The military still very much has company stores, company housing, really the whole company town concept is very much intact. It works, and has worked since WWII, because getting shot at is a strong disincentive to work for the military. Pacifism doesn't help either. But the net effect is that saving money on housing or recouping paychecks through the company store isn't exactly the long pole in the tent for the organization's success. Retaining skilled workers is far and away the long pole in this tent.

In general, the military also provides housing mainly for people who can't afford the local economy, or are frankly better off not making all their own financial decisions, and a few senior officers where it's better to keep them on base. The "skilled worker" group is still living on the economy, buying houses.

So, I would hypothesize that whenever companies are people-starved for the long term, due to systemic pressures, offering company stores and company housing as a benefit aren't such a bad idea, at least from the company's perspective. But they're still rentals, so really best suited for new grads trying to wait out the market (a strategy I definitely recommend). The company store ... who doesn't have a company store?

Until the labor-based enterprise running them faces some sort of competition, and really has nothing else to squeeze.

"By the 1920s the need for company towns had declined significantly due to increased national affluence. Despite income inequalities and a relatively low standard of living conditions amongst factory labourers, the prosperity of the 1920s saw workers’ material well-being improve significantly."

So, company towns were so exploitative, workers wealthed up before long and made them obsolete?

1. https://en.wikipedia.org/wiki/Company_scrip

2. http://www.pbs.org/tpt/slavery-by-another-name/themes/compan...

3. http://clio.lib.olemiss.edu/cdm/ref/collection/aah/id/29047 (page 7, 'Abusive Practices')

4. http://www.smithsonianmag.com/travel/americas-company-towns-...

etc. etc. ad nauseum. This is a pretty well documented terrible thing.

If someone decides to share some information on HN, it isn't their responsibility to provide a robust argument and complete set of citations. If you'd like them to you're free to ask politely, or to volunteer your own (or even better, provide counterpoints). But a terse summary of the HN rules is, "add meaningfully to the conversation." The individual you're berating added context that they felt was missing from the original article; this certainly qualifies.

The burden of accessing the veracity of the information lies on you. If they provide you with citations, then they're generously offering you a shortcut. If you're having a hard time finding support for their claims, then ask them for a pointer in the right direction. But if you haven't looked at all, then you should decide if this question is worth your time to research, and act accordingly, rather than asking other people to do the legwork for you.

And what exactly kept the families from just packing up and leaving? It would seem that it must have offered a better value proposition that anything else if people chose to stay there. Unless they were slaves, your whole point is moot.

It's very likely, that it was incredibly difficult to file for bankruptcy in the era of company towns in the US---i.e. 1880 (first bankruptcy bill was filed in 1889) through 1934.

For example, someone in a company town may not know that moving to the city will most definitely result in a better job, and out of fear of this ignorance, they continue to stay in a poor situation until it reaches a point where emotionally (rather than rationally), it becomes intolerable.

To me, the one of the purposes of good governance is to ensure that information is spread widely, and citizens are well educated in order to understand and take advantage of it.

Edit:

To add to it... recruiting children, laying debt upon them, and ensuring they only know about 1 kind of job is exactly the kind of asymmetric information that we make laws to prevent the formation of.

Plus there's always the chance that wherever you're moving TO is just a case of grass being greener across the fence and won't actually help anyway.

THAT is why the word "just" does not belong in that argument at all.

The company owned everything. The only way out without paying for company run transport, which you won't get without settling your debt, is to walk. Walkers are easily rounded up by debt collectors, and if you had a wife and children you wouldn't leave them.

These towns were set up to create a supply of indentured labour.

https://en.m.wikipedia.org/wiki/Switching_barriers

It is also why everyone is locked into sites like facebook (network effects) or cities like NYC even if they say they want to leave

GREAT SCENE: http://m.youtube.com/watch?v=LWZk24MA7TE

If the ridiculous scenario the GP suggested actually worked, we would see, you know, examples of it.

You mean like all the documented examples people posted? (see https://news.ycombinator.com/item?id=12178695 for an example)

Company towns enforcing debt slavery are an actual, genuine, true, real, factual part of US history. They existed. They really did work as described. People really did not manage to escape them. In several places it took literal armed revolution to break this system.

So if your theory of economics somehow predicts that such things are impossible, the problem is with your theory of economics.