Sunday, January 4, 2015

Beware the B-Corp.

Minnesota has become the 27th state to establish the fantasy of a corporation without those nasty profits. Yes, you can now register in the land of 10,000 do-gooders as a "public benefit" corporation thereby removing the horror of protecting shareholder value.

Maximizing profits for shareholders has long been the bane of the anti-capitalist left so what better way to undercut free enterprise than to promote the so-called "B-Corp" which is legally allowed to consider "social good" over profits. In a state with some of the richest non-profits already (see MPR, McKnight, Clear Way MN, et al), not to mention some of the most 'politically correct' corporate HQs in the country, you'd think that further funding of such things as "sustainability" initiatives would be overkill.

Of course, the nauseating premise of this scheme to grant corporate liability protections to organizations that spend earnings on liberal fundraising is that the for-profit business is amoral at best and really immoral. How pathetic in this day and age that we have to explain rudimentary economics to the masses, but understand this: the greatest force for social good is the profitable business. And the more profits the better. Why? Because profits increase productivity of workers resulting in wage gains, they pay dividends to Grandma's pension fund, they grow companies when reinvested and add jobs, they provide customers with what they desire, and they encourage competition which drives down prices.

Besides, as the late, great Peter Drucker once said: "There are no such thing as profits, only costs." Translated: profits are to capital what wages are to labor--without the former, you don't have the latter. And without capital and labor, you don't have an economy.

This is only the beginning. You can count on the "public benefit" lobby (and their chief non-profit protagonist B-Lab) to demand favored tax status soon. In the meantime, don't waste your time patronizing or heaven forbid investing in such foolishness.

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