Katrina vanden Heuvel: Making the economy more just

[marmar]

from WaPo:




Making the economy more just

By Katrina vanden Heuvel
Wednesday, July 21, 2010


Congress has passed the Wall Street Reform and Consumer Protection Act, but the task of transforming our economy into one of shared and sustainable prosperity has only just begun. Structural reform will come not through the sweep of a single piece of legislation but with new, innovative economic models that better reflect the democratic values of this country.

The good news is that some of these transformative ideas are already taking root. Here are five ways to build a more just economy that Americans are experimenting with across the country.

The answer is 'B'

Corporations are compelled to pursue a single objective: maximize profit. In fact, a company can be sued for following goals that veer from that statutory obligation.

That's why Maryland State Sen. Jamie Raskin sponsored the Benefit Corporation legislation that was signed into law this spring. It gives businesses the option to register as a "B corporation," an entity legally obligated to maximize both shareholder value and advance a common public purpose such as cleaner air, open space or affordable housing. The B corporation's stated public goal is vigorously monitored by independent, third-party groups. It's a new business model with social consciousness in its DNA. ...........(more)

The complete piece is at: http://www.washingtonpost.com/wp-dyn/content/article/2010/07/20/AR2010072002754.html

[cascadiance]

1. This is a nice idea, but I think needs a more level playing field to work.

Existing corporate behemoths can still operate under the same rules of not doing anything except pursue profit. That means they don't have the additional costs that these newer B corporations have to be more socially responsible that they will "externalize" away.

How many funds will invest socially consciously? How many individuals have the sufficient choices through their 401ks to demand having "B fund" style options? Still not clear.

Ultimately, I think there needs to be a set of tax credits that are available to do the "right things" by companies that are equivalent to these externalized costs, so that companies, even if not "B" companies officially, will be motivated to not externalize these costs, and therefore compete more on an even playing field with the B companies. Perhaps later, the corporate charter laws can be rewritten so that all corporations operate by these rules so that we don't even have to use taxpayer funded subsidies to level the playing field any more.

Right now, you really need conscientious leadership, which I would argue is a dying breed, that at times "bends" the rules on "maximizing profit" to help provide for better working conditions and pay for employees, and more environmentally friendly products and practices that some companies engage in but which investors complain about (like Costco).