June 9, 2011

sloppy thinking, unexamined assumptions...

The Rise of Benefit Corporations — The Nation:

When America began, the states chartered corporations for public purposes, like building bridges. They could earn profits, but their legitimacy flowed from their delegated mission. [I don't know the history behind that, but it sounds fishy. And wait a minute. When we build a bridge now, who does the work? Corporations, n'est pas?]

Today, corporations are chartered without any public purposes at all. They are legally bound to pursue a single private purpose: profit maximization. [This is a bogus complaint for various reasons. For instance, who owns our corporations? Who gets the profits? Millionaires who light their cigars with $20 bills? NO, the majority of shares are owned by pension funds and mutual funds, which are the investments of workers and the middle class. So the public in fact gets the profits. If The Nation has a retirement fund for its employees, what does it invest in? I'd guess, profitable corporations.] Thus, far from advancing the common good, many for-profit corporations have come to defy the law, corrupt the officials charged with enforcing it and inflict harm on the public with impunity. The consequences are visible in the wreckage left by BP, Massey Energy, Enron, AIG, Lehman Brothers, Blackwater and Exxon Mobil, to name a few recent wrongdoers. Profits rule; anything goes. [For every one of those, there are thousands which don't break the law. Who simply provide the products people need.]

We need a new business model inspired by the old one. Corporations should again come to bolster democratic purposes, not thwart them. [Democratic? Oh, that means the public gets to VOTE on what these purposes might be? No? I'm so surprised.] To be sure, there will be no return to the legislative short leash, especially now that the Supreme Court has invited corporations to spend treasury funds electing pliant and obsequious lawmakers. [The business model of the public employee unions.] But socially minded businesses should at least have the right to operate outside the straitjacket legal requirements of Delaware Code profit maximization. [Actually, straightjackets are good. No organization can operate efficiently unless it is forced to pursue a single clear measurable objective. It is certain that these "B" thingies will use resources unwisely, and probably ask for government assistance.]

Thankfully, a promising alternative is emerging: an entity called the Benefit Corporation, which has been written into law in Maryland, New Jersey, Virginia and Vermont, and is moving quickly in other states too. The new laws permit companies to join the profit motive with the purpose of making a "positive impact on society and the environment." [Positive?] In their articles of incorporation, Benefit Corporations declare their public missions—things like bringing a local river back to life, providing affordable housing, facilitating animal adoptions or promoting adult literacy. Under the law they must go regularly before a third-party validator like B Lab, the visionary Philadelphia-based alliance of more than 400 so-called B Corps across the country, [So the B-Corp "alliance" gets to measure the B Corps. I'm SO surprised. But of course they will be objective and fair, because they are "visionary."] to prove that they are not only meeting their goals but treating their employees, customers, communities and local environments with the same respect as their shareholders. Benefit Corporations can lose their B Corp title and their legal status for not doing right by these standards. [Standards? How do you define "treating the community with the same respect as shareholders?" What IS that? Who decides? By what standards? ] ...

This is such a bunch of malarky. The "standards" will inevitable be the current lefty fads, proclaimed by "activists" and politicians seeking another sneaky way to get power. And they will probably be the worst things possible.

For instance, "treating workers with respect" will surely involve making it harder for lay-off or fire them. But that's the opposite of what is good for workers. When it's easy to get rid of workers, then companies are happy to hire them in great numbers, because they are confident that they won't be stuck if sales go down. Those countries that make it hard to fire workers always have very high unemployment rates.

I could go on for many more paragraphs, but what really really bugs me about this sort of thing (most people won't even care, but it's important) is the assumption that "the good" is obvious. In truth it is hard bordering on impossible to know what the good is. Often in hindsight we see that the common assumptions of some particular time were all wrong. If they had B Corps 200 years ago, "indian killer" would have been considered a "positive impact on society and the environment."

Lefties at Yearly Kos

Posted by John Weidner at June 9, 2011 7:06 PM
Weblog by John Weidner