Do As I Say, Not As I Do

Recently,  an article was published  that hopefully will permanently ruin any connection that  the Silicon Valley tech billionaires have with their supposedly  libertarian worldviews. 

This article reports on a court case that alleges that Apple, Google, and other Silicon Valley companies actively conspired to keep their workers' wages down. 

According to documents filed in the case, these companies agreed not to compete for each others' workers dating at least as far back as 2005. Workers in the industry have filed a class action suit that could lead to the payment of billions of dollars in lost wages.

This case is interesting in that there is theft of large amounts of money by some of the richest people on the planet from their employees; but, bosses steal from their all the time and there is no surprise that rich people were willing to break the law to get even richer.

The real news here is how the Silicon Valley barons allegedly broke the law. The charge is that they actively colluded to stifle market forces. They collectively acted to prevent their workers from receiving the market-clearing wage. 

This means not only that they broke the law, and that they acted to undermine the market, but that they really don't think about the market the way libertarians claim to think about the market.

The classic libertarian view of the market is that we have a huge number of people in the market actively competing to buy and sell goods and services. This point is central to their argument that the government should not interfere with corporate practices.

For example, if we think our local cable company is charging too much for cable access, our libertarian friends will insist that the phone company, satellite television or other competitors will step in to keep prices in line. 

They would tell the same story if the issue were regulating the airlines, banks, health insurance, or any other sector where there is reason to believe that there is limited competition.

If we think that workers are getting low wages, then the answer is to improve their skills through education and training, rather than raise the minimum wage. If workers were worth more than the minimum wage, then the market would already be paying them more than the minimum wage.

If we think about family leave, sick days, or other benefits. Libertarians would say that if workers value these benefits, they would negotiate for them and be willing to trade off wages. There is no reason for the government to get involved.

However, the Silicon Valley non-compete agreements show that this is not how the tech billionaires believe the market really works.

Of course, the “invisible hand” as mentioned by Adam Smith in his Wealth of Nations, presupposed that the marketplace would be self-correctly and that no one entity or person would ever do anything to hard themselves or their entity.  

Obviously, Adam Smith did not predict that greedy billionaires would do just about anything to protect their billions.