Benefit Corporations: Expansion of the Public-Private Fascist State, Part 4

By Stephen Poole
Posted on Freedom Advocates on August 17th 2011

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 SB 26. 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 SB 26; 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.

So let’s get this straight: Women are “underserved” in the “employment sector” more than men, right? I don’t think so…..

And if you don’t think that the creation of a new type of business called a Benefit Corporation wouldn’t lead to it being favored by government, banks, and investors, you owe it to yourself to see what the creators of the B Corporation™ concept have to say on the subject. On Page 11 of “Benefits of Becoming a B Corporation™” we read:

Access Mission-Aligned Capital and Policy Incentives

Over the long term, by building the community of B Corporations, we build constituency among B Corporation entrepreneurs, investors, employees, suppliers, and consumers for a variety of policy initiatives which will benefit B Corporations.

  • Alternative Stock Exchange B Lab is working to create BX, a stock exchange for B Corporations™, to provide B Corporations™ with access to mission-aligned liquidity options and growth capital.
  • Preferences for Purchasing and Investing By building a distinct class of high-impact companies, B Lab makes possible government, institutional, and corporate purchasing preferences and institutional investment preferences for B Corporations™.
  • Legal Recognition & Tax Incentives B Lab is working toward eventual recognition of B Corporations™ as a distinct legal entity at both the state and federal levels. Legal recognition is a likely precondition for a variety of tax incentives which could reduce the corporate taxes for B Corporations™ and the capital gains taxes for investors in B Corporations.

There you have it. Benefit Corporations are being promised access to a special stock exchange; preferential treatment by government, “institutions,” and other corporations; and lower corporate and capital gains taxes. But can B Lab really make any of this happen for its B Corporations™?

It already has. In 2009, Philadelphia became the first city to authorize a tax break for the corporations certified by B Lab. When you read about this groundbreaking event on page 20 of B Lab’s 2011 Annual Report, you discover that this is more about “sustainable development” than about “general public benefits:

“As 2009 came to a close, Philadelphia became the first city in the U.S. to pass a law awarding a tax break to certified sustainable businesses. The $500,000 pilot program goes into effect in 2012, and during a five-year pilot phase, 25 sustainable businesses per year can apply for a $4,000 credit. While the Mayor’s Office of Sustainability has the authority to recognize other certifications, B Corp certification is the only certification recognized directly in the city ordinance as meeting the City’s definition of a certified sustainable business.”

“Philadelphia is focusing on attracting sustainable businesses,” says Councilman James Kenney, who sponsored the Sustainable Business Tax Credit. “One way is by providing this tax exemption to companies that meet social and environmental performance standards.”

So the real goal of the Benefit Corporation legislation is to coerce — or at least strongly coax –  all corporations into becoming B Corporations™ and, in the process, implementing many of the social, economic, and environmental goals of Agenda 21 without having our representatives knowing that’s what they’re actually doing. And if you’re still unsure about Agenda 21 being implemented on the local level, scroll back and read the excerpt from the “Congestion Relief and Intermodal Transportation 21st Century Fund.” Note what cities must do to gain government grants: set aside 15% of housing “stock” for people making less than 60% of the area’s median income, conveniently located near bus or rail lines. That’s called “stack ‘em and pack ‘em” planning: shoving poor people into areas where they won’t “need” cars because the train or bus will be right outside the doors of their ghetto apartments, ready to whisk them away to the local food or manufacturing cooperative. Say you’re not too keen on this dystopian vision? Too bad, because in the Agenda 21 document the U.N. points out that resistance is futile:

“The [Agenda 21] programme envisages continuation of this work, with particular emphasis on development of appropriate sanitation and waste disposal technologies for low-income, high-density urban settlements…The public-awareness campaigns will also include components to overcome user resistance to second-class services by emphasizing the benefits of reliability and sustainability.

What would a “low-income, high-density urban settlement” look like? The Smart Growth Utopians paint a rosy picture, where pastoral quietude blends seamlessly with a bustling (but carbon-free) local economy “where all the women are strong, all the men are good-looking, and all the children are above average.” Here’s a typical example of how they envision a “smart growth” urban design.

But it’s funny how artists’ conceptions rarely match the reality when the projects reach fruition. Take the Pruitt-Igoe housing complex built in the 1950s in St. Louis. Here’s an artist’s rendering of what the urban housing center would look like.

The bureaucrats (both Democrats and Republicans) who pushed for the clearing of “slums” and replacing them with an idyllic group of domiciles hoped they would pay unexpected dividends, helping the entire city by leading to new parks, parking lots, playgrounds, and shopping centers. Instead, here’s what the citizens of St. Louis got.

The result of a partnership between the federal government, state authorities, and private construction firms, Pruitt-Igoe had several “features” that housing planners thought would improve the lives of the tenants. Elevators stopped only at the first, fourth, seventh, and tenth floors, forcing tenants to use the stairs in an effort to reduce “congestion.” Communal corridors on the third floor of every building housed a communal room, laundry, and a garbage room; these corridors quickly became covered in graffiti and littered with garbage and human waste. Pruitt-Igoe was completed in 1955; by 1968, HUD was encouraging people to move out, and in 1972 the buildings were demolished. Topping off the fiasco, it turns out that Pruitt-Igoe cost 60% more than above the national average for public housing.

But the caring folks who’ve crafted Agenda 21 surely wouldn’t crowd us into cities and make us live in squalor, right?


If Bonnie Prince Charles has his way — and he is not only a huge proponent sustainable development but also a key architect of Agenda 21, to the point that it was on his yacht that George H. W. “New World Order” Bush signed Agenda 21 — these “human settlements” should be modeled after Dharavi, the shanty town featured in the movie Slumdog Millionaire. The Good Prince said that Dharavi has the “benefits” of locally sourced materials, a balance of business and homes, and “walkable neighbourhoods” as evidence for its superiority. That Newspeak translates into images like this one:

Prince Charles’ idea of a “sustainable community” featuring the benefits of locally sourced materials more commonly known as refuse.

And how might the “alternative stock exchange work?” We get a glimpse by looking at another piece of bad legislation passed by our overlords in Raleigh in August 2010. SB 308 allows the creation of yet another type of corporation known as a “low-profit limited liability company.” In the text of the law we get some classic Orwellian doublespeak, bolded for your convenience:

“A low-profit limited liability company is a limited liability company whose articles of organization state that the company is formed for both a business purpose and a charitable purpose that requires operation of the company in accordance with the requirements of this subsection. A company that operates in accordance with these requirements is considered a for-profit entity and not a charitable entity for all tax purposes. A company’s failure to operate in accordance with these requirements does not affect its status as a limited liability company. The charitable purpose requirements are as follows:

(1)   To accomplish one or more charitable or educational purposes within the meaning of section 170(c)(2)(B) of the Code, as defined in G.S. 105-228.90.

(2)   To operate so that no significant purpose of the company is the production of income or the appreciation of property. The fact that a company produces significant income or capital appreciation is not, in the absence of other factors, conclusive evidence of a significant purpose to produce income or accumulate capital.

Where did the idea for a L3C come from? Why, the Aspen Institute, of course — which makes you wonder why our representatives don’t just move to that resort town whenever they are considering any type of changes to our business laws. To help you divine the inspiration for this new corporation, I’m going to quote liberally from an article that was written in close cooperation with LC3 “visionary” Robert Lang, who just happens to head up a foundation that as you see stands to benefit greatly from the new type of corporation.

“Lang’s proposed L3C, a form of Limited Liability Company (LLC), would be a for-profit entity organized to engage in socially beneficial activities. The traditional LLC provides a flexible ownership structure whereby different owners of a single company can receive different economic benefits. Lang’s proposed L3C takes the concept one step further. The L3C’s unique structure would allow foundations to invest by using an alternative to grants—program-related investments (PRIs). It can have different classes of investors—such as individuals, government agencies, nonprofits, and for-profits—with foundations taking the most risk. The L3C’s investment structure would be designed to bring new pools of funds such as pension and endowment investments to bear on problems normally treatable only by nonprofit dollars.

By being a defined entity organized under state laws, the L3C would usually eliminate legal fees and organizational costs associated with PRIs. It would allow the use of the more efficient free enterprise system unburdened by nonprofit regulation. Finally, its financial structure would allow the creation of a saleable product by the financial industry….

Lang is already trying to establish the first L3C in North Carolina, where the furniture manufacturing industry has been hard hit by increased global competition. Lang is working to establish L3Cs that would be owned by his and other foundations, individuals, and institutional investors.The L3Cs will buy factories in the state, make them green and up-to-date, and lease them to furniture manufacturers at a low rate, thereby helping the manufacturers to be more competitive and preserve jobs. The foundations would take the top tier of ownership in the L3C and assume the greatest financial risk. The next tier might be taken by banks, wealthy community-minded individuals, or institutions, and the bottom tier would be a AAA investment that could be sold to pension or endowment funds. Lang is in discussions with many large financial institutions to enable the L3C to become a viable investment product.

Look at the types of “investors” listed in the first and third paragraphs: “community-minded” individuals, government agencies, nonprofits, for-profits. Is there a better definition of “public-private partnership?” Note that foundations — you know, the ones who’ve been socially and economically engineering our society for more than 50 years, and doing it without paying income taxes on their mammon — “take the top tier of ownership” and, in this example, would “lease” factories to furniture manufacturers.

Or would that be “furniture cooperatives?” Sounds a lot like an industrial version of sharecropping to me.

Lastly, note that the scheme entails creating “tranches” that could be bundled together and sold to “pension or endowment funds.” Who do you think controls most “endowment funds” in this country? That’s right: foundations. And it’s likely they’ll be trading these soon-to-overleveraged derivatives on B Labs’ “Alternative Stock Exchange.”

Friends, I plead with you to call your representative in the NC General Assembly and demand that they vote against this legislation. As I’ve abundantly pointed out, there’s no reason companies can not achieve the purported goals of SB 26 without the passage of such a law, while the enactment of this legislation could lead eventually to corruption and crony capitalism of dizzying proportions. Last but not least, you might try to explain how this is a back-door implementation of Agenda 21, or coax them into reading my series here on NC Freedom so they can understand the full implications of their vote.

Or you might try this: tell them the only laws you want to see them pass are ones repealing the tyrannical dictates previous sessions have imposed upon us.


Here are the links to all parts of Stephen Poole’s Benefit Corporation series:
Part 1, Part 2, Part 3, Part 4.

As a graduate of Wake Forest University, Stephen Poole emerged from that institution as a zombified collectivist incapable of critically analyzing the socialist shibboleths with which he’d been indoctrinated. After awakening to the untenable nature of his “beliefs,” he’s now a an individualist who believes in truly free markets, Constitutionally limited federal government, the eminence of personal liberty, and unalienable rights granted by God.

“Benefit Corporations: Expansion of the Public-Private Fascist State, Part 4” by Stephen Poole


This article contains links to outside sources not controlled by Freedom Advocates and therefore are subject to change.

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