Well, so much for that.

“If you’re passing legislation that is effectively giving huge tax cuts to the rich and stripping away Medicaid, that speaks for itself,” Khan tells me in an interview Thursday, referring to President Trump’s One Big Beautiful Bill. “It’s difficult to paint that in any type of populist brush…. It’s very much a continuation of the kind of Reagan-Bush-type philosophy: ‘Let’s concentrate wealth upwards, and maybe it’ll trickle down.’”

She worries that the same corporations that used “woke” and “ESG” (environmental, social, and governance) tropes to legitimate their market power over the last decade are now deploying anti-woke rhetoric to do the same thing. And the Trumpians are letting them get away with it.

As chairwoman of the Federal Trade Commission under Joe Biden, Khan went further than perhaps any one official in giving teeth to post-neoliberalism. She reawakened the FTC, which for decades had lain dormant, enchanted by Reagan-era lullabies about how corporations can do no wrong. She went after firms that slapped false “Made in USA” labels on foreign-made goods; sued Facebook over its monopolistic practices; attacked fee-skimming middlemen in the drug industry; banned non-compete clauses used by employers to prevent workers from seeking better opportunities elsewhere; and much else of the kind.

Her crusades garnered praise from JD Vance, who, during the 2024 campaign, suggested she could stay in her job in a second Trump administration; young GOP staffers took to calling themselves “Khan-servatives.” And while she didn’t, in fact, get to keep her job once President Trump took over a second time, Khan saw early promise.

“In the first few months, and with some of their appointments, and certainly with their rhetoric, it did seem like there was going to be much more continuity” with the Biden approach, recalls Khan. As secretary of labor, Trump tapped Rep. Lori Chavez-DeRemer of Oregon, one of only three GOP lawmakers to cosponsor the PRO Act, the top legislative priority of the labor movement, which would reverse the decade-long hollowing out of collective bargaining.

On antitrust, Trump nominated Gail Slater, a former Vance Senate aide, to lead the Department of Justice’s antitrust unit. Antitrust types on both sides of the aisle viewed Slater as someone who gets it, an impression reinforced at her Senate confirmation hearing, in which she warned about the possibilities of market-based coercion and “private tyranny.” Trump’s antitrust team, moreover, retained the merger guidelines put forth by their Biden predecessors — standard practice, but enough to enrage the US Chamber of Commerce and the neoliberal Wall Street Journal comment pages (where, full disclosure, I used to work).

But then, as the honeymoon phase passed, says Khan, “we saw, just going back to this era of greenlighting really problematic mergers [and] accepting really flimsy promises for merging companies that create a huge risk of failure.” There were also “very troubling allegations about lobbyists kind of now taking over the process … and antitrust decisions being made not based on the facts and the laws, but based on what Trump lobbyist companies could get.”

She’s alluding to the DOJ’s controversial settlement in the merger between Hewlett-Packard Enterprise and Juniper, the second and third largest providers, respectively, of networking solutions for large institutions (universities, hospitals, sports stadiums, and the like). Early on, the Trump II DOJ sued to block the merger before putting the case on a settlement path.

But as contentions arose over the terms, HPE retained a pair of MAGA lobbyists to petition higher-ups in the department, circumventing Slater’s team. The final deal, as UnHerd first reported, was hashed out in a literal clubby backroom over cocktails, and two of Slater’s deputies who raised objections were fired. As one of the fired deputies, Roger Alford, wrote in an essay for UnHerd: “MAGA-in-name-only lobbyists and the DOJ officials enabling them are … determined to exert and expand their influence and enrich themselves.”

Reflecting on all this, Khan asks, “I think ultimately, a real realignment and a real commitment to economic populism require a willingness to make rich and powerful people upset, right?”

Not, it turns out, if the rich and powerful are willing to mouth the culture-war pieties du jour. During the “peak-woke” era, a firm like Amazon would march at the forefront of the Black Lives Matter column — even as it brutally suppressed the nascent Amazon Labor Union and called its African-American founder, Christian Smalls, “not smart or articulate.” Likewise in 2025, the Federal Communications Commission clears mergers between Paramount and Skydance Media based on the firms’ commitment not to pursue diversity, equity, and inclusion.

Khan is critical of both mirroring tendencies: the power of big business to adapt itself to prevailing cultural conditions, depending on who’s in power. “I’ve long been a skeptic of ESG-type initiatives,” she tells me, and when she took office as FTC chair, “I made very clear that there’s no ESG exemption to the antitrust laws. If companies come to me and say, ‘Hey, let our illegal merger through, but don’t worry, we’ll make some nice, full commitments,’ I tell them that was not what the FTC did.”

Put another way: You can’t act monopolistically and get away with it just because you hire a trans disabled CEO or donate to climate-change initiatives.

But are Republicans equally alert to how business uses anti-woke as a shield against regulatory scrutiny? Says Khan, “It is interesting and quite perverse, candidly, that we are now seeing [how] companies will make certain commitments to shut down their DEI projects…. And suddenly, you know, potentially troubling mergers” win approval.

Fair enough. But given the post-neoliberal thrust of much Biden economic policy, why did Trump and the GOP end up walloping Democrats in last year’s election, especially among working-class voters? Khan’s answer, in short, is that the Bidenites didn’t have enough time.

More from this author

Abdul El-Sayed: Democratic bro whisperer

By Sohrab Ahmari

“There’s no secret that people were very concerned about cost of living,” Khan says, by way of explaining Kamala Harris’s failure. “Initially, there was a surge in pricing during the pandemic, because there were legitimate supply-chain issues. As those supply-chain issues got resolved, prices didn’t come down as quickly. We have seen companies be quite open about how, be it the supply chain issues, be it tariffs, these can be very useful covers for inflating prices.”

Neoliberalism, she says, was too entrenched for post-neoliberalism to overcome in short order: “Big picture, the [Biden] administration in a whole bunch of economic domains really did break with the 40-year Reagan-Bush-Clinton neoliberal playbook…. But at the end of the day, you’re going to need more than four years to fully undo the destruction of that 40-year regime.”

Not all Democrats agree. The so-called Abundance movement — a cohort of pundits and intellectuals led by the likes of Ezra Klein, Matt Yglesias, and the newly founded Argument magazine — traces the party’s troubles to too much populism and not enough deregulation, especially when it comes to building up housing and transportation in blue cities and states. They’ve courted, and received, the backing of some major donors in Silicon Valley and elsewhere.

What does Khan make of Abundance? “I haven’t seen any credible analysis that suggested why Democrats lost was we didn’t have enough donors on our side,” she says. “I just haven’t seen that presented in a convincing way.” Indeed, Harris had the backing of one tech heavyweight, LinkedIn founder Reid Hoffman, who called for Khan’s head as the price of ongoing support. “There’s some prominent tech donors who are opposed to the antitrust and competition work that we were doing.” Some of those donors are now throwing their weight behind Abundance.

Still, Khan grants part of the Abundance argument. Says Khan, “To the extent that there are arguments about making government more effective, more efficient, absolutely, let’s do that.” But even that, she goes on, depends on taking on oligarchic power and monopoly, since it’s often the largest firms that benefit most from byzantine bureaucracy and from deliberately gumming up economic governance as means to discredit it.

Asked which active politicians today she finds most congenial to her agenda, Khan doesn’t hesitate: Dan Osborn, the independent union organizer running to unseat a Republican senator in Nebraska; Abdul El-Sayed, the Bernie protégé running for Senate in Michigan; Nathan Sage, a progressive running for Senate in Iowa; and Zohran Mamdani, the socialist New York mayoral hopeful (and likely shoo-in).

The upshot of her analysis: given that the Trumpians are drifting away from robust antitrust, protection of entitlements, and friendship with organized labor, the future of post-neoliberalism turns on battles within the Democratic Party.

The Republican Party today is a battleground. The confrontation isn’t between traditional conservatives and Trump supporters. Rather, it pits genuine MAGA reformers against MAGA-in-name-only lobbyists. It’s a fight over whether Americans will have equal justice under law, or whether the wealthy and the well-connected enjoy preferential access to our justice system.

Officials like Assistant Attorney General Gail Slater, my former boss, strive to remain true to President Trump’s populist message that resonated with working-class Americans. Antitrust enforcement that applies equal justice under the law can deliver tangible results for millions of Americans. The MAGA-in-name-only lobbyists and the DOJ officials enabling them are pursuing a different agenda. They’re determined to exert and expand their influence and enrich themselves as long as their friends are in power. Will America be governed by the rule of law or the rule of lobbyists? If the rule of lobbyists prevails, it will render futile the realignment of the two parties, which has impelled millions of working-class Americans to migrate to the Right over the past decade.

The Department of Justice is today the central front in this battle. Slater and her closest advisers are committed to protecting ordinary Americans by vigorously enforcing the antitrust laws. The same can’t be said for many in the senior leadership. This was painfully demonstrated in the handling of the HPE-Juniper merger, which saw two tech giants achieve a sweetheart settlement, circumventing the Antitrust Division by currying favor with senior officials above us. The arrangement, as Sohrab Ahmari reported in these pages, involved a literal backroom meeting over cocktails.

It is still early days in this administration, and correcting the problems at the DOJ is possible, either by political will or judicial decree. I experienced nothing remotely like this when I served at the DOJ in the first Trump administration, and hopefully this is a short-term aberration.

To be clear, I have absolutely no reason to think the White House or other departments are involved in the current HPE-Juniper merger scandal. Nor do I think Deputy Attorney General Todd Blanche is involved.

suggested article

The antitrust war inside MAGA

By Sohrab Ahmari

But I can’t say the same about a small set of actors in senior leadership within the DOJ. I met with the most senior officials of the DOJ regularly, and my concerns aren’t based on conjecture. The core problem is simple: Attorney General Pam Bondi has delegated authority to figures — such as her chief of staff, Chad Mizelle, and Associate Attorney General-Designee Stanley Woodward — who don’t share her commitment to a single tier of justice for all.

Good may yet prevail, but at least with respect to senior DOJ oversight of antitrust enforcement, we are on a path toward injustice.

Under the rule of law, rules matter and must be respected, both in substance and in procedure. Under the rule of lobbyists, by contrast, antitrust laws are nuisances or obstacles to overcome. Rather than the legitimate lobbyists who have expertise and perform traditional functions of education and engagement, bullying lobbyists with no relevant expertise are perverting law enforcement through money, power, relationships, and influence.

There are people within the DOJ who follow the law and care deeply about protecting Americans from anticompetitive behavior. That is true of the leadership and career staff at the Antitrust Division. Sadly, there are others inside and outside the government who care little for the antitrust laws. They consider law enforcement not as binding rules, but an opportunity to leverage power and extract concessions.

Although the terms of my service with the federal government limit what I can say even after I depart, I believe that in the HPE-Juniper merger scandal, Mizelle and Woodward acted inconsistent with the populist values of the Trump administration. These actions have potentially opened the case to judicial scrutiny under the Tunney Act, passed by Congress in the Seventies to ensure that merger settlements take place consistent with the public interest, not based on political connections over cocktails between lobbyists and government officials.

It would be helpful for the court reviewing the settlement to clarify the substance and the process by which the settlement was reached. Although the Tunney Act has rarely served its intended purpose, the court may demand extensive discovery this time around, and examine the surprising truth of what happened. Indeed, the court should block the HPE-Juniper merger. If you knew what I know, you would hope so, too.

The second distinction between the rule of law and the rule of lobbyists is that those who follow the rule of law show no special favors to the parties and counsel appearing before them. By contrast, the rule of lobbyists cares deeply about benefits they can extract in transactional relationships with perceived friends. At the Antitrust Division, we ignore the affiliations of the lawyers who appear before us — whether friend or foe, Republican or Democrat — and attempt to treat everyone equally. That’s how we maintain a single-tier system of justice.

Others at the DOJ and elsewhere in government consider some parties, counsel, and lobbyists to be on the “same MAGA team” and worthy of special solicitude. They consider others to be “enemies of MAGA” that merit particular disfavor. Too often in the current DOJ, meetings are accepted and decisions are made depending upon whether the request or information comes from a MAGA friend. Aware of this injustice, companies are hiring lawyers and influence-peddlers to bolster their MAGA credentials and pervert traditional law enforcement.

Third, the rule of law provides predictability while the rule of lobbyists guarantees instability. Violations of the antitrust laws impose grave risks to companies, including criminal prosecution, massive civil penalties, company breakups, and the blocking of mergers. Lawyers and their clients need a stable and predictable environment to do business. The Antitrust Division uniformly seeks to promote the rule of law in both litigation and merger enforcement. I personally have heard lawyers say that the political uncertainty of this administration is more difficult than the hostile but predictable environment of the Biden administration.

The DOJ, of course, must welcome all lawful competition and all pro-competitive mergers. And there is nothing wrong with lobbying done the right way. But this new pay-to-play approach is so far removed from legitimate lobbying or traditional antitrust enforcement that it is creating massive legal and economic uncertainty. Those adopting this new approach care little about the instability this creates for the markets.

The cost to the country of this new pay-to-play approach to antitrust enforcement is enormous. MAGA-in-name-only lobbyists are influencing their allies within the DOJ and risking the president’s conservative-populist agenda.

Is this the new normal, with every law firm hiring an influence-peddler to dual track and sidestep the litigation and merger review process? That’s what law firms are considering. The DOJ is now overwhelmed with lobbyists with little antitrust expertise going above the Antitrust Division leadership to seek special favors with warm hugs. On numerous occasions in a variety of matters, we implored our superiors and the lawyers on the other side to call off the jackals. But to no avail. Cases are being resolved based on political connections, not the legal merits.

Which case is the next casualty? Will the same senior DOJ officials ignore the president’s executive order on live entertainment just because Live Nation and Ticketmaster have paid a bevy of cozy MAGA friends to roam the halls of the DOJ in defense of their monopoly abuses, making bogus arguments about mergers being necessitated by national security?

Suggested article

We deserve better populism

By Batya Ungar-Sargon

What must the antitrust bar think? If the new game in town is to hire well-connected lobbyists ignorant of the law to get your deal done or your case dismissed by going around and above Slater, what role are respected antitrust lawyers supposed to play? Why did the lawyers advising the parties in the HPE-Juniper merger scandal not appreciate the risk they were generating, not only for their clients and their law firms, but for the entire antitrust bar?

Lastly, there are real costs for the lobbyists, the companies and lawyers who hired them, and the officials within government. Outside the small circle of transactional MAGA friends seeking and giving favors, do these lobbyists and their friends in power actually know what traditional or populist conservatives think about them?

Those who forsake the rule of law are violating fundamental moral principles. The Bible teaches: “You shall not pervert justice. You shall not show partiality.… Justice, and only justice, you shall follow” (Deuteronomy 16:19-20). I know many in and out of government who sincerely respect these moral principles. Perhaps now is the time to implement them. The influence-peddlers and their allies in government will hide behind their friends in power, excuse their behavior, claim we are naïve, and hope this all goes away. But many of their friends in power have principles and want to avoid further scandal.

How will the DOJ recover from the current crisis? Will there be policy or personnel changes among the senior leadership at the department? Will Slater have the freedom to enforce the law and fire or hire her team consistent with the administration’s true antitrust agenda? At a minimum, will the DOJ remove Chad Mizelle and Stanley Woodward from any antitrust oversight? In the absence of reforms at the DOJ, must state attorneys general now join every DOJ antitrust lawsuit and merger challenge as a check against influence-peddling? The status quo is simply unsustainable.

My position while I served in government was simple: lobbyists and lawyers are subordinate to the law. Yet by stating this truth, I was dismissed for insubordination. My termination letter is now framed and hangs on the wall in my office at Notre Dame. I joke with friends that I’ve never been fired before, and I’ve been working since my first job as a young teenager at the Dairy Queen in Sherman, Texas. All it took to be fired were lobbyists exerting influence on my superiors to retaliate against me for protecting the rule of law against the rule of lobbyists.

The rule of law is not just an inheritance, it is also an opportunity and obligation. Soldiers are willing to go to war and risk their lives to serve our country. So why shouldn’t we take lesser risks to serve our country and protect the rule of law? The principles inscribed in marble at the Department of Justice building only survive if each generation takes up the fight. Failure is always a possibility. But so too is triumph.

Then, with impeccable timing, on Tuesday, 14 May, the National Labor Relations Board released a month-old letter finding that Uber drivers are not legally employed by the company and are therefore ineligible for federal protection for collective bargaining. The company’s fortunes turned on a dime, the share price was in free-fall no more, and as of this writing, its value is above where it began. Tens of billions of dollars hinged on that favourable regulatory decision.

Back in 2012, when Facebook’s IPO started badly, there was an epidemic of hand-wringing about the gullibility of financial markets in valuing big-name tech stocks. But the situation was easily remedied – $1 billion was all it took to shut down the competition from upstart Instagram and seal Facebook’s domination of worldwide social media, to the tune of over $50 billion a year of revenue.

Coming hot on the heels of global euphoria about the liberating power of social media in the Arab Spring, Facebook looked like that rarest of species, the company that does well by doing good. With the floatation the public was offered a piece of the action.

But the value in Facebook turned out not to come from global emancipation but from its opposite – global dominance of the social networking market. It is a service that claims to foster human connection and interaction, but for a price – and that price is one that users, and governments, are increasingly unwilling to pay. There seems to be a disconnect between Facebook’s value to investors and its value to society – they push and pull in different directions. Uber is in a similar place now.

Uber, like Facebook, experienced a long train of popular congratulation as the globally disruptive innovator shaking the dust out of urban taxi markets. It offered to revolutionise local transportation, and investors couldn’t wait to get involved. Uber raised $11.5 billion through nearly 20 funding rounds, ultimately valuing the company at $68 billion.

But a reckoning is coming. As indeed it is for Facebook.

Suggested reading

When you get online – get paranoid

By Carl Miller

The “techlash” is highlighting the degree to which tech’s business models consist of running roughshod over everyone else’s privacy, security, democracy, environment, and livelihoods, and cashing out in spectacular Wall Street fashion before the public truly understands what hit them and how much autonomy they’ve lost.

Uber is no different – though its model has its own peculiar quirks. The platform’s value depends on its ability to charge what it wants to riders, whilst paying as little as possible to its drivers. It classifies the drivers as independent contractors, so as to escape adhering to labour standards, avoid contributing to social insurance, and enabling it to offload the cost of capacity it doesn’t use. It relies on there being as many drivers logged on at peak times as possible – for customer convenience – without having to pay for their availability. The drivers bear the risk of a quiet night.

Uber, and other gig economy ‘platforms’ have been celebrated as creating venues for individual entrepreneurship, a new path for upward mobility. In the case of Uber this seems a stretch. The driver may differentiate the service offered by providing riders with bottles of water, ambient music, good conversation, or no conversation, according to tastes, but the most they can hope for is a higher rating, which does not automatically translate into more rides and revenue. Rather, high ratings are needed to maintain Uber’s strict minimum to stay on the platform. It’s more like the scores of Roman scribes, dutifully copying down set texts, being told that they are the authors of history – Uber drivers control very little of their individual “enterprises”.

Alex Rosenblat’s book Uberland details how Uber’s business model works: bonus-based driver compensation directs drivers to work where and when Uber needs them, whilst penalising them for time spent logged into any other ridesharing platform. The bonus-based pay schedule closes off any other opportunities they might have: if they log-off before they earn the bonus, then the whole shift will turn out not to have been worthwhile. Even with the bonus they just barely break even.

Suggested reading

The gig economy: a platform for exploitation

By David Z Morris

Uber has, for the most part, escaped regulatory intervention to force re-classification of drivers as its own employees, which would compel them to absorb some of the risks that drivers currently bear. Just recently, both the Department of Labor and the National Labor Relations Board issued opinions highly favourable to gig economy platforms, holding that such platforms don’t exercise sufficient control over drivers to qualify as their employers.

The NLRB’s general counsel stated: “The drivers had… complete control of their cars and work schedules, together with freedom to choose login locations and to work for competitors of Uber.”

As Rosenblat and other scholars’ work has shown, this statement is empirically false – the fact that Uber drivers can operate outside the bounds of what its compensation system incentivises is a dead letter if they can’t make a living by doing so. The UK Court of Appeals also found that the categorisation of drivers as independent contractors engages a “high degree of fiction”.

Meanwhile, the company has also challenged its drivers’ right to collective bargaining even outside federal protection. When Seattle tried to grant Uber workers that power, the city was sued by the Chamber of Commerce at Uber’s behest. It argued that such a union of independent contractors would violate the US antitrust laws.

The federal antitrust agencies weighed in on Uber’s side, and a federal appeals court agreed. As a result, the ordinance was amended to exclude collective bargaining over wages. But Uber continues to claim that the whole concept of driver collective bargaining on any matter violates the federal antitrust laws.

Suggested reading

Who benefits from the Uberised economy?

By Peter Franklin

The irony seems lost on Uber that while it has used antitrust regulation against its drivers, it has managed to avoid any antitrust scrutiny on its own account, even as it fixes prices and wages for these supposedly independent businesses. A private class action against Uber on those grounds was set to go to trial in New York in 2016, but the company successfully sent the case to arbitration, where it hasn’t been heard from since.

No public enforcer has yet alleged that Uber’s non-employment of its drivers constitutes grounds for price-fixing antitrust liability. In fact, if anything, antitrust enforcers have viewed Uber’s business model as introducing much needed competition into urban taxi markets, and have encouraged local officials not to question it. So, between lax labour law and lax antitrust, Uber is able to operate a business model that depends on controlling drivers without being responsible to them as an employer.

In this way, Uber’s profitability hinges on continued regulatory forbearance, as the market response to the NLRB letter showed. Far from being an innovative company challenging comfortable monopolies hiding behind state power, Uber is itself dependent on government regulators for its continued success. The intricacies of labour law and antitrust law, developed in a time before the platform economy, continue to be debated. But at the heart of the controversy is the question of who should have the power to determine drivers’ working conditions – the government, through employment law, drivers themselves, through union participation, or – as now – Uber.

But even with the deferential treatment it receives from regulators, Uber is operating at an enormous loss and has no immediate way of reversing the hemorrhage. Given its cheap ride strategy, it doesn’t generate enough operating revenue to both pay drivers enough to stay on the platform in the long run and generate a return for shareholders. It is already trying to increase the prices its habitual customers are used to, but that has not yet come near to solving its basic cashflow problem.

Suggested reading

Big tech is out of touch

By Henry Olsen

The fact that it has enjoyed privileged access to investors and their wealth is also a big part of the company’s success at acquiring market share at the expense of legacy taxi companies. At least so far, these investors have viewed Uber’s aggressive pricing and the trampling of local regulations as likely to pay off in the long run, with a dominant market share and significant pricing power, or through the ability to phase drivers out entirely and move to full automation.

For most of the big-name tech IPOs, the companies aren’t looking primarily to raise cash. That’s because the public equity market has transformed from a source of capital with which to finance investment, expansion, and growth, into a means by which insider shareholders can diversify their risk: an IPO gives founders and early venture capital backers the big exit they have been waiting for, and a way to cash-in before the true costs of the business model catch up with them.

That dynamic is certainly at play in Uber’s case: should regulators go the other way on the employee/contractor categorisation – which the UK Supreme Court may well do if Uber loses its appeal – then it is useful to have already cleared a way out for investors. In the meantime, investors can take advantage of market optimism (and well-timed letters of support from the US regulators). Unusually, Uber also actually needs the money. In the real world, as opposed to in the purely digital realm, the runway to world dominance is a little rougher, though no less assured as long as investors are willing to strap down for the bumpy ride.

But even though it needs the money, Uber has not been willing to cede control, nor has it had to. The typical Silicon Valley IPO retains total control over operations among the insiders through a dual-class share structure: the insiders retain full voting power in their ‘old’ stock, and the ‘new’ stock they sell on the public markets comes with no voting rights. No matter how much of the company is ultimately made available to the public, no outside investors can ever challenge the founders’ control over their company. The company is still run in the interests of shareholders – and often at odds with the interests of society – but it is a sub-set of privileged, insider shareholders, whose interests are even less aligned with the average public-facing pension fund and institutional shareholder.

Suggested reading

Can Big Tech save its soul?

By Charles Arthur

For as long as it remains in need of infusions of cash, Uber’s management and core group of founders may not be able to maintain the complete independence enjoyed by other tech behemoths such as Facebook, Amazon, and Google. Otherwise, it would need to raise fares, potentially curtail its geographic coverage, and lower its world-bestriding ambitions for autonomous vehicles. It probably has not yet tested the patience of late-coming partners such as Softbank and the Saudi Arabian Investment Authority, if only because these investors aren’t necessarily seeking the highest return, but rather American companies where they can stash their wealth. Others might not be so forgiving.

Uber’s long-term viability as a going concern will depend on whether the regulatory rope-a-dope it has played to date is permitted to continue. The recent backlash in the form of drivers’ strikes and policy-makers worried about the ability of gig economy platforms to exercise control while evading responsibility may also start to put pressure on the company. Perhaps they will finally constrict the legal grey area where it has been permitted to grow with a great deal of deference and little in the way of limits.

But in the meantime, the IPO has simply confirmed that the real Silicon Valley business model is the concentration of wealth and power at the top. And it reminds us there are few protections for those who rely on the permission of powerful gatekeepers to earn a living.

Shockley was as close to a rock star as it got in the science world. Having won the Nobel Prize for co-inventing the transistor, many people thought he had gone mad when he moved to Palo Alto to found the Shockley Semi-Conductor Laboratory. But he had his reasons. He had grown up in the area, and he wanted to return home to help his ailing mother.

Shockley hired an all-star cast to join him – experts in physics, metallurgy and mathematics, they abandoned the East Coast to work on the commercialisation of the transistor. Robert Noyce, one of the hires, said getting the call from Shockley was like picking up the phone and talking to God.

Read the series

When competition ends in conspiracy

By Jonathan Tepper

Shortly after arriving, however, they discovered he was an erratic and difficult boss. He was a genius, but a jerk, and not just your ordinary, run-of-the-mill jerk. He was an epic egomaniac – and had tried to claim sole credit for the invention of the transistor. Later in life, he spent his time espousing a racist eugenics agenda, promoting a high-IQ sperm bank, and losing all contact with his children. He was, by most accounts, a horrible boss.

Within a year of joining Shockley, the new hires decided to leave and found a new company – Fairchild Semiconductor. Later dubbed the ‘Traitorous Eight’, they signed one-dollar bills in place of formal contracts – a symbol of nonconformity.

Many consider this act of employee treachery as the definitive moment of Silicon Valley’s creation. It set a precedent of ‘can-do’ entrepreneurialism and loyalty to lofty ideas, rather than individual firms and egos.

Noyce, only 29 at the time, was the ringleader and the group’s transistors expert. Eventually, Noyce and his colleague Gordon E. Moore outgrew Fairchild, and again poached employees to start Intel. In 1971, only three years after founding Intel, Noyce made history yet again with the invention of the Intel 4004, the world’s first microprocessor. He had invented the beating heart of the modern computer.

Suggested reading

Time to topple the technopoly

By Charlotte Pickles

Silicon Valley owes its success to many things – access to capital, proximity to Stanford (one of the best universities in the world), and access to a vibrant Pacific hub in San Francisco. But what helped make it the innovation capital of the world is rarely discussed: California is one of the few states where non-compete clauses in work contracts are completely non-enforceable. In other words, employees have full rights to leave and work for a competitor.

In many other states, employees may be asked to sign a non-compete agreement as a condition of their employment. The terms vary considerably, but the basic idea is that if you are fired or quit your job, you cannot work for a competitor within the same industry for a certain period of time. These clauses make it difficult for workers to leave jobs and bargain for higher wages elsewhere.

Back in 1872, California made it illegal for employees to be bound to a specific employer. This state law is still in effect nearly 150 years later, and the lack of non-competes has proven a powerful factor in the Valley’s success. To this day, Boston lags Silicon Valley in the commercialisation of new technologies.

Imagine where the Valley would be today if Noyce had been prevented from defecting? What if Wozniak had never left Hewlett Packard to join Steve Jobs? Where we would be if Nikola Tesla were prevented from leaving Thomas Edison?

Suggested reading

Google, Amazon, Facebook: It's time to smash Silicon Valley monopolies

By Nigel Cameron

Silicon Valley’s history demonstrates that respect for worker talent was prized above strict company loyalty. This led to a malleable ecosystem, where good ideas spread quickly from company to company and innovators were free to choose their own fates. Professor AnnaLee Saxenian, author of many books on the tech industry, points out that, “In the early days engineers would say, ‘I work for Silicon Valley.’ And the idea was that they were advancing technology for a region, not any single company’s technology.”

If Noyce thought Shockley was God in the early 1950s, Steve Jobs idolised Noyce in the 1970s. When Apple was starting, Noyce was already a legend with Intel. “Bob Noyce took me under his wing,” Jobs said. “He tried to give me the lay of the land, give me a perspective that I could only partially understand.” Jobs continued, “You can’t really understand what is going on now unless you understand what came before.”

Although Jobs worshipped Noyce, he failed to give his own Apple employees the same freedoms that allowed Noyce’s best innovations to flourish. In 2014, it came to light that Jobs had been preventing employees from moving to other companies. Silicon Valley was founded on freedom of mobility for workers, but the tech giants – Apple, Facebook, Google, Adobe and many others – were caught in “gentlemen’s agreements” to not poach each other’s employees. Staff brought the case forward claiming that these pacts made it difficult to market their skills and that they also suppressed their salaries.

Suggested reading

What government can do about the winner-takes-all economy

By Peter Franklin

As part of the lawsuit, emails came out in court between Steve Jobs and Eric Schmidt, the CEO of Google, “I am told that Google’s new cell phone software group is relentlessly recruiting in our iPod group. If this is indeed true, can you put a stop to it? Thanks, Steve.” In another email, Larry Page from Google sent a distressed message saying Steve Jobs had threatened war if a single one of his staff were hired.

In the end, the agreement not to poach went out across Silicon Valley. Google, Adobe and others developed Do Not Hire lists. This was clear collusion, and the tech firms were forced to pay a $324.5 million fine for their illegal non- compete pact.

Further Reading

Marxist McDonnell has a plan to save capitalism

By Daniel Haynes

The non-compete problem did not end there. These contractual arrangements are now spreading like an epidemic across the entire economy and hurting the poorest the most. Today non-competes cover almost 18% of the entire American workforce and nearly 40% have signed one in previous jobs. Only California and three other states (Montana, North Dakota and Oklahoma) ban non-compete agreements in the US.

Lawyers sometimes argue that these clauses help protect trade secrets, but is there any good reason to ask camp counselors, janitors, and personal care workers to sign them? There are already federal laws dedicated to protecting Intellectual Property and today even those who clearly do not possess trade secrets are made to sign them, including 15% of workers without a four-year college degree and 14% of people earning less than $40,000.

These employment clauses are found in a staggering percentage of America’s largest fast-food chains with minimum wage employees. Chains like Burger King, Carl’s Jr., Pizza Hut and, until recently pressured in 2017 to drop them – McDonald’s. These no-hire rules affect more than 70,000 restaurants – more than a quarter of the fast-food outlets in the US – according to Alan B. Krueger, who is an economist at Princeton University.

Suggested reading

The collapse of unions is corrupting capitalism

By Denise Hearn

If you’re wondering what Pizza Hut has to lose if one of their store workers decides to work for another Pizza Hut across town, the answer is simple: the fewer options workers have, the less freedom they have to find a company that might pay a higher wage. The only function of these rules is to limit worker mobility and diminish their ability to bargain for wage increases. This is modern day feudalism, and workers have become vassals to corporate lords.

The truth is that non-competes only help firms that want tight control over employees. They do little for a given industry at large or for the economy. They harm workers and are disastrous for workers’ wages.

Often employees do not realise they are signing away their right to work somewhere else, as firms are not legally obligated to disclose non-compete clauses in almost all states. According to a study by economists Matt Marx at MIT and Lee Fleming at Harvard University, barely 3 in 10 workers were told about them in their job offer, and in 70% of cases, they were asked to sign them after they had already accepted the offer and turned down any alternatives. Half of the time, non-compete agreements were presented to employees on or after their first day of work.

Further Reading

Could Mill's model mend capitalism?

By Victoria Bateman

Barring workers from moving in search of better opportunities only works in an environment where firms have all the power. Because of industrial concentration, a number of firms now have monopsony power – that is, they are the only buyers of labour. A monopoly means there is one seller, and a monopsony means there is only one buyer.

In a monopsony, workers have little choice in where they work and have little negotiating power for wages with employers. In a healthy economy, many firms would be competing equally for workers and would be incentivized to entice new hires with higher wages, better benefit packages, and few restrictions on their next career moves. But monopsonies make it easier for firms to depress worker wages. The classic example of this is a coal-mining town, where the coal plant is the only employer and only purchaser of labour. Today, in many smaller towns, Walmart is the new coal plant – and is the only retail company hiring.

With burdensome occupational licensing, forced arbitration, and increased industrial concentration thrown into the mix, American workers are now faced with pressure on all sides. Without a strong union movement to provide a countervailing power, American workers are left to fight alone.

This is a toxic cocktail. The hangover from increased corporate power is real, with many struggling to meet basic needs. This is not the free capitalism we need or the hope that drove the ‘traitorous eight’ in Silicon Valley decades ago. Workers deserve better.

This is the second of three extracts from “The Myth of Capitalism: Monopolies and the Death of Competition” a new book co-authored by Jonathan Tepper and Denise Hearn.