Tuesday, September 20, 2011

NC SB 26: Benefit Corporations: Expansion of the Public-Private Fascist State

Via Bill
Let me begin by congratulating any readers who’ve slogged through the first three parts of my analysis of the North Carolina Benefit Corporation Act, or SB26. While those articles expose both the incompetence (or worse) of the NC General Assembly for considering such legislation and the abuse that such vague, open-ended legislation can entail, you’re probably still wanting to know just why I’ve bothered cobbling together several thousand words warning you of the perils of such a new regulation.

Follow closely, and I will explain — and those of you who haven’t read the first three parts should probably do so now so you’ll know I’m not making scenarios up out of whole cloth.

Imagine two corporations, Mammon LLC and Beneficius B Corporation. The former is a traditional corporation, the latter a new “Benefit Corporation” created courtesy of the passage of SB26; both are primarily involved in the housing construction industry. And both are submitting bids for an “affordable housing” project being contemplated by a North Carolina municipality as a result of the passage of the “Congestion Relief and Intermodal Transportation 21st Century Fund,” specifically G.S. 136-252 section (b) (3) (d), which says applicants for grants must produce a “housing needs assessment and plans” that includes:

“Identification of potential resources and a strategy to provide replacement housing for low-income residents displaced by transit development and to create incentives for the purpose of increasing the stock of affordable housing to at least fifteen percent (15%) within a one-half mile radius of each transit station and bus hub to be affordable to families with income less than sixty percent (60%) of area median income.”

But most important for consideration in this hypothetical situation is this: the two companies are not only completely equal in terms of customer satisfaction and quality of work, but have submitted precisely the same bid. So who gets the contract for the housing project?

Be honest. Do you really think that Beneficius, because its very corporate designation implies it is imparting a “benefit,” wouldn’t get the contract over Mammon? Of course it would, even though the decision-makers at the municipality might not say that’s the reason in so many words. And of course there’s always the possibility that a Benefit Corporation could simply underbid its non-Benefit Corporation competitors because it allegedly doesn’t seek the same type of profit margins that bad, money-loving standard corporations do.

So now one company would likely win out over another company not because its work is necessarily more “beneficial” but because it had hired more women and minorities, used more renewable energy, recycled more goods, reduced its carbon footprint, offered more generous employee compensation plans, and dealt with suppliers who had followed the same regimen — i.e., creating the vague “general public benefit” defined by the “third-party standard” I addressed in Part 3. But are the qualifiers that make up the bulk of the “third-party standard” all that beneficial? The wage gap between men and women has been obliterated; men are being increasingly shoved out of the workplace, in keeping with Agenda 21's focus on women and children; renewable energy sources are costing lives and money; manmade global warming is a scam; and recycling is utterly inefficient and even wasteful.

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