Keeping secrets

Posted Apr 11, 2016 23:20 UTC (Mon) by Wol (subscriber, #4433)
Parent article: Moglen: How Should the Free Software Movement View the Linux Foundation?

Much as many people seem to believe in "no secrets", I am sure they would not like having their personal life streamed on the internet 24/7. There is great value in being able to share information yet at the same time keep it secret.

I used to work for a trade association, and we were a trusted intermediary. If, for example, IBM wanted to know how much Microsoft, ICL, Fujitsu etc were paying their staff in salaries, they could ask us. And they would get the data, suitably anonymised, back. But the deal always was "you want the survey - we pay them for the data by giving them a copy, too".

So the LF could be a place where RH, Novell/SUSE, Canonical et al could share what they were planning for the market without actually giving away any detail, or who was planning what. Knowing your competitors' future plans is valuable, and if you can share that via a trusted intermediary you can get mutual benefit, rather than letting them poach your stock ... :-)

Cheers,
Wol

Keeping secrets

Posted Apr 12, 2016 0:47 UTC (Tue) by pabs (subscriber, #43278) [Link] (5 responses)

Your anecdote about IBM/etc sounds like price fixing to me. Am I interpreting that incorrectly?

Keeping secrets

Posted Apr 12, 2016 6:47 UTC (Tue) by donbarry (guest, #10485) [Link] (2 responses)

We know that price-fixing is de jure illegal. But let's not entertain any illusions that it doesn't go on de facto. The loopholes that exist are legion: Airlines (in those few areas where there is still competition) inch fares up and down in something akin to the semaphores in contract bridge. The informal agreements against poaching agreed upon by Apple, Google, etc, and penalized with pretty minor wrist-slaps were only noticed because of the arrogance of Jobs, who couldn't resist bragging. And, of course, in a monopoly there's not even a reason to price-fix.

This is nothing new. Adam Smith, in _The Wealth of Nations_, Book I, Chapter X, Part II:

"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty or justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary. "

Keeping secrets

Posted Apr 12, 2016 8:54 UTC (Tue) by Wol (subscriber, #4433) [Link] (1 responses)

> Airlines (in those few areas where there is still competition) inch fares up and down in something akin to the semaphores in contract bridge.

GAME THEORY.

In areas with poor competition (we have this in the energy supply market in the UK) you do not need *any* communication between the players to result in what looks like price fixing.

When the price of your raw goods goes up, everybody raises prices. It's a game of dare - when the first one does it (hanging on as late as possible) everyone else follows suit.

When the price of your raw goods goes down, nobody drops their prices. Again it's a game of dare - once the first one drops, everyone else follows suit - BUT NOBODY WANTS TO DAMAGE THEIR NICE PROFIT MARGIN FOR WHAT THEY KNOW WILL BE MINIMAL GAIN.

Humans like to see patterns where there aren't any. And price fixing is often one of those illusions. I'm not saying it doesn't happen, but I am saying it's a lot less common than most people think - the *illusion* is an *inevitable* consequence of poor competition. And given the American penchant for "winner takes all" style business ...

Cheers,
Wol

price fixing and mens rea

Posted Apr 22, 2016 23:50 UTC (Fri) by Garak (guest, #99377) [Link]

I like the nuance you are highlighting, but it seems like you are splitting hairs with your definition of 'price fixing'. You articulated well how no actual communicative collusion is often required for the players to gain the benefit of elevated prices across the board. But your emphasis on labeling the effect as an illusion of price fixing, rather than price fixing is curious. The natural upstream philosophical question is- are there laws against either part of this split hair, and if the laws only apply to one half of the hair, is that for a good reason or a bad reason historically that might be better resolved with a little bit of modern brainstorming.

Keeping secrets

Posted Apr 12, 2016 8:47 UTC (Tue) by Wol (subscriber, #4433) [Link]

> Your anecdote about IBM/etc sounds like price fixing to me. Am I interpreting that incorrectly?

NO NO NO.

Price fixing is where company executives collaborate and agree to act together. This would be if you knew that three of your competitors were planning to raise prices, but you did not know who.

Actually, in our case, salaries, I think this works the other way round :-) It drove salaries up. Which imho is insane but ours was not to reason why ...

The *idea* is to attract talent by paying high salaries. The *effect* is to pay more for crappier talent. If you want to attract the best talent by offering "salaries in the top quartile", every company that does that will get into a spiral of ever rising salaries. BUT you will end up poaching the same rotating pool of people with no company loyalty, questionable talent, and minimal corporate knowledge.

IF on the other hand, you give your staff decent pay rises, and promote internally, you'll find that the cream rises to the top. One of the biggest causes of *good* talent leaving is that people see no opportunity for personal advancement (which doesn't necessarily mean promotion). So if you aim to be an average payer, with a decent HR that does good succession planning, you'll probably find you outperform the spiralling companies quite nicely.

(If you want a cite, there was a study, sorry no details, that compared "return on assets" vs "CxO salaries" and found pretty much that - buying in expensive "talent" depressed returns significantly over a five-year period.

Cheers,
Wol

Keeping secrets

Posted Apr 12, 2016 14:34 UTC (Tue) by Abrahams (guest, #103692) [Link]

No, it is not collusion because there is no joint strategizing, and all players remain in a state of competition. The difference is "I don't even know what the other guys are doing" vs "I know a bit about what the other guys are doing, and can plan to compete accordingly."

Keeping secrets

Posted Apr 12, 2016 13:30 UTC (Tue) by tialaramex (subscriber, #21167) [Link]

"Much as many people seem to believe in "no secrets", I am sure they would not like having their personal life streamed on the internet 24/7"

You first is my only rule. I am more than happy to have my life streamed 24/7 if the Powers That Be are streamed too. And I mean that quite sincerely.