors have no right to complain in court . . . except in a few narrowly defined cases . . . The most highly ranked individual takes no orders but issues many. The lowest-ranked may have their bodily movements and speech minutely regulated for most of the day . . . This government does not recognize a personal or private sphere of autonomy free from sanction. It may prescribe a dress code and forbid certain hairstyles. Everyone lives under surveillance . . . Suspicious searches of their bodies and personal effects may be routine . . . The government may dictate the language spoken . . . It may forbid certain topics of discussion. People can be sanctioned for their consensual sexual activity or for their choice of spouse . . . They can be sanctioned for their political activity and required to engage in political activity they do not agree with.
> The economic system of the society run by this government is communist. The government owns all the nonlabor means of production in the society it governs . . . The vast majority have no realistic option but to try to immigrate to another communist dictatorship . . . (37-38)
That is not true. They can say, "You are trespassing. Leave now." (Just as anyone can if you are on their land.) They can't take away a state-issued license. I'm not sure why you think it's so terrible that someone who lets you use their car can also stop letting you use their car. Likewise, you can do the same if anyone is using your car.
> They can reassign you to do something else or simply lay you off with a short notice.
And I can leave for another job with short or no notice. I can use a job to learn certain skills, then immediately go work at another company.
> Companies can put you in prison using the state.
Only if the state determines that you've committed a crime. And anyone can do this, not just companies. In this case the power is with the state, not the companies.
> Companies can and do extort workers on certain terms like withholding paychecks and so on.
That's mostly not true. If you are employed at a company and they don't pay you, they've opened themselves to a lawsuit. If you quit or are fired, in some states companies can withhold the last paycheck for a limited amount of time. Usually this can only be done to encourage former employees to return company equipment.
Even without government laws enforcing these things, if a company becomes known for such behavior they'll have a harder time attracting talent.
> Companies absolutely enslave people by for instance telling them a myriad of ways in which they can and can not conduct their lives.
In slavery you're not allowed to leave. If your employer wants you to do something, you are free to say, "Go fuck yourself." and find another. Contrast this to say… jury duty, where you can be fined and imprisoned for not doing what the state orders you to do.
> Her argument is that companies are communist dictatorships and they are all communist dictatorships, so you can not escape their control no matter who you are working for. Considering that you spend most of your life under control of such governments either one or another, these governments determine most of your life.
I understand her argument, and the reason it is incorrect is because unlike governments, the cost to switch companies is tiny. Most employment is terminated at the volition of the employee, not the employer.[1] If twice as many people are quitting their jobs than are fired or laid off, how can it be that people are in thrall to their employers? Wouldn't the ratio be the opposite if that were the case? Again, the cost of switching jobs is lower than the cost of moving between states. If you think we have freedom of movement in the US, then we clearly aren't subjects in company dictatorships.
I work at my current job because it's the best one I've found. That's true for pretty much everyone who is employed. Workers compete for jobs and employers compete for workers. Neither side can coerce the other. This is not at all like governments. With governments, you're mostly stuck with the one you're born into. There are only a few specific, difficult ways to switch governments, and at every step there is coercion.
1. https://www.bls.gov/news.release/jolts.nr0.htm According to the BLS, 3.4 million people quit their jobs in June of 2019 compared to 1.7 million who were subject to layoffs or otherwise terminated.
Furthermore, there are plenty of scenarios where a business is so big in a particular area that the local judges and law enforcement essentially work FOR the company. It does not matter if state or federal law is on the employee's side - if that employee is sitting in a local jail or state prison, they may be there for quite some time before hopefully pushing the case to a high enough court to get justice.
> In slavery you're not allowed to leave.
There are so many ways that one can be practically enslaved. I really doubt that you have experienced what many poor employees have experienced: having a family with children, just enough income to get along when everything is going ok, and then having an employment situation arise where the choice is "leave" (and face serious financial/life consequences) or stay (and work in poorer conditions with fewer benefits or any other reduction in quality of life) - all under the control of the company.
"Smith underestimated economies of scale. His butcher is now working the night shift on the line in an industrial meatpacking plant." The key point being that early theoreticians of the free market were motivated by humanistic impulses, but failed to understand how large and powerful corporations could become, relative to the bargaining power of the individual.
When you talk about the cost of switching jobs, and how you will be actively recruited to your next one, you are talking from the perspective of a minority at the apex of the industrial food chain who has that kind of labor power.
The economies of scale in the global economy are such that an entire industry can and will pull itself out of a large region because the labor is cheaper and the laws are friendlier in another region. The bargaining power of the individual is negligible in such a circumstance, and alternative work is hard to come by, or is impoverishing. While third world countries are in truly terrible plights due to this kind of situation, large portions of the United States are subject to the same forces. While, to your point, the workers in those areas are not subject to actual physical coercion, the effects (drug abuse, suicide) show that the spiritual suffering is quite there and quite effective.
> The bargaining power of the individual is negligible in such a circumstance, and alternative work is hard to come by, or is impoverishing. While third world countries are in truly terrible plights due to this kind of situation, large portions of the United States are subject to the same forces.
Your point about terrible plights simply isn't true. Wages in the developing world have increased greatly. Since I've been born, over a billion people have been lifted out of extreme poverty. Those living on <$1/day are now less than 10% of the world population.[1] And in the US, non-managerial wages have stayed the same or increased since 1960.[2] (These statements are accounting for inflation, of course.)
US suicide rates have increased, yes, but they're still lower than they were in the 1950s and they're below countries such as Switzerland. Last I checked, Switzerland wasn't exactly a land of despair. Something is causing more people to commit suicide, but it's probably not the economy.
1. https://ourworldindata.org/extreme-history-methods
2. https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us...
Yes the world economy is growing and lifting people out of poverty, but it is also resulting in atrocities.
Neither the author or myself are arguing for wholesale movement away from capitalism, in which case your argument would be compelling, but the understanding that things like laws and labor unions can and should stand for the worker.
No, but they can create situations where you have a debt to them, and they influence local enforcement policy that results in you being in "debtors' prison".
> Companies don't enslave me.
Just as one example, when Walmart comes to your small town and kills many of the local small businesses, you're left with two choices: move to another town, or work at Walmart. You have family/roots in the area, so you work at Walmart. And now you may have a lower wage, fewer benefits, and generally poorer options for living compared to life before Walmart moved in.
> Only criminal organizations and governments do those sorts of things.
It really can be argued that many large companies are criminal organizations, at least by some definitions. Walmart has lost high profile court cases with respect to worker treatment, and it was proved that Walmart intentionally broke laws. That is criminal. Some very large banks have been proved to have actively laundered large amounts of money for criminal organizations. Many other large companies have been exposed as behaving in criminal ways. Whistleblowers in some such companies have had their careers and lives ruined by the companies they worked for.
As we have seen recently regarding issues from harassment to non-compete agreements, this kind of abusive behavior is widespread in spite of labor laws and public opinion to the contrary.
I don't understand that one at all. A huge point of 401ks is you can leave your employer and you keep all the money, as opposed to things like a pension.
They may change it at any time.
You can only do what you want with your money after you leave your job.
You also can only contribute earned income to tax advantaged retirement accounts, not unearned income.
It will manifest itself in all sorts of ways.
If you have a limited supply of basically anything and use all of it the same issue would arise. If you had 50L of water to use per day, and all of your activities used 49.5L of it, then you would be in a water crisis, because if you ever e.g. needed to wash an extra shirt you simply couldn't, it would be impossible.
So people making $7.20/hour should be living on $5/hour? People are spending all their income, but inflation adjusted income has been stagnant for the middle class and below[0]. Combine this with the costs of living (like healthcare) increasing and you've created a situation where a lot of households are struggling to have money left over (or are commonly indebted).
[0] https://www.advisorperspectives.com/dshort/updates/2018/10/1...
I don't know what they "should" do. It sounds like they're really in a pickle indeed and the solution (if one even exists) is going to be very dependent on individual circumstance.
The main issue is perhaps what you hint at the end there. Credit has gotten far more available, so people are no longer used to saving to make purchases, and are in the habit of going into debt.
This article illustrates it well: https://www.businessinsider.com/how-high-income-and-low-inco...
The bottom 20% earners spend 40% of their income on housing. The top 20% spend 30% of their income on housing. And keep in mind, that housing that the poor people are paying for would be considered horrid compared to the housing that the rich people spend their money on.
If you were to look at the housing prices in the areas that the bottom 20% are renting/owning, and apply that price to what the top 20% earn, the top 20% would be spending less than 5% of their income on housing (comparing apples to apples).
Yes, credit has made it much worse for the poor people. Credit appeared to be a way to save them from a difficult short term or starting situation, but predatory lending (provably so) has essentially enslaved them.
The bigger question is, how/why do the bottom 20% start off in such bad situations (in some countries)? The answer almost always involves corporate influence of government.
This is a very well known problem. The poor person must make financial decisions out of absolute short term necessity that result in worse financial futures compared to one who has the starting finances to think long term.
One good example is in everyday choices, like buying shoes. A good pair of shoes, the type you would wear to a job (whether working boots or business casual) may cost around $80. Most of us here think that's low, but it's a reasonable example. Those $80 shoes should last a few years with some maintenance (low cost maintenance).
The cheap shoes cost $15. They will be very poorly made (probably by children or effective slave labor), and they will come apart within a year (despite your efforts to keep them clean or make small repairs).
The poor person will have to buy new shoes more often, and the overall cost will probably be higher than if they had been able to _invest_ in better shoes.
Used cars are another good example. The $500 beater will require more maintenance and be less reliable than the $3000 used car, but the poor person doesn't get to choose wisely. So they buy the $500 car, drive far each day to work (since they cannot afford to live close their job due to rising property prices). Their car breaks down or otherwise requires $xxx in repairs frequently. In the end, they will spend more on their car than the person who could afford the $3k up front.
Now, perhaps the poor person can get a loan so they can make some wiser buying decisions. We know how that goes. Once saddled with debt, they are statistically far less likely to get out of debt and reach a positive financial situation.
If you look at the numbers on poverty in the US, you'll see just how many poor kids you are asking something impossible of.
I don't claim to have the solution. And neither am I asking anything of anyone in particular.
I am simply staying the facts. It is a crisis situation to be in, and only by treating it as such can it be solved.
This is not advice but fact. Perhaps an individual can do nothing about their situation. Their future light cone may be fixed, like the event horizon of a black hole.
So it goes.