When people are hired, their contracts can sometimes include what are called non-compete clauses. These were originally designed to prevent someone from learning trade secrets at one company and then switch to another company or start their own business using that knowledge to the detriment of the original employer. As you can imagine, the only people who are likely to know valuable insider information are high-level employees. But companies realized that they could use those clauses to keep many more of their workers captive and started extending the clauses to cover lower and lower level employers, thus preventing them from finding better jobs.

Now the Federal Trade Commission under the admirable leadership of Lina Khan has forbidden the use of such clauses for all but top-level employees. As Kevin Drum says:

The vote was 3-2 in favor of banning noncompete agreements for new workers and voiding them for all existing workers (except C-suite executives). This will eliminate the ridiculous practice of fast food chains hiring sandwich makers and then prohibiting them from quitting and going to work for a different fast food chain—and giving their valuable, proprietary sandwich making expertise to the competition.

Corporate America has only itself to blame for this. Noncompetes used to be limited to high-end jobs like coders or lawyers. But then, as usual, some bright boys got the idea of expanding the idea to poor shlubs working minimum wage jobs. That was outrageous enough that it finally produced support for killing noncompetes completely.
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A Labor Department study published in June 2022 estimated that 18 percent of Americans are bound by noncompete agreements, while other research suggests it could be closer to 50 percent. They are used in a wide range of industries, including technology, hairstyling, medicine and even dance instruction, while imposing restrictions on both high- and low-wage earners.

The FTC estimates that banning noncompete agreements could create jobs for 30 million Americans and raise wages by nearly $300 billion per year.

All good free-market capitalists—as opposed to those who are merely shills for big corporations—should be happy about this. The United States will do nothing but benefit from it.¹

Apparently California banned these clauses over a century ago and and despite that has had a booming economy.

The term ‘neoliberal’ is used quite a lot these days (including by me), usually in a pejorative sense but like all umbrella political and economic labels, its boundaries that determine what falls under the umbrella and what does not, are a little fuzzy. In a review of the new book The Big Myth: How American Business Taught Us to Loathe Government and Love the Free Market by Naomi Oreskes and Erik M. Conway, Louis Menand traces the history of the neoliberal ideology and movement, in an essay that has the same title as this post.

What’s “neo” about neoliberalism is really what’s retro about it. It’s confusing, because in the nineteen-thirties the term “liberal” was appropriated by politicians such as Franklin D. Roosevelt and came to stand for policy packages like the New Deal and, later on, the Great Society. Liberals were people who believed in using government to regulate business and to provide public goods—education, housing, dams and highways, retirement pensions, medical care, welfare, and so on. And they thought collective bargaining would insure that workers could afford the goods the economy was producing.

Those mid-century liberals were not opposed to capitalism and private enterprise. On the contrary, they thought that government programs and strong labor unions made capitalist economies more productive and more equitable. They wanted to save capitalism from its own failures and excesses. Today, we call these people progressives. (Those on the right call them Communists.)

Neoliberalism, in the American context, can be understood as a reaction against mid-century liberalism. Neoliberals think that the state should play a smaller role in managing the economy and meeting public needs, and they oppose obstacles to the free exchange of goods and labor. Their liberalism is, sometimes self-consciously, a throwback to the “classical liberalism” that they associate with Adam Smith and John Stuart Mill: laissez-faire capitalism and individual liberties. Hence, retro-liberalism.
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