What exactly, is a non-compete clause? It appears, typically, in a labor contract. In view of the wages and working conditions and other benefits the employer will be bestowing on the employee, the latter agrees that for the duration of his employment there, and if and when his relationship with the firm is later severed, he will not compete with his employer. This is usually stipulated for two years or so afterward, although the noncompete duration may vary. The fear on the part of the company is that the employee will either set up on his own as a competitor, or work for a different firm in the same industry. He will have the benefit of his first employer’s trade secrets, ways of doing business, etc. The employee, presumably, is paid a bit extra for agreeing to limit himself in this manner. Why then, is there any opposition to contracts of this sort? What is the case against them? First, a little history. In 2016, the Obama Administration determined that these agreements were not in the public interest. With the help of his pen and telephone this former president issued in April of that year an Executive Order, “Steps to Increase Competition and Better Inform Consumers and Workers to Support Continued Growth of the American Economy”. This was followed up in March 2016 by a Treasury Department report, “Non-Compete Contracts: Economic Effects and Policy Implication”. Hard on the heels of that came another White House report, in May 2016, “Non-Compete Agreements: Analysis of the Usage, Potential Issues, and State Responses.” This was followed by yet another October 2016 White House report, “State Call to Action on Non-Compete Agreements.” What were the justifications of this plethora of attacks on these agreed upon contracts? First, it was charged, the welfare of workers was decreased, because they had fewer options with them than without them. Well, superficially, this is indeed true: they cannot compete for a given time period. However, they were paid for this restriction on what they would otherwise be free to do, presumably with a higher wage. The employees are also precluded from outright stealing from the company, and this, too, curtails their freedom. Not all limitations are illicit. Second, they these stipulations are accused of artificially restricting competition. This is indeed correct, if by “competition” we mean, literally, numbers of competitors. Each such agreement reduces that number by exactly one. But these contracts are part and parcel of the competitive system. They were reached because of competition among employers for employees, and of the latter for the former. Mergers, too, as well as bankruptcies, decrease the number of firms still in operation. Shall we prevent them by law also? Hardly. A third criticism is that non-compete contracts hamper economic efficiency. But this, too, is difficult to accept. Suppose they were entirely outlawed. Then, firms would be loath to share with their employees trade secrets, formulae, methods of doing business, etc. that could later be used against them. If this would not stultify progress, inhibit innovation, then nothing would. Non-compete clauses help guard against such an eventuality. Another supposed flaw is that these pacts limit mobility. Of course they do. But we do not want infinite mobility, wherein workers switch jobs every millisecond. Rather, if we want economic development, we need optimal mobility. It would appear we could locate closer to that ideal on the basis of freely agreed upon contractual arrangements rather than by precluding options. Then there is the charge of depressing wages. This is perhaps the weakest of all the counter-arguments, in that first, remuneration will tend to rise, not fall, other things equal, when employees give up a bargaining chip. Second, wages depend upon productivity, and this will increase, not decrease, if firms do not fear sharing information with members of their teams. It has also been bruited about that these institutional arrangements are particularly onerous for minority group members, and thus constitute an instance of systematic racism. But this too is difficult to accept, since this demographic tends to be lower on the industrial jobs pyramid. If these clauses hurt workers, which they do not, minorities would thus be the least vulnerable to them, not the most. Walter E. Block is Harold E. Wirth Eminent Scholar Endowed Chair and Professor of Economics at Loyola University New Orleans (0 COMMENTS)

Last year, fellow UCLAer Steve Globerman and I wrote a short book for Canada’s Fraser Institute on the distinctive UCLA school. It’s now out. We’re pretty proud of it. It’s part of Fraser’s series on particular economists and on schools of thought. The schools of thought books are harder to do because you have to decide whom to exclude or say little about. The book is here. Here are two paragraphs from Chapter 1: The most important member of the School was Armen Alchian, who died in 2013. Alchian taught at UCLA from 1946 until his retirement in 1984. As you will see throughout this volume, Alchian’s insights and writings underlie a distinctive theme of the School’s approach to economics: in most productive activity, the profit motive, combined with private property rights, successfully aligns the interests of producers and consumers, often in subtle ways. As Susan Woodward, a former graduate student of Alchian’s, has noted, Alchian had no use for formal models that did not teach us to look somewhere new in the known world. Nor had he any patience for findings that relied on fancy statistical procedures. Alchian saw basic economics as a powerful tool for explaining much of human behaviour in both market and non-market settings. Much of Alchian’s work was guided by the insight: “You tell me the rules and I’ll tell you what outcomes to expect.” As Woodward has noted, Alchian believed that a huge amount of human behaviour could be understood if one got straight what the property rights (i.e., the rules) were. The chapters are: What was the UCLA School? Can Property Rights Help Us Understand People’s Actions and Even Reduce Conflict? How the Profit Motive Reduces Racial and Other Discrimination. When Do Property Rights Come About? Firms Exist to Solve Problems. The Nirvana Approach. Does the High Market Share of a Few Companies Imply Market Power? Regulation: The Economics of Unintended Consequences. Do Firms Need to Maximize for the Model to Fit? Can Economies Recover Quickly  from Disaster? Concluding Comments. Enjoy. The pic above is of Armen Alchian. When I post on other UCLA economists’ work, I’ll use their pictures. (0 COMMENTS)

Dan Sutter, an economist who heads the Manuel Johnson Center for Political Economy at Troy University, interviewed me in June about my recent article in Reason titled “Economic Lessons from COVID-19,” Reason, June 2021. The 30-minute interview is up. Some highlights: 3:00: How incentives matter. 5:25: Extra federal unemployment benefits and a free summer vacation. 8:00: Opportunities for teenagers. 8:50: Mises, Hayek, and the socialist calculation debate. 9:50: Polanyi, The Tacit Dimension. 10:30: How the central planning insight applies to COVID. 12:00: How the private sector responded. 13:20: Value is subjective. 15:00: My value of going to my cottage. 16:00:  What my wife tells people that I do as an economist. 17:00: What’s wrong with one size fits all and why “We’re all in this together” is literally true but figuratively false. 19:15: Externalities. 20:50: What happens when the polluter pollutes himself. 21:40: Least-cost avoider. 22:20: Focus on elderly. 25:15: COVID vaccine–subsidies versus price controls. 29:00: My summary.     (0 COMMENTS)

I am Christopher Nolan’s fan: from Batman to Tenet, there is no movie of his that I didn’t love. I highly recommend this article by Titus Techera for Law and Liberty. Techera searches, so to say, for Churchill in Dunkirk (the movie, of course). As you may remember, Dunkirk describes the British evacuation on the beaches, on the sea, and in the air. The movie has a complex timeline (well, it’s a Nolan’s movie), so it provides us with the perspectives of soldiers of the BEF, of the sailors of the unlikely fleet of ships (transports, fishing boats, yachts of different sorts, etc.) that participated in the Operation Dynamo, and of a RAF’s pilot. Churchill is evoked at the very end, when a soldier, who feels defeated and depressed upon returning, reads the prime minister’s June 4th speech (We shall fight on the beaches). In that incredible piece of political rhetoric, Churchill says indeed that wars are not won by evacuations but then he emphasizes the heroic nature of the Dunkirk’s evacuation and thus makes it a token of hope for the English people. Techera maintains that “Nolan’s movie Dunkirk is a necessary introduction to Churchill’s greatness because it shows in a uniquely persuasive way the crisis he overcame, the possible defeat of his country and the entire collapse of Europe in one fateful moment when the entire British Expeditionary Force was about to be destroyed or captured.” It is an interesting point, in a most interesting and eloquent essay. Interestingly enough, in The Nolan Variations. The movies, mysteries, and marvels of Christopher Nolan, Tom Shone explains that “the immediate impetus for Dunkirk came after a visit by Nolan and the family to the Churchill War Rooms in London, the secret bunker located beneath the Treasury, where you can see the western front planned out by Churchill’s general”. There is no Churchill and there are no politics in the movie – but that’s not to the detriment of our understanding of the audacity of Operation Dynamo and the dire predicament of Churchill (and England) in those days of May 1940. It emphasizes, as Techera pointed out, the role of  individuals, their importance, their heroism in the face of terror. (0 COMMENTS)

The National Commission on Military, National, and Public Service issued a report in March recommending that Congress “eliminate male-only registration and expand draft eligibility to all individuals of the appropriate age cohort,” because “expanding draft eligibility to women will enable the military to access the most qualified individuals, regardless of sex.” Women have been eligible to occupy all combat roles since 2015. This is from Ella Lubell, “Senate Considers Requiring Women to Register for the Draft,” Reason Hit and Run, July 22, 2021. Lubell also points out the ACLU’s disappointing stance: “Like many laws that appear to benefit women, men-only registration actually impedes women’s full participation in civic life,” says the ACLU on its website. “Limiting registration to men sends a message that women are unqualified to serve in the military, regardless of individual capabilities and preferences. It reflects an outmoded view that, in the event of a draft, women’s primary duty would be to the home front—and, on the flip side, that men are unqualified to be caregivers.” This is appalling, especially coming from the ACLU, one of whose founding members, Roger Baldwin, went to prison for refusing to be drafted during World War I. Notice that the ACLU doesn’t mention rights but, instead, wants equal oppression. What would send a message to women that they are unqualified to serve would be a policy by the U.S. military that they can’t serve. But they can. The actual message that the U.S. government is sending to women by not forcing them to register for a draft is that the government respects women’s rights. The government should also start respecting men’s rights. Here’s what Chad Seagren and I wrote on this issue a few years ago. One excerpt: Note the irony: feminists and their allies, in arguing for greater inclusion of a sometimes marginalized element of the population, actually seek to extend an institution that ruthlessly exploits the most marginalized segment of the population. Women’s advocates who favor opening selective service for women are correct that doing so will result in more “equality” between the sexes. However, this is equality of oppression. It is as if, rather than argue for the total elimination of slavery in the name of freedom and equality, nineteenth-century abolitionists advocated extending slavery to whites. There is an alternative that serves both equality and freedom: end the selective service system altogether. I do have one major disagreement with Ella Lubell. Here’s her last paragraph: If Democrats are considering making changes to the draft, they should not exchange women’s liberty for gender equality. Rather, they should extend to men the privilege that women already enjoy. My disagreement is with one word she uses in the second sentence of that paragraph. Can you guess the word? Postscript: I have long been a fan of Roger Baldwin, and still am. It was partly because of my admiration for him and for the ACLU’s actions defending free speech in the 1970s, that I joined the ACLU only a few weeks after getting my green card. (I had worried, probably unnecessarily that listing my membership in the ACLU would hurt my chances to immigrate.) But in researching this post, I learned something about Baldwin that I found disappointing. This is from the NYT obituary: Under the threat of Hitlerism, he modified his views of the draft in World War II, and was among those A.C.L.U. members who opposed organizational support in the courts for draft resistance in the Vietnam conflict.         (1 COMMENTS)

This tweet caught my eye: Notice that sales have recently increased much faster than employment.  A bit of that might be inflation, but surely that cannot explain such a massive divergence occurring over just a few months.  Another part of the increase might reflect a make-up rise in productivity after the recent recession.  But even that cannot explain the size of the increase. More likely, the productivity numbers seem higher because restaurants are understaffed.  I base that claim on three facts: 1. Personal observation.  In recent weeks I’ve experienced some of the worst restaurant service in my entire life, most notably long waits in line at times of day when there would normally be no line at all. 2. News reports.  There are many stories in the media indicating that restaurants are severely understaffed. 3.  Logic.  How could restaurant productivity all across the country soar in a period of just a few months, after rising at very slow rates from almost the beginning of recorded history?  If there were some incredible recent technological breakthrough in providing restaurant services, wouldn’t we all have heard of it? Restaurants had the option of raising prices enough so that sales matched the staffing levels available to serve customers, but prices are sticky in the short run for all sorts of reasons. To summarize, restaurants have recently become more “productive” in the sense of delivering more pounds of food per worker.  But in terms of actual economic productivity—delivering a nice experience to customers—I see no evidence of a recent surge in restaurant productivity.   (0 COMMENTS)

Here’s my last round of response to reader comments.  I’m on vacation now, but in early September I’ll post one last reply to Huemer’s replies to me, then give the author the last word. Parrhesia: Even if we assign very low probability that insects feel pain and they feel significantly less pain, there are something like 10^18 insects so insect suffering is a massive problem. Nematodes have nociceptors and there are 4*10^19, which is 57 billion for every human. I do not know exactly how but I imagine human beings could be causing massive amounts of suffering to these tiny creatures for trivial reasons all the time. Plausible. Having children is not trivial but it would seem there is a moral obligation not to reproduce if there is a risk your child may not be a vegan. It would be the same as the obligation not to reproduce if your children would have a decent chance of being mass murderer. Even vegan children would cause animal suffering as noted above. Yes, vegans should be anti-natalist. If you turn the dial of animal concern up too high then saving lives may be unethical. Imagine saving the life of a mass murderer. If I give money to help those in developing countries by giving them malaria nets or vaccines, they could be meat eaters or at least start eating meat 20 years from now when their country is more developed. Turn up the dial more and it might be morally praiseworthy to kill meat eaters. Turn the dial up higher and all human life is inflicting too much suffering on animals; if we were provided the chance, we should kill all human life. Harsh but fair. It seems like vegans keep the dial turned pretty high but not quite high enough to start doing really crazy stuff. Where is the line between “trivial”, “moderately trivial” and “unnecessary” or “not completely necessary.” I can’t stomach the idea of having no concern for animals but I can’t see good reason to exclude possibly insects, nematodes, fish, vermin and so forth. And their suffering accumulates. However, doing so seems really really counter intuitive. Which is why I’m so baffled that the world’s greatest ethical intuitionist would be so sympathetic to vegan premises. B K: Since intelligence doesn’t appear to be binary but rather a continuous gradient, and if, as a matter of physics and computer science, there is no hard upper ceiling on intelligence, or if the ceiling is arbitrarily high, those aliens might be hundreds, thousands, millions, billions, or trillions of times smarter than we are. The intelligence difference between them and us could in principle be much greater than the difference between us and cows, pigs, chimpanzees etc. From the perspective of ‘intelligence is what makes suffering morally bad’ premise, it seems like the only way to say that the aliens above are morally wrong is to posit some threshold of intelligence above which no matter how much more intelligent the aliens are, it is wrong for them to cause great suffering for trivial reasons on those who are merely above the threshold. pgbh: I looked at the prior debate, and he actually did bite the bullet which you suggest in your second-to-last paragraph; i.e., he agreed that moral worth is proportional to intelligence, and hence there could (theoretically) be a creature which is so intelligent that it would be entitled to torture and kill us to avoid so much as a stubbed toe. Actually, I believe I explicitly denied the view that pgbh acribes to me.  I reproduced Huemer’s graph, and said, “Your graph accurately describes my view.”  B K says this is a “lame response,” but I don’t know any way to make it sound less lame. KevinDC: Killing Banthas, on the other hand, is no big deal, because they’re just alien animals. This is a bit of a shift in goal posts. Huemer isn’t talking about merely “killing” animals, he’s talking about keeping them in conditions of constant suffering for their entire existence, so responding with examples of animals being killed after living normal lives is a red herring. Just change the statement to “The suffering of Banthas, on the other hand, is no big deal, because they’re just alien animals,” and my claim works about as well. I am puzzled by the big distinction many vegans make between killing and causing suffering.  “It’s not morally wrong to kill X, even though he wants to live” strongly suggests that the well-being of X is morally of little importance. Because “intelligence” is roughly synonymous with “learning ability.”  And since human babies go from knowing zero languages to one language in a couple of years, one can plausible say that they are in fact highly intelligent. That doesn’t follow. This demonstrates that babies later gain learning ability, and will thus later become intelligent, but that doesn’t entail that babies therefore are highly intelligent in the present sense. That makes no more sense that saying that since babies will go from being almost completely immobile to walking and running within a couple years, it’s  plausible to say babies are in fact highly mobile. It’s possible, of course, that babies have very low intelligence for months 0-6, and then become highly intelligent, which allows them to learning language.  But a creature that quickly goes from knowing zero languages to one language must have had high learning ability before the language acquisition occurred.  I suppose you could experimentally test this by seeing if babies who hear no language for their first six months acquire language as quickly as babies who hear language from birth.  But my general sound is sound. Cigarros: Brian, you say that animal welfare has moral import, though a lot less than human welfare. However, your arguments suggest that concerns for animal welfare place no moral constrains on human behavior. What activity involving animals do you think it is morally wrong, if any, and why? I morally oppose the factory farming of primates, if such exists. Thanks to everyone for your comments! (0 COMMENTS)

In a critique of a recent column by New York Times columnist David Brooks, Andrew Bacevich, president of the Quincy Institute for Responsible Statecraft, writes: In a progressive context, individual dignity is a euphemism. It is a leftwing equivalent of “free enterprise,” a term employed by some right-wingers to provide a moral gloss to policies that exalt market values over human values. Bacevich, generally a very smart man, makes a common mistake, seeing market values as contradicting or undercutting human values. But what are human values? They’re the values that humans have. Where do market values come from? They come from humans. If many people are willing to pay a lot for a limited number of tickets to a concert for example, the market value reflects the value that those humans put on the tickets. Bacevich might challenge the idea that humans should value those concert tickets as much as they do. But if so, then he’s simply dismissing human values that don’t correspond with his own. Bacevich’s error is similar to an error that has been around for a long time: the idea that there’s a conflict between property rights and human rights. In early 1970, in the first talk I ever saw Harold Demsetz, at the time a professor at the University of Chicago, give, Harold addressed that issue with a concrete example. Holding up his lecture notes, he said, “My property rights in my notes are my rights in my notes; they’re not the notes’ rights in themselves.” (By the way, somewhere in my attic, I still have the reel-to-reel tape of that talk.)     (0 COMMENTS)

My friend Daniel Johnson has an article on the European project at our sister site, Law and Liberty. Johnson seems convinced that the pandemic has endangered the European project and, indirectly, proved the feasibility of Brexit. There is much I agree with in Daniel’s article; here I will concentrate on what I don’t agree with. It is a very English article, so to say. I think he could be right, but for the wrong reasons. Johnson writes: The European Commission, having elbowed aside national governments, was culpably slow to provide adequate supplies of vaccines for its peoples. The vaccination rollout began later, has taken longer, and has resulted in lower rates of inoculation than in either North America or the UK. At the time of writing, more than 740,000 EU citizens have died of Covid: slightly fewer than the United States in proportion to population, but still a shocking total. This display of bureaucratic incompetence over a matter of life and death has been the greatest single failure in the history of the European Union. The worst of it is that those responsible are unelected. Donald Trump paid a price at the ballot box for his handling of the pandemic. Leaders of European nation-states may do the same. But the President of the European Commission, Ursula von der Leyen, and her fellow Commissioners will remain in office for the foreseeable future. They cannot be held to account. This is true, but it is quite bizarre to note it the very day when the EU vaccination rate caught up with America’s one. Also, if the EU didn’t perform very well in its centralized bid for vaccines (mostly because of its procurement procedures, see this), it is also true that health care is something each European state supplies in its own way. Dramatically different health care results were a national matter, due to the severity of outbreaks and the difference in the organization of national health services. The English “Brexited” national health care service didn’t work much better, though England was more rapid and efficient n the vaccine rollout. Did “the pandemic and its mishandling by the EU have exacerbated conflicts”? I find it hard to believe. If you are searching for those who mishandled the pandemic, you will find them in national capitals, whatever your preferences. If you think lockdowns were disproportionate measures, it was national politicians who mandated them. If you think the healthcare systems worked badly, they are of national design. If you think test and tracing systems should have been better organized, again it is national authorities who were unable to work them out. It would be difficult for national governments to shift the blame to Brussels. Particularly because, in a move that surprised most, “European solidarity” was agreed in the form of a “Next Generation EU” package that is the closest thing to a transfer union the EU has seen so far. I am personally skeptical of this move, but it certainly made the EU more popular than it used to be in the South. It eased conflicts – at least so far. On the Italian government, Daniel writes: Last February, Italy repeated its experiment of appointing a technocrat as Prime Minister, in this case the former head of the European Central Bank, Mario Draghi. So far, his “government of national unity” has held together, but this unelected EU bureaucrat has no party and no popular constituency. As the immediate crisis recedes, Draghi will find it hard to hold together his ragtag coalition of socialists, populists, and nationalists—especially if a threatened new wave of migrants arrives from North Africa. The prime minister before Draghi was an unelected university professor, Mr Conte, who succeeded in presiding over two governments, both of them supported by the populist (and ultra-democratic, in the sense that it advocates direct democracy) Five Stars Movement, one together with the Northern League, one together with the Democrats of the Left. So, what we had before Draghi was not really more “democratic” – nor more accountable. In our parliamentary democracy, governments are made in the Parliament and ought to have the support of parliamentary forces. This we had before, and this we have now. The anomaly of Draghi is that a lifelong civil servant is called to manage, not a time of austerity or fiscal prudence, but a big public spending programme. This is what brought so many different parties together: if you want to be cynical, it shows the need to make sure they get a bite of the cake. If you want to be romantic about democracy, you could see it as the willingness to engage together with the other political parties in virtuous spending, for the good of the country. Draghi is not an “unelected EU bureaucrat”: he has been director general of the Italian Treasury Minister and governor of Italy’s central bank.. You may like his policies or not, but he enjoys unprecedented international prestige. That strengthens the national interest, if you care about such things. On top of that, his caretaker government is appointed basically for one year, because next year the mandate of the current President of the Republic will end and hence a new PM might be appointed under the patronage of a different political constellation, the same which must agree on the selection of the new President. I will be happy to bet a dinner in a good restaurant, either in London or in Milan, with Daniel that the Draghi majority will hold fine until the election of the new President of the Republic. I said before that Daniel may be right but for the wrong reason. I think there is one set of policies in which the EU is bound to exacerbate conflict: the “green new deal”, supposed to reduce net greenhouse gas emissions by at least 55% by 2030, compared to 1990 levels. The Commission’s agenda (see here) is very ambitious and if confirmed in its guidelines may elicit conflicts both among and within member countries. A last point. In his article, Daniel writes: “Globally, the nation-state has made a comeback, courtesy of the pandemic; supranational organisations, not so much.” Well, that is true: interventionism rose in the pandemic, and interventionism in our world is always nation-state interventionism. But I don’t think the nation-state performed particularly well, and I think with the passing of time that will be ever more apparent. On the one hand, the only “solution” to the pandemic, if we may use this world, is genuinely global: vaccines developed by for profit international corporations. On the other hand, national solutions to outbreaks and rise in contagions looked as awkward and sometimes overshooting “one sizes fits all measures;” outbreaks demanded more local solutions, tailored to the needs and problems of each territory. The nation-state was too big to be surgical in its interventions and that had a cost. It was also no good substitute for international capitalism and genuine international cooperation among scientists. Vaccine nationalism, when practiced (including by the EU in its procurement decisions), didn’t work well. (0 COMMENTS)

The summer issue of The Independent Review just published my article “The Impossibility of Populism.” In an introductory article to the whole volume, which discusses populism and liberty, Michael C. Munger writes: We lead off with a piece by Pierre Lemieux, which we have selected as the winner of our third Independent Excellence Prize. Lemieux notes quite rightly that there is a logical contradiction at the heart of populism. This contradiction, as has been pointed out in much of the public-choice movement (Buchanan 1954; Riker 1982) is ontological, not (just) epistemological. That is, the problem of populism is not do what the people command, if you can figure out what that is! That would be a hard problem because information, complex voting procedures, and problems with turnout and participation are daunting. Lemieux’s point is that “the people” does not exist as an independent individual-like or superindividual entity, so that “the will of the people” is not just hard to discover but also cannot be assumed to exist. The problem of Condorcet’s Paradox, generalized by Kenneth Arrow’s “impossibility theorem” (for background, see Munger and Munger 2015, chap. 7), is that there is no single will that can be arrived at by aggregating the preferences of citizens. An abstract of my more detailed argument runs as follows: Defined as a political regime where the people rule, populism is impossible. The reason is that “the people” does not exist as an independent individual-like or superindividual entity. In any event, the “will of the people” is unknowable. As shown by many strands of economic theory and especially by Arrow’s Impossibility Theorem, the preferences of different individuals cannot be aggregated into coherent and non-dictatorial social preferences. In other words, there is no coherent social welfare function equally incorporating the preferences of all individuals. Thus, populism requires the illusion of a ruler who incarnates the people and its will but who, in reality, can only govern in favor of a part of the people at the detriment of the rest. The only way populism would be possible is if the people is conceived as a set of separate individuals who each governs himself. However, there is already a label for such a philosophy and political regime: (classical) liberalism or libertarianism, which deeply clashes with populism as generally defined. (0 COMMENTS)