Senate Bill 26, the North Carolina Benefit Corporation Act, would create a new class of business or corporation that can claim to be morally superior to the run of the mill greedy corporation that now exists. This bill sponsored by Sens. Don Vaughn (D-Guilford); Richard Stevens (R-Wake) and Eleanor Kinnaird (D-Orange) would create a new filing classification and additional requirements for becoming a “Benefit Corporation.”
Without going into the seven pages of legalese that would create this new structure it is better to look at what companies now do and why this bill is not necessary.
Businesses exist to efficiently convert resources (human and material) into products and services that people want and voluntarily purchase or use. Businesses that fail that test should be allowed to go bankrupt. Think GM & Chrysler and others.
A business, by making a profit, increases the wealth of society and hence the ability of individuals to find employment and increase their standard of living. They also provide products and services that make our lives better.
A lawful, profitable business, by its very existence, already “benefits” society by its products and the wages and taxes generated to name a few ways. We do not need government to designate some business as better than others. If this happens it will not be long before government, at the behest of an interest group, tries to add legislation and laws that give these “benefit” corporations some kind of added financial advantage because they are doing “good” things. Think “green” energy and ethanol subsidies.
A more immediate effect will probably be the increased income of another private corporation, B Corporation, since on page 6 the bill requires:
“An assessment of the social and environmental performance of the benefit corporation, prepared in accordance with a third-party standard applied consistently with any application of that standard in prior benefit reports or…”
It appears that the only “third-party” out there that has developed “standards” is B Corporation and they charge for making it “official.”
SB 26 is an unnecessary piece of legislation and if the sponsors and supporters attended the Civitas Free Market Academy they would understand better how the Free Market really works and let this bill quietly go away. For being an unnecessary piece of legislation that potentially benefits a private operation and shows a misunderstanding of capitalism and the free market SB 26 is this week’s bad bill of the week.