There are some fantastic counter-arguments in there. For the record I think both sides have valid points: unions do make industries "sclerotic," but they also exist to prevent a deflationary race to the bottom in wages. I'd reference Peter Thiel's comments on competition from Zero to One-- they apply just as well to labor as they do to companies.
"All workers can't be paid union wages" is perhaps true, but flattening the labor market completely would result in a squeezing of disposable income that would harm the economy overall not to mention the well being of its participants. As Thiel correctly argues: surpluses are required for pretty much anything outside the status quo to happen. If there are no corporate surpluses there can be no R&D or expansion. If there are no labor surpluses, there can be no adoption of anything new or interesting or novel. How many impoverished check-to-check workers will be purchasing an Oculus Rift or a Tesla?
A lot of the criticism of unions is also hypocritical. For example, corporate executives as a class are de-facto unionized. Why is it that companies pay absurd salaries for directors? Being a CEO is a hard job but it's not that hard. The reason companies hire superstar directors and pay them superstar wages isn't because these people are actually hundreds or thousands of times more effective. It's because these people are connected. They're plugged into the "old boy network" a.k.a. in the union and that confers a privileged position in relation to things like raising money, making big deals, protecting companies from government scrutiny (the CEOs union has a revolving door with government), etc. A great recent example would be Condi Rice being recruited for the Dropbox board. What expertise does she have in IT enterprise marketing, distributed systems, engineering team building, ...? None. But she's very connected in the "union."
I think it's reasonable to hypothesize that any time you see what appear to be above-market wages being paid for any form of labor, something union-like is going on even if it's not officially organized as such.
I also love the comparison of YC to a union. It's very much like one. An open question for pg:
Would he be willing to forego YC's union-like attributes? This would entail ceasing all collective bargaining with investors on the part of YC companies and refusing to permit companies to openly leverage the YC brand to increase their clout in the market. YC could still provide co-working space and mentorship but could not use any collective marketing, branding, or bargaining strategies to assist its companies in fund raising or growth.
Wouldn't it be a more efficient market if startups competed only on merit and negotiated in a flat market domain with investors?
I believe this is true, and there probably are things that could be done to "disrupt" both these markets.
YC (and to a lesser extent Silicon Valley itself) have union-like characteristics. Why is it that a bunch of companies working on distributed networks that are designed to permit easy global communication have to be located within 20 miles of each other and consequentially forced to spend sizable percentages of their investment capital propping up an absurd real estate market? This is being disrupted by things like AngelList that make it easier for startups in more reasonable local markets to raise capital on an open flat market.
The death of Detroit wasn't caused by the death of cars. The automobile market has grown since the 1970s. It was caused by the global geo-diversification of the automobile industry. I wonder if the same thing could happen to SV (and YC) as a result of similar disruptive market shifts in the IT/Internet/tech markets. Since investors are to a great extent the customers in this market, the shift could come if investors see superior returns from companies outside the SV/YC orbit and decide that paying the Valley Tax is not justified. Also like Detroit, SV's cliquish quasi-unions are perhaps a bit smug and self-satisfied and don't see it coming.
I'm not sure how you'd go about disrupting the "CEOs union." Let's make the question more concrete: what value does a union hire like Condi Rice (just using her as one example) bring to Dropbox and how might a startup replace that with something more efficient? I personally don't know enough about the high corporate world to know the answer, but I suspect a few around here do and might have some ideas. Maybe it would be possible to leverage your customer base. If you have something people love -- like AirBnb for example -- and are getting flak over it, which would be cheaper: to mobilize your customers or to hire a $200m/year CEO with government connections?
I think it illustrates that while the tweet sounds insightful, it's actually nonsense and doesn't stand up to scrutiny.
Besides, every industry has unions or entities that are similar to unions - even the software/startup industry - so it's basically saying 'startups can work anywhere'. I'm also curious to see how a startup would 'release the potential' held back by bus-drivers' or coal-miners' unions, such that there would cease to be such unions (ie: 'the sclerosis is removed'), without there being the reduction in wages/conditions that the follow-up tweet mentions it's not trying to pursue.
> Would he be willing to forego YC's union-like attributes?
Interesting view point! I would note though, that before the YC & AWS era of young founders starting companies on the cheap, venture capital had union/old-boy-network like properties. There were only a handful of great VCs and they would be very connected and collusive on deals. So maybe YC collective bargaining balance out VC old boy network?
Sometimes the political divide between Europe and the US becomes glaring on Hacker News. I feel this tweet is one of those moments. Our differences makes us more interesting but this tweet was a bit hard to digest.
I don't think this is a continental divide at all. I think what PG said here would be considered reprehensible to a lot of Americans, and I count myself among that contingent.
This isn't demonstrative of a divide between continents, this is a musing of a man so far out of touch with regular society that he sees a large swath of society as an inefficiency waiting to be obsoleted by a tech startup (which would presumably increase his personal wealth in the process).
40/60 splits often turn into "group A does this, but group B does that". It happens a lot.
I remember an article about whether people consider various acts on social media to be "cheating". So you know, 85% of women considered having a tinder account to be cheating, whereas 75% of men did (or something like that, I can't really remember). This was reported, of course, as "men and women differ about what counts as cheating on social media" when the data screamed "men and women largely agree about what counts as cheating on social media."
The split may be relevant - it does tell you something when 60% of one continent feels one way and only 40% of another does, but "Europe is this, whereas the US is that" is usually a vast oversimplification.
It's generally media driven, the differences make for better headlines, but it crops up all over the place.
Historically, unions have been very antagonistic to capital. Paul Graham is basically the definition of capital; he uses his wealth to generate more wealth. And what he is suggesting is that startups could fix the inefficiencies in the market that unions have created. The problem is that fixing these inefficiencies would primarily benefit people like PG, who make their money from the ownership of enterprises rather than labor.
Generally speaking, the inefficiencies of unions exist to protect the interests of the workers, who generate wealth for the company but more often than not do not have an equity stake in the business. Unions exist to maintain the balance between capital and labor, and to make sure that people like PG don't deprive the laborers of fair remuneration for their work.
While we can almost always find someone who will do a job for less money, as a society we have an interest in providing an equitable share to labor, as there are far more workers driving this global economy than there are venture capitalists (or even just plain old capitalists) contributing to the economy in the form of seed round funding and the like.
For some people. Within the union some members benefit and some members lose relative to individual bargaining. Generally speaking unions base compensation heavily on seniority rather than productivity. That really screws the young, the hard working, and those with the most initiative.
I think the net result is a greater share of the profits for labor, but there are definitely some people in unions getting totally screwed by the unions.
It's still better than no unions. Similarly, unions don't just do paypackets, they also do things like check OH&S conditions. And from experience, at the low end of town, the young, the hardworking, and those with the most initiative are screwed by capital anyway. You don't get extra money in your paypacket for being a hardworking or initiative-showing bus driver or call-center operator.
In some cases yes, in some cases no. The CAD draftsmen at one of the companies I worked at were in the UAW. The older guys made a boatload of money while the young guys barely made made more than minimum wage. On an open market the managers would have happily paid the young guys 2-3x as much for their work, but that wasn't an option.
OH&S wasn't all that important since we're talking about a desk job.
I've often wondered how much of the potential corruption in unions could be minimised through a membership app. Try to take some of the responsibilities away from people in organisational roles.
> Generally speaking, the inefficiencies of unions exist to protect the interests of the workers, who generate wealth for the company but more often than not do not have an equity stake in the business.
What if we paid workers meaningful amounts of equity? Would that perhaps reduce the need for unions bc the labor/capital divide starts to get blurred and then workers are able to share in the wealth they generate for companies?
This is a complex issue well outside of my personal areas of expertise, but I would certainly think that workers earning meaningful equity would induce them to act in the best interestes of the company, because their own interests would be better aligned with the company's interests.
That's a great point. Maybe we should view the issue from two perspectives: 1) unions for government employees and 2) unions for corporate employees. Where maybe the solution for corporate employees is more equity compensation, and for gov't employees a formal union system makes sense. Though some have argued that perhaps the gov't should not be in the business of education, and perhaps encourage a voucher system instead.
In some ways public sector unions are worse than private sector unions. In the private sector, the stakes are higher; you can contribute to the bankruptcy of your company if you are too aggressive. You also can only negotiate with the company itself. Maybe you can get a boycott of products in some cases.
With public sector unions, bankruptcy is very hard to achieve. The union also isn't negotiating with the government agency; it's negotiating with politicians as well, who have aims other than efficiency. They want to get elected. If enough of your constituency is in the relevant union, there's going to be pressure to not negotiate as hard.
Look at e.g. public transit unions. The DC Metro is falling apart, station managers sleep at work, escalators don't work ludicrously often, repairs are shoddy, and the drivers aren't terribly good at driving their trains (seriously, since they disabled computer control it's started giving me motion sickness; I have never experienced this on other transit systems). Yet the union is asking for a raise.
>> What if we paid workers meaningful amounts of equity?
> How would you provide equity for public school teachers?
I don't subscribe to the neo-liberal idea of conflating money with value (or equivalently: to measure efficiency in terms of money). But one could theoretically ban salaried employment[1,2]. And structure public services as employee-owned corpration that bid on service contracts. On might create a limited monopoly, by requiring a license to eg: run public education. And the same could be done for police, prisons, fire departments, special forces, security services... Again, I don't think this is a good idea, and we do this to a certain extent already.
Workers tend to consume as much or more than they make in income, hence most workers would immediately liquidate their equity holdings in exchange for cash that actually improves their quality of life. The best move would be eliminating the inefficiencies in the private sector (i.e. Unions) and adding universal supplemental income via the public sector.
We already get paid in equity. Our 401(k) plans tend to be invested in stocks. I work for a public company, and could move 100% of my 401(k) into my employer's stock if I wanted to. What mainly distinguishes my situation is that I get paid enough to have money to invest.
But for people who work for private companies, equity gets to be more tricky, for instance due to varying levels of seniority, "golden" shares, and so forth. From what I've read on HN, my impression is that the senior shareholders screw the junior shareholders. Also, it may be impossible to figure out the value of such a company, i.e., for anybody to know what they're really getting paid.
> [...] he is suggesting is that startups could fix the inefficiencies in the market that unions have created. The problem is that fixing these inefficiencies would primarily benefit people like PG[...]
And perhaps the customers of the industry?
Edit: My point is that, assuming there are inefficiencies created by unions in a given market (as the parent does), then correcting those inefficiencies would be a positive externality for the market at large, i.e., it would benefit more than just the specific company or investors.
Doubt it. Why would I give the customers a better deal when I could just take that money for myself? If I was the kind of guy who wanted to give the customers a better deal, I wouldn't be screwing over my employees.
I wish I lived in this bizarre world of yours in which economics is a kind of frictionless, perfect implementation of a primary school level of economics. Sadly, I live in a world in which companies that do not have monopolies nonetheless don't make zero profit. Put down your happy-clappy-valley economic religion and look out of the window.
Yes, in my response I am trying to be as explicit as possible in saying that I think these inefficiencies are a net good. However, they are still inefficiencies. There will almost always be somebody willing to work for less, and things like union protection keep that from happening. The result is a net positive for the workers. However, that doesn't stop the process from being economically inefficient.
Corporations also have inefficiencies, because they’re biased against tech which happens to empower workers and removes management layers. (They prefer to deskill labor to be replaceable cogs. David Noble wrote about this.)
Don't forget that wasting money on management is good, while wasting money on mere employees is bad. This has nothing to do with managers having an artificially strong negotiating position (they don't after all, generally produce anything) -- while individual employees have an artificially weak bargaining position (they do in general create the major value for any company).
It's sad that union has such a bad rep in the US. I'm not sure if that has more to do with right wing politicians colluding with organized crime to disrupt and discredit unions, or if there really are issues with unions in the US in general. My limited reading implies unions in the US are generally a net good for society. Then again, it's hard to discuss sane labour practices in a country where a number of states practice at-will employment.
It's so far distant from the work market in Norway that I have a difficult time trying to relate.
I share the same opinion and congratulations for tailoring this great piece of rationality you wrote.
But I think PG isn't bad. I think he mostly want to do good things and thing well of him, just as all the other venture capitalists that back his incubated companies. But they rarely get how hard life is for most of the people.
They were born in the land with the most opportunities, and/or studied to be in the field with the most growth in the last decades by far(technology)... and they don't get it.
I actually miss the time he was just a computer programmer, he wrote cool stuff.
Now, it seems everything to be about making a dent(5-7%) in the universe. Everything is about money. Money. Money.
I seriously see no value in making taxists make less money than they already do, or completely "disrupting" markets where the workers, the poor, end up having shittier lifes because all of that venture capital injected to a competitor just across the street.
But well, history will tell if this was right or not. I'm just a man who can barely come up with a concise though as you.
Unions are also formed to prevent large corporations from colluding to keep labor costs artificially low. (Yes, large corporations do that. Recent example: leading technology companies in Silicon Valley who colluded for years not to poach employees from each other, keeping compensation lower than it would have been if there had been true competition for employees.[1])
I also have no idea how you reach the conclusion that capitalists are the most benefited from it, but I guess it comes from the old labor-capital analytical framework. You completely ignore the benefits of less intrusive unions to consumers which, at least to me, seem to be the most obvious ones.
"We can almost always find someone who will do a job for less money". Where does this come from? Try hiring someone equally capable for half the salary you are paying now.
For the same reason we have minimum wage laws. Pitting workers against each other in a race to the bottom leads to unsustainably, exploitatively low wages.
Of course, technology gives capital a way to replace labour, which I assume is PG's fundamental point.
At some point, the value of labour will have to be decoupled from remuneration almost entirely. As a society need to re-adjust our thinking on the meaning of welfare, quality of living and the value of work.
I do wonder, if wealth were more equally distributed, whether we'd already be in a post-scarcity economy, at least in the developed nations.
Why do I feel PG was drunk Trittering when he hit those keys on a late Friday? Two, or five glasses of buttery Chardonnay, "I have a brilliant idea!"
We all had that idea. Going non-union is nothing new. I've seen, and worked non-union all my life. Owning a non-union shop is nothing to be proud of, and your employees are always looking to get some gravy. That is--the one's who realize they are being exploited.
Again his statement is old news, and you can decimate some unions in some counties. Strong unions, like most San Francisco unions will be a tough nut to crack. Unions in San Francisco stick together. I have seen entire buildings empty out over a union painters strike.
Rebublicans have tried to stifle unions as long as I can remember. I don't know of a business that doesn't fear unions.
Why did a wealthy tech boy say something like it was a new idea? He was under the influence of God's nectar, or he isn't as clever, as I thought? Yea, he's a great programmer, and a seemingly great businessman. Or, is he just a great programmer, who was first to this second/third tech investment table?
No matter what he is, I'm back to thinking tech is really in a bubble. It's funny how little I needed to change my mind.
While we are speaking our inner thoughts out loud, let's go for it:
Let's decimate all Union.
Get that county judge down to minimum wage.(Don't worry about graft?)
Get that cop down to minimum wage. (Yes, there would still be yahoo's that would do that job for free. Why? We all know why?)
Get rid of all Union construction jobs. (We are close to being there already.)
Why date, or marry locally? You could buy cheaper love in another country. A country that doesn't have Union expectations. Imagine a husband that will do whatever you tell him to do? He hasn't been ruined by a union? He doesn't expect much? Love is a union--right? Let's break it up.
Let's build everything in the cheapest country. (We already do that.)
Let's get rid of any profession that relies on tips. I honestly never liked being served, nor helped by that phoney tip seeking behavior. I'm just being honest. I can get my own food. I can open my own door. I don't want someone parking my car. This trend I like, but a higher minimum wage might stop the need for tipping?
Let's finally decimate the middle class! Yea, my app will do it, and we have enough people who don't mind sleeping four to a 10' X 10' room? They just want a little money to survive? And maybe buy one of our toys? Or, maybe none of our toys?
It's all cute when your standing on the full wine barrel, but God help us when we turn into Mexico. Where, if you have a few assets, and some pocket change, you can't even enjoy a dinner out. You can't take a stroll in the local park. Constantly fearing a kidnapping. Fearing for your children's safety. Fearing life?
By the way, I've know too many former Programmers who are now homeless. A few years ago I thought it was just a statical, local fluke. I don't believe it was a cluster. I honestly think Programmers could unionize in The Bay Area? There's a reason your boss wants to live here. It would be an incredibly hard Union to get into, but if done right; you guys would be set for life? I've been in good unions. Not all Union members are paid the same (some members work one day, and are let go). There's no law, that I know of, that would prevent profit sharing for individual union members. Maybe it's time? Forget about the free food--Don't you want normal hours, and some pension guarantees? Again, this fictional Union would have to be set up by the best Programners out there, and some charismatic organizers. It would be an exclusive Union. A union that was different than any Union I'm aware of. The time has come? Or, do we need to let them waste more money on some ri...
Trying to dig into the question: "Why does anyone care what Paul Graham thinks?" I discovered his Wikipedia entry. He wrote a few books on lisp, neat. Claims to have invented baysian spam filters (applied baysian theory to filtering spam?), neat. Helped make a mediocre ecommerce store which he spammed off on Yahoo, ok.
So once again, why does anyone care about what Paul Graham thinks?
PG is basically the reason why this site exists - HN started out as a marketing forum attached to YC. Regardless of what you think of his wider internet celebrity, he is an ('the'?) HN celebrity.
This is sort of self-evidently true; the purpose of a capitalist firm is to achieve a monopoly (in exactly the sense used in antitrust law, that is, to achieve a market within which they exercise pricing power) and extract rents from it for the capitalists the firm serves. Unions are a mechanism by which labor does much the same thing, limiting the ability of capital to retain rents even if firms achieve a mechanism to extract them.
So, sure, from the point of view of capitalists, the existence of unions is an inhibition to the realization of capital yields.
Dismantle all protection for labor, keep oppressing them, and you will eventually force a destruction of the very canvas of economic stability against which you want to tap this "potential energy".
There are people who work, such as the young programmers in SoMa who work 50/60/70+ hour weeks pounding out code for startups, who after rent and such don't have much savings piling up in the bank, nor much of a social life. These are the people who work, who create wealth.
Then there are the parasites - the heirs whose families haven't worked in living memory. The LPs give money to the VCs and whoever else does Series-A type rounds nowadays, who filter it to the CEOs. Unlike the poor 22 year old sap, they have their bets spread. Once a Facebook, or Google, or Oracle gets big enough, they start extracting their profits from the monopoly type situation they created, and from the wealth the workers have been creating.
Labor organizes into unions so that the people doing the work, the workers, get to keep more of the wealth they create, as opposed to the money going off in dividends to these parasitic heirs. The parasites hate organized labor, because it prevents the parasites from expropriating more surplus labor time from people who work and create wealth.
It always amazes me that if you get a bunch of workers together and organize them so they can act collectively, you get a ton of hate and a lot of people assume you're destroying value. Yet do the exact same thing on the employer side and this is not only acceptable, it's the only way we would ever think of doing things.
In other words, why can't I replace "unions" with "corporations" and have the statement still be true?
How do you figure? A trust is when employers not only organize, but that they all join together such that there is no competition. The equivalent on the worker side would be a single union that covers all workers in a particular field. And while I'm sure such things exist, it's nothing inherent to unions.
Are you joking? The United States is dominated by the modern trusts. In 1911 Standard Oil was broken up. In 1999 the two major Standard Oil subsidiaries - Standard Oil of New York and Standard Oil of New Jersey merged once again, into ExxonMobil. In 1984 Bell was broken up. Now the Baby Bells have merged back together with the countries local loops dominated by Verizon and AT&T (and Qwest) and the wireless spectrum also dominated by AT&T and Verizon (and Sprint...and T-Mobile, which AT&T tried to merge with, then Sprint - and which will be merged or carried off to the graveyard in the coming years).
Monopoly is the name of the game, or duopoly any how - and everyone from Peter Thiel to Warren Buffett is pretty open about it. The "Big Eight" accounting firms have been halved, they are now the Big Four. The media is owned by the Big Six, which is really the Big Five as Redstone controls Viacom and CBS.
The US is full of trusts and monopolies and the trend has been for more of the same. Even breakfast cereals have a Big Four. Less than 7% of workers in private industry are in unions, and that number has been falling.
Well put, I would further add that much of the equity in these few firms is owned by massive firms such as Blackstone, and and Blackrock. Concentrating the ownership into the hands of fewer owners further promotes anticompetitive action.
Fully agree. Workers sell their labor to employers and should be free to form associations among themselves and negotiate the sale of their labor together or individually as they please, just like any other seller. Unless of course they start using force rather than negotiation, or begin to hold a monopoly on the sale of all labor in a given field. Just like any other seller.
"Unless of course they start using force rather than negotiation, or begin to hold a monopoly"
But that's the typical form of negotiation from unions. Unions often take advantage of their exclusive/monopolistic access to a workplace - e.g. UAW workers, school teachers, police officers, etc. And as far as violence, good luck trying to work at an automotive plant if you're not in a union and a strike is going on. If you don't get beat up or your tires slashed, you'll at least be harassed and threatened just trying to make a living. I recall an instance growing up where union drivers fired a gun into a truck on the highway during a trucking strike. The truck was carrying explosives. The driver was instantly vaporized. No one was ever prosecuted for the murder. Par for the course in unions where I grew up.
Edit for reference (note my recollection about there being no prosecution was incorrect)
(I don't mean in simply paying people less, but rather that industries afflicted by unions are sclerotic so have left lots undone.)
There is much more money in doing new things than in paying people less.
edit: this received a number of downvotes, and I'm having trouble understanding why. Presumably providing context is a good thing here, right? There are comments that would be better informed if they had seen the follow up tweets.
Perhaps because it's incredibly vague to the point of being meaningless?
What, for example, does "sclerotic" mean in this context? What things are left "undone"? There is more money in doing what "new things"? More money for whom?
If I were to put this tweet in my own words in order to convince others of its truth I'd say something like: companies in industries that have met both of the necessary conditions of having unionized workforces [0] could probably be improved by the application of recent technological progress to that company's operations, but most large companies lag in their efforts to refactor their processes, so there's an opportunity for brand-new companies to gain market share by using new technology in ways that make them categorically better at delivering the product or service associated with that industry.
The problem I have with this tweet is that it makes PG look like an arrogant, detached asshole. It's the kind of thing that non-VC's imagine that VC partners say amongst themselves while swilling $500 organic Merlot in their palatial estates in Woodside. PG to a great extent is seen by the outside world as speaking for the Valley, which is usually a good thing because usually the stuff he puts out there is thoughtful and makes him look smart. I'd say this tweet is a pretty big outlier from that pattern.
[0]These are: a) existing for long enough and b) employing enough people that their workforces decided to unionize
Without unions (or minimum-wage laws), the price of labour reflects supply and demand. Skills in shortage have higher wages; unskilled labour drops to starvation wages - or below, provided there are replacement people.
In good times, with labour in demand, wages are higher, up to the point where the demand is met. Wages can go no higher. If there are enough people, these wages might be quite low. The remaining surplus is captured by capital.
In bad times, when demand for labour is low, wages may drop arbitrarily low.
Another solution to starvation-wages or below is social security or, more radical, universal income. It acts like an employer competing for labour, providing a minimum-wage threshold, through market forces. If capital doesn't offer sufficient wages, labour chooses the safety net.
However, this ignores the non-wage benefits of employment: people like to work, to be important/needed/useful, to be part of something, social contact, etc not to mention practice and acquisition of skills.
Finally, to be fair to pg, unions also represent a freezing of a particular way of doing business. Like back-compatibility or a requirement to use a particular technology, it restricts the way work can be organized. It prevents work from being "re-factored" - even if there exists another arrangement that would be just as good or even better for workers.
Inflexibility eventually causes inefficiency.
[ BTW I think there are three levels of systems that we can optimise for "efficiency": technical systems are efficient at their task; a business as a system is efficient at making money; a society as a system is efficient being something people want to be part of - that is, serving their needs. ]
The main protest here seems to be that fixing what unions break inevitably benefits capitalists while cheating the worker. I'd genuinely like to know: what's the best example of an industry disrupted in this way that left workers net behind?
Everyone knows it's annoying to see the rich philosophize in armchairs while the rest of the world does the lifting. Is that all that's left to say? pg seems to be claiming that (a) unions indicate breakage for startups to fix, and that (b) fixing this breakage is in fact more profitable for startups if they do it good-naturedly instead of simply taking workers' pie. Is this false?
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[ 8.4 ms ] story [ 2285 ms ] thread"All workers can't be paid union wages" is perhaps true, but flattening the labor market completely would result in a squeezing of disposable income that would harm the economy overall not to mention the well being of its participants. As Thiel correctly argues: surpluses are required for pretty much anything outside the status quo to happen. If there are no corporate surpluses there can be no R&D or expansion. If there are no labor surpluses, there can be no adoption of anything new or interesting or novel. How many impoverished check-to-check workers will be purchasing an Oculus Rift or a Tesla?
A lot of the criticism of unions is also hypocritical. For example, corporate executives as a class are de-facto unionized. Why is it that companies pay absurd salaries for directors? Being a CEO is a hard job but it's not that hard. The reason companies hire superstar directors and pay them superstar wages isn't because these people are actually hundreds or thousands of times more effective. It's because these people are connected. They're plugged into the "old boy network" a.k.a. in the union and that confers a privileged position in relation to things like raising money, making big deals, protecting companies from government scrutiny (the CEOs union has a revolving door with government), etc. A great recent example would be Condi Rice being recruited for the Dropbox board. What expertise does she have in IT enterprise marketing, distributed systems, engineering team building, ...? None. But she's very connected in the "union."
I think it's reasonable to hypothesize that any time you see what appear to be above-market wages being paid for any form of labor, something union-like is going on even if it's not officially organized as such.
I also love the comparison of YC to a union. It's very much like one. An open question for pg:
Would he be willing to forego YC's union-like attributes? This would entail ceasing all collective bargaining with investors on the part of YC companies and refusing to permit companies to openly leverage the YC brand to increase their clout in the market. YC could still provide co-working space and mentorship but could not use any collective marketing, branding, or bargaining strategies to assist its companies in fund raising or growth.
Wouldn't it be a more efficient market if startups competed only on merit and negotiated in a flat market domain with investors?
"{YC,CEOs} have potential energy that could be released by startups."
YC (and to a lesser extent Silicon Valley itself) have union-like characteristics. Why is it that a bunch of companies working on distributed networks that are designed to permit easy global communication have to be located within 20 miles of each other and consequentially forced to spend sizable percentages of their investment capital propping up an absurd real estate market? This is being disrupted by things like AngelList that make it easier for startups in more reasonable local markets to raise capital on an open flat market.
The death of Detroit wasn't caused by the death of cars. The automobile market has grown since the 1970s. It was caused by the global geo-diversification of the automobile industry. I wonder if the same thing could happen to SV (and YC) as a result of similar disruptive market shifts in the IT/Internet/tech markets. Since investors are to a great extent the customers in this market, the shift could come if investors see superior returns from companies outside the SV/YC orbit and decide that paying the Valley Tax is not justified. Also like Detroit, SV's cliquish quasi-unions are perhaps a bit smug and self-satisfied and don't see it coming.
I'm not sure how you'd go about disrupting the "CEOs union." Let's make the question more concrete: what value does a union hire like Condi Rice (just using her as one example) bring to Dropbox and how might a startup replace that with something more efficient? I personally don't know enough about the high corporate world to know the answer, but I suspect a few around here do and might have some ideas. Maybe it would be possible to leverage your customer base. If you have something people love -- like AirBnb for example -- and are getting flak over it, which would be cheaper: to mobilize your customers or to hire a $200m/year CEO with government connections?
Besides, every industry has unions or entities that are similar to unions - even the software/startup industry - so it's basically saying 'startups can work anywhere'. I'm also curious to see how a startup would 'release the potential' held back by bus-drivers' or coal-miners' unions, such that there would cease to be such unions (ie: 'the sclerosis is removed'), without there being the reduction in wages/conditions that the follow-up tweet mentions it's not trying to pursue.
Interesting view point! I would note though, that before the YC & AWS era of young founders starting companies on the cheap, venture capital had union/old-boy-network like properties. There were only a handful of great VCs and they would be very connected and collusive on deals. So maybe YC collective bargaining balance out VC old boy network?
This isn't demonstrative of a divide between continents, this is a musing of a man so far out of touch with regular society that he sees a large swath of society as an inefficiency waiting to be obsoleted by a tech startup (which would presumably increase his personal wealth in the process).
I remember an article about whether people consider various acts on social media to be "cheating". So you know, 85% of women considered having a tinder account to be cheating, whereas 75% of men did (or something like that, I can't really remember). This was reported, of course, as "men and women differ about what counts as cheating on social media" when the data screamed "men and women largely agree about what counts as cheating on social media."
The split may be relevant - it does tell you something when 60% of one continent feels one way and only 40% of another does, but "Europe is this, whereas the US is that" is usually a vast oversimplification.
It's generally media driven, the differences make for better headlines, but it crops up all over the place.
Generally speaking, the inefficiencies of unions exist to protect the interests of the workers, who generate wealth for the company but more often than not do not have an equity stake in the business. Unions exist to maintain the balance between capital and labor, and to make sure that people like PG don't deprive the laborers of fair remuneration for their work.
While we can almost always find someone who will do a job for less money, as a society we have an interest in providing an equitable share to labor, as there are far more workers driving this global economy than there are venture capitalists (or even just plain old capitalists) contributing to the economy in the form of seed round funding and the like.
Where the workers are also helped, that seems almost incidental in practice.
Edit: to the downvoters: consider what life was like for workers before unions were widespread.
I think the net result is a greater share of the profits for labor, but there are definitely some people in unions getting totally screwed by the unions.
OH&S wasn't all that important since we're talking about a desk job.
What if we paid workers meaningful amounts of equity? Would that perhaps reduce the need for unions bc the labor/capital divide starts to get blurred and then workers are able to share in the wealth they generate for companies?
How would you provide equity for public school teachers?
With public sector unions, bankruptcy is very hard to achieve. The union also isn't negotiating with the government agency; it's negotiating with politicians as well, who have aims other than efficiency. They want to get elected. If enough of your constituency is in the relevant union, there's going to be pressure to not negotiate as hard.
Look at e.g. public transit unions. The DC Metro is falling apart, station managers sleep at work, escalators don't work ludicrously often, repairs are shoddy, and the drivers aren't terribly good at driving their trains (seriously, since they disabled computer control it's started giving me motion sickness; I have never experienced this on other transit systems). Yet the union is asking for a raise.
> How would you provide equity for public school teachers?
I don't subscribe to the neo-liberal idea of conflating money with value (or equivalently: to measure efficiency in terms of money). But one could theoretically ban salaried employment[1,2]. And structure public services as employee-owned corpration that bid on service contracts. On might create a limited monopoly, by requiring a license to eg: run public education. And the same could be done for police, prisons, fire departments, special forces, security services... Again, I don't think this is a good idea, and we do this to a certain extent already.
[1] https://www.jacobinmag.com/2015/08/knights-of-labor-jim-crow...
[2] https://en.wikipedia.org/wiki/Wage_slavery
But for people who work for private companies, equity gets to be more tricky, for instance due to varying levels of seniority, "golden" shares, and so forth. From what I've read on HN, my impression is that the senior shareholders screw the junior shareholders. Also, it may be impossible to figure out the value of such a company, i.e., for anybody to know what they're really getting paid.
And perhaps the customers of the industry?
Edit: My point is that, assuming there are inefficiencies created by unions in a given market (as the parent does), then correcting those inefficiencies would be a positive externality for the market at large, i.e., it would benefit more than just the specific company or investors.
Barring a monopoly situation, this isn't a choice you get to make.
It's sad that union has such a bad rep in the US. I'm not sure if that has more to do with right wing politicians colluding with organized crime to disrupt and discredit unions, or if there really are issues with unions in the US in general. My limited reading implies unions in the US are generally a net good for society. Then again, it's hard to discuss sane labour practices in a country where a number of states practice at-will employment.
It's so far distant from the work market in Norway that I have a difficult time trying to relate.
Providing a better outcome without the intermediaries would be a great way to improve the system.
But I think PG isn't bad. I think he mostly want to do good things and thing well of him, just as all the other venture capitalists that back his incubated companies. But they rarely get how hard life is for most of the people.
They were born in the land with the most opportunities, and/or studied to be in the field with the most growth in the last decades by far(technology)... and they don't get it.
I actually miss the time he was just a computer programmer, he wrote cool stuff.
Now, it seems everything to be about making a dent(5-7%) in the universe. Everything is about money. Money. Money.
I seriously see no value in making taxists make less money than they already do, or completely "disrupting" markets where the workers, the poor, end up having shittier lifes because all of that venture capital injected to a competitor just across the street.
But well, history will tell if this was right or not. I'm just a man who can barely come up with a concise though as you.
[1] https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_L...
"We can almost always find someone who will do a job for less money". Where does this come from? Try hiring someone equally capable for half the salary you are paying now.
Why not let that person have the job?
That's probably the poorest person, who needs it the most.
For the same reason we have minimum wage laws. Pitting workers against each other in a race to the bottom leads to unsustainably, exploitatively low wages.
At some point, the value of labour will have to be decoupled from remuneration almost entirely. As a society need to re-adjust our thinking on the meaning of welfare, quality of living and the value of work.
I do wonder, if wealth were more equally distributed, whether we'd already be in a post-scarcity economy, at least in the developed nations.
We all had that idea. Going non-union is nothing new. I've seen, and worked non-union all my life. Owning a non-union shop is nothing to be proud of, and your employees are always looking to get some gravy. That is--the one's who realize they are being exploited.
Again his statement is old news, and you can decimate some unions in some counties. Strong unions, like most San Francisco unions will be a tough nut to crack. Unions in San Francisco stick together. I have seen entire buildings empty out over a union painters strike.
Rebublicans have tried to stifle unions as long as I can remember. I don't know of a business that doesn't fear unions.
Why did a wealthy tech boy say something like it was a new idea? He was under the influence of God's nectar, or he isn't as clever, as I thought? Yea, he's a great programmer, and a seemingly great businessman. Or, is he just a great programmer, who was first to this second/third tech investment table?
No matter what he is, I'm back to thinking tech is really in a bubble. It's funny how little I needed to change my mind. While we are speaking our inner thoughts out loud, let's go for it:
Let's decimate all Union.
Get that county judge down to minimum wage.(Don't worry about graft?)
Get that cop down to minimum wage. (Yes, there would still be yahoo's that would do that job for free. Why? We all know why?)
Get rid of all Union construction jobs. (We are close to being there already.)
Why date, or marry locally? You could buy cheaper love in another country. A country that doesn't have Union expectations. Imagine a husband that will do whatever you tell him to do? He hasn't been ruined by a union? He doesn't expect much? Love is a union--right? Let's break it up.
Let's build everything in the cheapest country. (We already do that.)
Let's get rid of any profession that relies on tips. I honestly never liked being served, nor helped by that phoney tip seeking behavior. I'm just being honest. I can get my own food. I can open my own door. I don't want someone parking my car. This trend I like, but a higher minimum wage might stop the need for tipping?
Let's finally decimate the middle class! Yea, my app will do it, and we have enough people who don't mind sleeping four to a 10' X 10' room? They just want a little money to survive? And maybe buy one of our toys? Or, maybe none of our toys?
It's all cute when your standing on the full wine barrel, but God help us when we turn into Mexico. Where, if you have a few assets, and some pocket change, you can't even enjoy a dinner out. You can't take a stroll in the local park. Constantly fearing a kidnapping. Fearing for your children's safety. Fearing life?
By the way, I've know too many former Programmers who are now homeless. A few years ago I thought it was just a statical, local fluke. I don't believe it was a cluster. I honestly think Programmers could unionize in The Bay Area? There's a reason your boss wants to live here. It would be an incredibly hard Union to get into, but if done right; you guys would be set for life? I've been in good unions. Not all Union members are paid the same (some members work one day, and are let go). There's no law, that I know of, that would prevent profit sharing for individual union members. Maybe it's time? Forget about the free food--Don't you want normal hours, and some pension guarantees? Again, this fictional Union would have to be set up by the best Programners out there, and some charismatic organizers. It would be an exclusive Union. A union that was different than any Union I'm aware of. The time has come? Or, do we need to let them waste more money on some ri...
So once again, why does anyone care about what Paul Graham thinks?
So, sure, from the point of view of capitalists, the existence of unions is an inhibition to the realization of capital yields.
Dismantle all protection for labor, keep oppressing them, and you will eventually force a destruction of the very canvas of economic stability against which you want to tap this "potential energy".
Then there are the parasites - the heirs whose families haven't worked in living memory. The LPs give money to the VCs and whoever else does Series-A type rounds nowadays, who filter it to the CEOs. Unlike the poor 22 year old sap, they have their bets spread. Once a Facebook, or Google, or Oracle gets big enough, they start extracting their profits from the monopoly type situation they created, and from the wealth the workers have been creating.
Labor organizes into unions so that the people doing the work, the workers, get to keep more of the wealth they create, as opposed to the money going off in dividends to these parasitic heirs. The parasites hate organized labor, because it prevents the parasites from expropriating more surplus labor time from people who work and create wealth.
In other words, why can't I replace "unions" with "corporations" and have the statement still be true?
Monopoly is the name of the game, or duopoly any how - and everyone from Peter Thiel to Warren Buffett is pretty open about it. The "Big Eight" accounting firms have been halved, they are now the Big Four. The media is owned by the Big Six, which is really the Big Five as Redstone controls Viacom and CBS.
The US is full of trusts and monopolies and the trend has been for more of the same. Even breakfast cereals have a Big Four. Less than 7% of workers in private industry are in unions, and that number has been falling.
But that's the typical form of negotiation from unions. Unions often take advantage of their exclusive/monopolistic access to a workplace - e.g. UAW workers, school teachers, police officers, etc. And as far as violence, good luck trying to work at an automotive plant if you're not in a union and a strike is going on. If you don't get beat up or your tires slashed, you'll at least be harassed and threatened just trying to make a living. I recall an instance growing up where union drivers fired a gun into a truck on the highway during a trucking strike. The truck was carrying explosives. The driver was instantly vaporized. No one was ever prosecuted for the murder. Par for the course in unions where I grew up.
Edit for reference (note my recollection about there being no prosecution was incorrect)
http://mo.findacase.com/research/wfrmDocViewer.aspx/xq/fac.1...
(I don't mean in simply paying people less, but rather that industries afflicted by unions are sclerotic so have left lots undone.)
There is much more money in doing new things than in paying people less.
edit: this received a number of downvotes, and I'm having trouble understanding why. Presumably providing context is a good thing here, right? There are comments that would be better informed if they had seen the follow up tweets.
What, for example, does "sclerotic" mean in this context? What things are left "undone"? There is more money in doing what "new things"? More money for whom?
The problem I have with this tweet is that it makes PG look like an arrogant, detached asshole. It's the kind of thing that non-VC's imagine that VC partners say amongst themselves while swilling $500 organic Merlot in their palatial estates in Woodside. PG to a great extent is seen by the outside world as speaking for the Valley, which is usually a good thing because usually the stuff he puts out there is thoughtful and makes him look smart. I'd say this tweet is a pretty big outlier from that pattern.
[0]These are: a) existing for long enough and b) employing enough people that their workforces decided to unionize
In good times, with labour in demand, wages are higher, up to the point where the demand is met. Wages can go no higher. If there are enough people, these wages might be quite low. The remaining surplus is captured by capital.
In bad times, when demand for labour is low, wages may drop arbitrarily low.
Another solution to starvation-wages or below is social security or, more radical, universal income. It acts like an employer competing for labour, providing a minimum-wage threshold, through market forces. If capital doesn't offer sufficient wages, labour chooses the safety net.
However, this ignores the non-wage benefits of employment: people like to work, to be important/needed/useful, to be part of something, social contact, etc not to mention practice and acquisition of skills.
Finally, to be fair to pg, unions also represent a freezing of a particular way of doing business. Like back-compatibility or a requirement to use a particular technology, it restricts the way work can be organized. It prevents work from being "re-factored" - even if there exists another arrangement that would be just as good or even better for workers. Inflexibility eventually causes inefficiency.
[ BTW I think there are three levels of systems that we can optimise for "efficiency": technical systems are efficient at their task; a business as a system is efficient at making money; a society as a system is efficient being something people want to be part of - that is, serving their needs. ]
Paul Graham is so right.
Everyone knows it's annoying to see the rich philosophize in armchairs while the rest of the world does the lifting. Is that all that's left to say? pg seems to be claiming that (a) unions indicate breakage for startups to fix, and that (b) fixing this breakage is in fact more profitable for startups if they do it good-naturedly instead of simply taking workers' pie. Is this false?