By: Robert Connolly (Cartel Capers)
One of the saddest lessons of history is this: If we’ve been bamboozled long enough, we tend to reject any evidence of the bamboozle. We’re no longer interested in finding out the truth. The bamboozle has captured us. It’s simply too painful to acknowledge, even to ourselves, that we’ve been taken. Once you give a charlatan power over you, you almost never get it back.”
― Carl Sagan, The Demon-Haunted World: Science as a Candle in the Dark
I have long been a devotee of the Chicago School (at least on the limited level at which I understand it), but the FTC and Antitrust Division’s recent aggressive civil enforcement actions have me questioning whether I’ve been bamboozled. The FTC’s latest action, FTC Proposes Rule to Ban Noncompete Clauses, Which Hurt Workers and Harm Competition, FTC Press Release, January 5, 2023, is a case in point. While I question whether the FTC has the authority to enforce the proposed rule, I think I like it, despite the procompetitive arguments that can be made in favor of non-competes.
Two days ago I had a conversation with a friend about this proposed rule. We discussed a real life, current situation where a young salesperson is being asked to sign a non-compete clause. He was concerned. To refuse to sign might mean losing his at-will position. To sign might mean that if he was later laid off, he’d have a hard time getting another job in the field due to the scope of the non-compete clause he was being asked to sign. The relative bargaining power of the employer/employee was lopsided to say the least. And this was a young man who was alert enough to realize the implications of what he was being asked to sign. I’m sure many people sign such contracts simply because the boss said so without understanding the rights they have signed away…
