Incompetent Scheming Is Just as Bad As Competent Scheming

A couple of months ago I wrote about new evidence suggesting that several big Silicon Valley firms had explicitly agreed not to hire away each others' workers. This case has now gotten more attention, and Tyler Cowen comments about it:

I would suggest caution in interpreting this event.  For one thing, we don’t know how effective this monopsonistic cartel turned out to be.  We do know that wages for successful employees in this sector are high and rising.  Many a collusive agreement has fallen apart once one or two firms decide to break ranks, as they usually do. [More follows about how this might play out in the real world]

Cowen is an economist, and I don't want to knock him for doing some economic analysis. Still, this is the kind of thing that gives economics a bad name. Who cares if this scheme was effective? Maybe it was the Keystone Kops version of collusion. What matters is merely that they tried. These companies felt perfectly justified in conspiring to hold down wages in a tight labor market. Like so many titans of capitalism, they think free markets are great just as long as workers who are in high demand don't get any fancy ideas about what that means.

Throw the book at them. If their scheme didn't work, it just means they're incompetent plotters. But they're plotters nonetheless.