[HN Gopher] Collusion through Common Leadership [pdf]
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Collusion through Common Leadership [pdf]
Author : MPLan
Score : 161 points
Date : 2025-01-05 17:05 UTC (3 days ago)
(HTM) web link (wwws.law.northwestern.edu)
(TXT) w3m dump (wwws.law.northwestern.edu)
| MPLan wrote:
| Common leadership, via the sharing of board members,
| significantly increased the likelihood that tech firms would not
| hire each others' workers. This form of 'no-poaching' may have
| had much bigger impacts on wage suppression:
|
| "It is worth noting that such collusion against workers may have
| costs beyond just the directly impacted workers in the high-tech
| sector. Wages and salaries of jobs in one industry can serve as
| reference points when workers in other firms/industries negotiate
| their wages. Thus, if high-tech workers get paid less, this may
| impact wages of other workers, say in finance, which may then
| impact wages in another sector and so on. Collusion in one sector
| can have impacts on other industries."
|
| To read more: https://www.nominalnews.com/p/competition-no-
| poaching-real-p...
| BurningFrog wrote:
| I really doubt that could override the fundamental supply and
| demand forces.
|
| If hiring a finance "worker" will make my company $500k/year I
| will offer him $450k regardless of what Google engineers make.
| mitthrowaway2 wrote:
| Will you offer him $450k regardless of whether he would
| accept $250k because his next best alternative is offering
| $200k?
| BurningFrog wrote:
| In that case I would offer $250k, of course, but that
| assumes there is no other firm that can put that person to
| work on something equally profitable.
|
| Either way, engineer wages at Google would not be a factor.
| wewtyflakes wrote:
| > Either way, engineer wages at Google would not be a
| factor.
|
| ...for you. It would be a factor for who you are trying
| to hire. If who you are trying to hire sees Google
| engineers making $$$, but you are offering $ for job X,
| and they do not see it as an unbridgeable gap in their
| own aptitude, they could well say "I am going to instead
| try to be an engineer at Google so I can make $$$,
| instead of being offered $ doing X". This happens all the
| time.
| sokoloff wrote:
| In this example, if their alternative was a $300K/yr job
| at Google, that would certainly affect their willingness
| to accept your $250K/yr offer.
|
| If it did not at least affect that willingness, they
| might not be worth $250K/yr as a financial analyst.
| roughly wrote:
| This is absolutely not how wages are set anywhere and
| certainly not in tech. Workers are paid according to the
| prevailing wages and what they'll accept, not according to
| the value they generate for the firm.
| yieldcrv wrote:
| and yet, they could, no matter what happens in other
| industries
| hmmokidk wrote:
| if they were paid for exactly the value they produced the
| firm would not profit as all the profit would be paid out
| to those generating it
| yieldcrv wrote:
| oh okay, if anyone anywhere suggested otherwise in this
| thread I'll let them know
| pests wrote:
| > the firm would not profit as all the profit would be
| paid out to those generating it
|
| Then what is the firm doing at this point?
| deathanatos wrote:
| In theory, it could re-invest those profits into the
| company, in hopes of further gains down the road. (But
| like all things, there's a healthy balance.) In practice,
| I think the answer is "executive bonuses" and [short-
| term] "stock buybacks".
|
| (But morally I agree; there is no reason every company
| has to be Scrooge, and I think it's to their long-term
| unprofitability to be so, by effectively ensuring a lack
| of experience & growth within the employees generating
| the value in the first place.)
| BurningFrog wrote:
| How much value a worker generates is of course much harder
| to quantify in tech, vs a finance trader, but the market
| forces will produce a rough equivalent result over time.
|
| But to get back to the topic, tech wages are _definitely_
| not set by comparing with finance wages!
| adrianN wrote:
| Markets are not guaranteed to convergence faster than
| surrounding conditions change.
| freen wrote:
| Markets are not guaranteed to converge.
|
| "The market can stay irrational for longer than you can
| stay solvent"
|
| There are price makers and price takers. Guess which side
| labor is on?
| roughly wrote:
| > the market forces will produce a rough equivalent
| result over time.
|
| No, they absolutely will not. Absolutely not. The entire
| history of the labor movement and of labor law is
| testament to this. We've tried this, repeatedly, in the
| real world, and labor gets fucked every single time.
| Employers do not pay according to the value generated by
| the employee, they pay the minimum they need to get an
| employee. Get this model out of your head, it is wrong.
| ethbr1 wrote:
| There's probably a case for Henry Ford, if the parable
| about paying above-market wages is true.
|
| But certainly not since then.
|
| And even he probably paid the minimum overage he could.
| It's the nature of business.
| roughly wrote:
| Every once in a while someone recognizes that paying good
| workers good wages works out well for the business, but
| that never makes it back into the textbooks somehow.
| Nevermark wrote:
| I would love a study, which compared how well a company
| did, and what their overall expenses were:
|
| 1. For paying a team of N people the going wage.
|
| 2. For paying a team of N/2 people, double the going
| wage. Aiming for the best workers it could find.
|
| 3. Paying a team of 2*N workers, whatever the bottom of
| the market is.
|
| This would be for teams where high functioning workers
| resulted in high value results, i.e.
| creative/design/technically challenging work.
|
| I have no idea how a study like this would work, but the
| more challenging the work, the higher likelihood that you
| save money going high salary, high talent.
|
| Some AI researcher seem to be falling into this category,
| with really high salaries. Researchers certainly have 10x
| talent. But I bet there are a lot of 2x, 4x engineers,
| designers, whatever, that are being overlooked and/or
| under motivated. That would be cheaper to pay, and
| produce more value, in small numbers, than others in
| larger numbers.
| richrichie wrote:
| These type of firms exist in all sectors.
| jay_kyburz wrote:
| I wonder if market forces would work better if everyone's
| salaries was public.
| ceejayoz wrote:
| There's a viable place to do a case study:
|
| https://www.bbc.com/news/magazine-40669239
| jay_kyburz wrote:
| Thanks for posting. That article was really interesting!
| BurningFrog wrote:
| I think/hope we're talking about different things.
|
| I think you're saying that employers pay employees as
| little as they can, not according to some formula based
| on the value each employee generates. Aside from some
| very specific exceptions, I think that's very true.
|
| But then we need to explain why all companies don't just
| pay minimum wage!
|
| I claim that prices (wages) on a labor market, like on
| most markets, is determined by supply and demand.
| Obviously, companies that pay employees more than the
| value they generate will run out of money and die. This
| sets an upper limit on wages.
|
| The lower limit comes from companies outbidding (demand)
| each other for workers (supply) as long as it's
| profitable. In aggregate this means wages will converge
| on on some large percentage of the value generated by the
| typical employee.
| __turbobrew__ wrote:
| I saved my company $3million+ / year in Opex costs. Still
| waiting for my juicy $1million/year salary in reflection
| of the value I generated.
| cjbgkagh wrote:
| I made a former company $100M p.a. And all I got was a
| 30K bonus paid out over 6 years. Not even a promotion as
| I was on a visa. The asset required maintenance and
| without me it slowly degraded away. Every now and then I
| offer to go back and fix it for a flat $1M but instead
| they would rather believe that it's impossible. You could
| imagine the sheer dysfunction required to let that much
| money go.
|
| A former colleague built a program that would have saved
| $30M p.a. in OpEx but as a policy they can't deploy
| something unless more than two people understand it and
| they wouldn't pay enough to hire someone capable enough.
| Probably would have taken $600K.
|
| It's about power and in general management does not want
| to yield power to ICs no matter how much money they could
| make with it. The more productive the IC the more power
| management loses.
| hnthrow90348765 wrote:
| My advice is to sleep on those kinds of improvements.
| Optimize things that are making your job/team's daily
| life more difficult, which directly translate into better
| WLB. You can sometimes knock significant hours-per-week
| off of your actual work done.
|
| We are giving away this expertise for fractions of a
| penny, but companies react to market pressures. Let them
| spend the extra $36 million for not keeping up with it.
| When they offer incentives, then do the work.
|
| Heck, maybe you can make an underhanded pitch to whatever
| cloud provider it was that you earned them millions by
| not fixing the issues.
| jknoepfler wrote:
| Having had real conversations with company leadership about
| "the board being concerned about engineer salaries being
| above industry norms" despite "having the highest revenue
| per engineer in their portfolio" I can... anecdotally
| confirm.
| dijit wrote:
| I'm here to second this.
|
| I've been in the board room when discussing salaries and
| told that we need to offer the lowest that the candidate
| will accept - "it's just good business".
|
| I was arguing against that mentality as responsibilities
| and retention are a more important metric to my mind when
| thinking about compensation. But even there, I'm part of
| the problem as I would set my "retention" target to some
| measure above industry standard: where-by I am still
| thinking in industry standard terms. (as per this thread)
| kelseyfrog wrote:
| Curious, have you always been a market determinist, or did
| that develop in a unique way for you?
| BurningFrog wrote:
| I've never heard that term before, so it's hard to answer
| :)
|
| After learning how microeconomics/"price theory" explains
| how prices emerge in markets, it can be hard to discuss
| with people who don't understand the mechanisms.
| kelseyfrog wrote:
| There's not exactly a good descriptive term, but the vibe
| I got was beyond, "Markets are the best tool to solve
| exchange problems," and ventured more into "Markets are
| an inevitable fact of nature, provide the most utility,
| and efforts to intervene produce worse outcomes." Let me
| know if I got that wrong.
| ceejayoz wrote:
| > After learning how microeconomics/"price theory"
| explains how prices emerge in markets, it can be hard to
| discuss with people who don't understand the mechanisms.
|
| AP Physics is learning that a perfectly spherical cow
| does X.
|
| Common sense is realizing perfectly spherical cows don't
| exist, and that certain things are overly simplified or
| more chaotic than theorists would sometimes like to
| admit.
|
| See also: https://en.wikipedia.org/wiki/Homo_economicus
| TeMPOraL wrote:
| But then wisdom is recognizing it's AP Physics, not
| common sense, that put a cow on the Moon.
|
| There may not be perfectly spherical cows in the real
| world, but then real cows will also do X, to the extent
| their non-perfect-spheriness doesn't interfere with it.
| Theorists don't simplify for the sake of simplifying,
| they're trying to study specific components of the whole
| in isolation. Yes, it's important to not confuse a
| component for the whole thing, but then it's also
| important to know the most impactful components and how
| they behave.
| ceejayoz wrote:
| _True_ wisdom is recognizing the folks that put stuff on
| the Moon had more than just AP Physics under their belt.
| Hizonner wrote:
| After learning how bad people who know a little
| microeconomics are at noticing or accepting it when their
| "explanations" diverge grossly and repeatedly from what
| happens in reality, it can be hard to take them
| seriously.
| freen wrote:
| "In theory, there's no difference between theory and
| practice. In practice there is."
|
| - Yogi Berra
| roughly wrote:
| Understand that the people arguing with you aren't doing
| so because they don't know or understand the theory,
| they're arguing with you because the theory is a toy that
| only works under very specific conditions which are
| almost never met in the real world.
| boringg wrote:
| I mean thats a pretty big stretch. You can certainly make the
| argument but I believe they call it casting a wide net.
| trgn wrote:
| It's baumol's cost disaease no? rising wages in one sector,
| have a side-effect of bringing up wages in another.
| boringg wrote:
| I agree that its possible but it seems to be the authors
| trying to cast a wide net via hypotheticals. Its easy to
| say its possible - but without any evidence its heresay,
| and within a paper like this its about trying to show the
| widest and broadest potential wage suppression possible.
|
| It seems sloppy to me to be honest.
| curiousllama wrote:
| I mean I know a lot of people who explicitly decide between
| sectors early/mid career.
|
| Tech vs consulting/finance for MBAs, tech vs. HFT for SWEs,
| tech vs. advertising for creatives, etc etc
| 0xcde4c3db wrote:
| It's been argued that similar dynamics also inflate executive
| pay, although I'm not well-versed enough in the overall
| economic policy debate to know how well-established this
| actually is [1].
|
| [1] https://www.epi.org/publication/reining-in-ceo-
| compensation-...
| roenxi wrote:
| And I'd say it is probably worse for society & small
| shareholders than it is for workers. These board-members aren't
| particularly skilled and companies mostly just fall into
| success by accident. Having a small set of board members
| everywhere is basically corruption and is surely funnelling
| money away from businesses into the hands of a small
| politically connected group of people.
|
| That being said, the best response would be to make it easier
| for workers to split off and spin up new businesses (ideally
| co-op style, we really should be experimenting with communal
| ownership styles now that communication tech is so much
| better). There isn't a mechanism to stop small politically
| connected groups conspiring with each other, that is just how
| power works. It isn't feasible to out-law the politically
| connected.
| sokoloff wrote:
| What did you have in mind to make it easier?
|
| It's already not hard for workers to split off and form a new
| company with whatever ownership structure they want.
|
| What's somewhat harder is to find a way to cover your bills
| until the company is able to pay your salary, assuming you
| aren't willing to sell part of the company in exchange for
| that funding. (I'm not giving you money in exchange for
| nothing; I'm probably not lending you money to immediately
| spend on salaries without collateral that will be worth
| something if you fail, and if you have that collateral, you
| could _already_ use it to raise funds.)
|
| Unless you're proposing some government scheme to give money
| for no security, I'm not sure of the form of making it easier
| that wouldn't be immediately gamed.
| hkt wrote:
| Investing in cooperatives isn't all that new, some sites
| (https://www.ethex.org.uk/) have a fairly long history in
| it. Cooperative financing options are generally debt
| instruments, or forms of shares which are a kind of like
| bonds that also confer membership and a vote.
|
| The difficulty really is in organising people into a
| functional company and acquiring customers ASAP. The
| coordination costs are high and the prospect remains risky,
| so very few people do this.
|
| Probably the best option for more cooperatives is to
| legislate the idea of a hostile takeover by employees into
| existence, such that a majority of employees can vote to
| take over a company if they can finance it's purchase. As
| you might imagine, certain quarters would respond badly to
| this.
| sokoloff wrote:
| If they can finance the purchase (at an arms-length
| price), they can _already_ buy the company; no law change
| is needed.
|
| The idea already exists and does not need to be
| legislated into existence: it's a leveraged buyout (LBO).
|
| A law change is only needed if you want to force a sale
| at a lower price than the current owner(s) will accept.
| In other words, if you want to forcibly take the company
| from them for less than the price they are willing to
| accept, so basically seize part of the value of private
| property and give it to other private people. I agree
| that would be unpopular.
| roenxi wrote:
| I'd basically like to see worker-owned corporations being
| tax-privileged (maybe a 5%, maybe a 15% discount tax rate)
| and some QoL legal features to make it obvious to people
| that they are signing up for a high-risk high-reward
| corporate structure. If I thought the idea had serious
| traction I'd look up what they do in Switzerland [0] and
| suggest people copy that. But I'd like to see new ideas
| experimented with that make it easier for workers or
| citizens to take on controlled levels of risk.
|
| It is more a political project than an economic one; I
| interpret serial board members as a problem of power
| centralisation. The incentives shouldn't be to engage in
| that sort of centralisation, it can't possibly be a
| technically good idea. One idiot in the wrong place will
| cause too much damage and board members don't have time to
| keep track of multiple companies. It'd be good to do things
| that decentralise power.
|
| [0] https://en.wikipedia.org/wiki/Coop_(Switzerland)
| Simon_O_Rourke wrote:
| > These board-members aren't particularly skilled...
|
| Are you suggesting Dana White of UFC fame joining the Meta
| board isn't particularly skilled? That he wasn't approached
| for his in depth knowledge of social network theory and
| practice, online ad revenues or AI ethics?
| hammock wrote:
| >Common leadership, via the sharing of board members
|
| We used to call this "interlocking directorates" and it's a
| fundamental pillar of antitrust law. Why are we using a new
| term?
| lupire wrote:
| This is talking about High-Tech Employee Antitrust Litigation
| form the aughts.
|
| https://en.m.wikipedia.org/wiki/High-Tech_Employee_Antitrust...
|
| Also, in retrospect, this timing was funny.
| https://www.apple.com/newsroom/2009/08/03Dr-Eric-Schmidt-Res...
| josefritzishere wrote:
| Marx predicted this. But he usually does.
| Etheryte wrote:
| Marx also predicted many things that turned out to be
| completely false. It's easy to make a convincing sounding
| argument after the fact if you only cherry pick the bits that
| support your view.
| reillys wrote:
| Give examples of things he got dead wrong?
| __turbobrew__ wrote:
| That communism is compatible with human nature.
| freen wrote:
| Tell that to monks.
|
| Or, your atomic family.
|
| Or heck, the bulk of the Neolithic.
| bigfishrunning wrote:
| All of which are small groups that rely on a ton of
| interpersonal trust. Large groups that lack interpersonal
| trust (like nations) tend to fail under communism.
| metalliqaz wrote:
| So perhaps one could say that human nature isn't
| compatible with such massive scale? Over here in
| capitalist paradise, it sure sucks for most people
| mgobl wrote:
| > Over here in capitalist paradise, it sure sucks for
| most people
|
| Pretty sure this reflexive, luxury belief is not borne
| out by the data.
|
| https://ourworldindata.org/grapher/world-population-in-
| extre...
| zmgsabst wrote:
| Compared to what?
|
| I'd argue that the US is reverting to the average global
| experience precisely as its domestic market breaks down
| due to interventions -- eg, destroying small businesses
| via regulation and mass importation of foreign labor.
| eli_gottlieb wrote:
| That the industrial working class would come to compose the
| supermajority of society? That history was driven by a
| Hegelian dialectical structure which would guarantee that
| something like the attempted German Revolution would
| succeed?
| reillys wrote:
| Are the working class not the majority of society? 1% of
| the population of most western countries are farmers. 1%
| are extremely rich and 98% are the rest of us.
| metalliqaz wrote:
| Well, as far as _industrial_ workers, they definitely
| aren 't a super-majority, given all the people working in
| service, creative, and white collar jobs. But I don't
| know why that would matter.
|
| I'm no scholar of this stuff by any means, but by my
| understanding the relevant difference was between those
| that lived by what they owned versus those that lived by
| selling their labor. I don't know the exact numbers but I
| would assume those that live by selling their labor are a
| majority but not super-majority. Those that live entirely
| off their property are a tiny minority, but there
| currently exists a solid chunk of people that both sell
| their time and build wealth from property/interest.
|
| Most of the HN crowd probably falls into that later
| category
| lucubratory wrote:
| >I don't know the exact numbers but I would assume those
| that live by selling their labor are a majority but not
| super-majority.
|
| They are a global supermajority. In some of the
| wealthiest nations on the planet, they are instead only a
| majority.
|
| >there currently exists a solid chunk of people that both
| sell their time and build wealth from property/interest.
|
| Yes, they are called the petite bourgeoisie. Marx wrote
| about them extensively. In very wealthy nations like the
| US, Canada, UK, Australia etc my understanding is that
| they make up roughly 30% of the population. The rest are
| proletarians & lumpenproletarians, aside from a
| negligible-in-numbers percentage of the population that
| compose the haute bourgeoisie or "real bourgeoisie". I
| believe the percentage of the population who are
| bourgeois in the US is around 0.3%, much lower in the
| other wealth nations because so many of global elite
| choose to live in the US.
|
| The percentage of the population who are petite
| bourgeoisie in countries other than the wealthy nations
| is highly variable, class composition varies a lot
| worldwide (e.g. there are many countries like the
| Phillipines where there is quite a large peasant
| population still). In general, outside of the wealthy
| nations the petite bourgeoisie are something like 5-15%
| of the population, and the haute bourgeoisie make up
| significantly less than 0.3% of the population.
| reillys wrote:
| I think having some money saved does not make one petite
| bourgeois as I say in the comment above I think people
| who trade their time for money are working class. If
| you've saved enough money that you can retire you aren't
| not working class, you are working class. The bourgeoisie
| do not need to work and so don't retire.
| Etheryte wrote:
| If you're familiar with Marx's work beyond capitalism-bad-
| communism-good, I think they're fairly obvious, but I'll
| bite since most of the other comments so far are fairly
| brief quips. Marx predicted that communism would rise from
| the internal collapse (or revolution, but the two are
| interchangeable in his context) of late capitalist
| societies, however this has not happened. Neither China nor
| Russia were really capitalist societies in any reasonable
| sense when they turned to communism, if anything, you could
| call them agrarian.
|
| Similarly, Marx claimed that as capitalist societies
| develop, workers would face increasing poverty, declining
| living conditions, etc. While the income gap between the
| top and low end is ever increasing, in the grand scheme of
| things, living standards for workers have improved
| considerably across the board in pretty much every
| category. Marx also argued that capital accumulation would
| lead to a decrease in profit margins, which would
| eventually result in an economic collapse, again ending
| capitalism. While we've seen numerous economic downturns,
| practically all affected economies have eventually
| recovered.
|
| And so forth, there's many other examples we can take turns
| picking apart, but I doubt there's much value to it -- most
| people arguing over Marx don't actually know much about
| Marx.
| reillys wrote:
| He didn't lay out a specific timeline though. So who is
| to say if this might come to pass? Also, perhaps his work
| and the development of more left leaning politics and
| policies actually slowed down the future he predicted.
| Finally I think people in the comments are deluding
| themselves about being petit bourgeois when they are more
| comparable to working class. Many of us have small
| savings but that does not mean we are not working class -
| having a million in savings means you might be able to
| retire, hardly being wealthy. I think a delineation that
| makes sense today is if you trade your time for money you
| are working class.
| Etheryte wrote:
| This has always been the definition of working class. A
| good example of my last point about Marx.
| SteveVeilStream wrote:
| One of the pieces of advice I would give to someone early in your
| career is to find a trusted seasoned executive who can share a
| perspective that I have never seen captured well in writing.
| Typical actual comp structures for a number of career paths.
| Board dynamics. The true sources of negotiating power. The types
| of restrictive terms included in exec and board contracts. etc.
| fluorinerocket wrote:
| One of the companies I worked at had the no poach list on the
| company open confluence for anyone to see if they looked
| realityfactchex wrote:
| As an extension: an opposite of "collusion through common
| leadership" might be "collusion enabled by common exclusion"; in
| other words, blacklisting.
|
| The inverse of a "no-poach list" would be a "no-hire list".
|
| In the past, blacklisting (now should be called denylisting) was
| a real labor issue. People who stood up for workers rights
| (think: coal-mining towns in the late 1wr800s) or had unpopular
| political views (think: Hollywood in the early cold war) were, so
| the story goes, put on shared lists and denied work.
|
| But the effect would be similar. Enabled beneficial collective
| action for the executive class, through a concerted and curated
| collection of who can participates in working together.
|
| Does tech do this, too? If so, it could explain the need to
| import labor, and reflect or contribute to an artificial
| inability to find high-tech labor domestically?
|
| That is-- some of the collusion enabled by "common leadership"
| might not be possible with a workforce having full agency--but,
| with the risk of blacklisting, basically, there is potentially
| another side to the collective action of the executive minority.
|
| Of course, blacklisting might be illegal, so, hard to learn
| about, but so might be some other other forms of collusion, which
| the paper talks about?
|
| I am not a lawyer, just wondering if this is part of a bigger
| workforce pattern, reaching further to the lower rungs of the
| ladder, too, even if in the inverse form (exclusion, not
| inclusion).
|
| Links: -
| https://firstamendment.mtsu.edu/article/blacklists/ -
| https://pen.org/censored-free-speech-hollywood/
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