Thursday, January 5, 2012

Compassionate Capitalism

"Compassionate" capitalists can now showcase their virtue in California by seeking legal standing as a "benefit corporation," which protects against backlash from shareholders cold-hearted enough to actually expect a return on their investments. But such legal theatrics slander all business by implying that capitalism is by nature uncaring and uncompassionate, when the opposite is usually true.

Aren't all companies "benefit corporations" that provide a good or service people want -- a benefit -- through fair and voluntary exchange? Each party benefits through such transactions, the company and the customer. That old bogeyman "exploitation" only applies in cases where such exchanges are forced, which shouldn't occur in a truly free economy (which ours isn't). Both parties recognize and receive some benefit from the transaction or it wouldn't take place.

Compassion and altruism don't animate the actions of either party, company or customer, as Adam Smith famously pointed out. Both are moved by self interest (even though no one ever accuses the customer of greedily "exploiting" the company). The ultimate (and happy) result is mutual satisfaction and growing prosperity for all, which is the magic of the free enterprise system.

Corporations don't exist for long that don't provide a benefit to their customers: serving or pleasing others is what makes them profitable. That qualifies 90 percent of California's companies as "benefit corporations," even if they lack such a grand title. That shareholders also benefit through this arrangement is frosting on the cake. And from where does the money that funds most private charity and philantropy come, if not from the people who do well in business?

No wonder businesses are leaving California in droves. Why continue to serve as a cash cow for state leaders who have such mindless contempt for those who put the gold in the "golden state."

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