Underpaid Genius

The press release, received by email:

NY Law Creates New Kind of Corporation

Spurs Investment to Create High Quality Jobs and

Use Business to Solve Social Problems

State Legislators from Wall Street Sponsored the Bill

Albany, NY: At midnight last night a law was enacted creating benefit corporations, a new class of corporations required to create benefit for society as well as shareholders.  Unlike traditional corporations, benefit corporations are required to create a material positive impact on society and the environment; consider how decisions affect employees, community and the environment; and publicly report their social and environmental performance using established third-party standards. 

Continuing a national trend of strong bi-partisan support for benefit corporation legislation, the New York bill (S79-A and A4692-A), sponsored by Senators Daniel Squadron (D-25) and Assembly Speaker Sheldon Silver (D-64) and co-sponsored by William Larkin (R, C-39), passed both houses of the New York legislature unanimously.

“Political leaders like Speaker Silver, and Senators Squadron and Larkin understand that New York needs to attract businesses whose core purpose is to create more high quality jobs and to improve the quality of life in communities across the state,” said Andrew Kassoy, co founder of B Lab, the nonprofit organization that drafted the model legislation.  “The benefit corporation bill will unlock billions of dollars in impact investment capital and enable entrepreneurs across the state to start businesses that solve some of society’s greatest challenges.”

“Benefit corporations will mean New York is open for business in an important new way. Benefit corporations will unlock billions of dollars in new investments in New York while empowering companies to do well and do good,” said Senator Squadron. “By offering this opportunity to entrepreneurs and investors, New York will bring new businesses into the state, new investors into the market and a new socially-minded approach for our entrepreneurs.”

“By bringing benefit corporations to New York, we are showing that profit and social responsibility are not mutually exclusive,” said Speaker Silver.  “This law will continue our efforts to strengthen and diversify our economy while ensuring that New York remains a national leader in progressive policies that help our environment, protect consumers and bolster the rights of working men and women.”

“I am very happy to see that this bill has finally become law.  It will enable businesses to grow without the infringement of state government, and will help New York become a more business friendly state,” added Senator Larkin.

The new law addresses a long time concern among entrepreneurs who need to raise growth capital but fear losing control of the social or environmental mission of their business. These entrepreneurs and other shareholders of benefit corporations now have additional rights to hold directors accountable for failure to create a material positive impact on society, to consider the impact of decisions on employees, community, and the environment, or to inform the public about the company’s overall social and environmental impact as assessed against a credible, independent third party standard.

New York is the seventh state to pass benefit corporation legislation, joining Maryland, Vermont, New Jersey, Virginia, Hawaii, and most recently, California.  The legislation has enjoyed broad bi-partisan support nationally, with a vote tally of 892 ayes and 62 nays, and the signatures of both Republican and Democratic governors. The New York bill had significant support from business (partial list below), including Eileen Fisher, City Light Capital, and UncommonGoods; and from more than 2,600 New York citizens, all interested in creating better choices for the growing number of entrepreneurs and investors who seek to create businesses that create both social and shareholder value.

“The passage of benefit corporation legislation is an important and much needed step forward to grow our New York state economy and create more jobs which can also provide greater social and environmental benefit,” says David Levine, co-founder of the American Sustainable Business Council whose members’ organizations represent over 100,000 businesses. “At a time when the country is looking for solutions to build the economy, New York is helping to lead the way with an innovative and sustainable business strategy.”

bobulate

E.B. White outlines that there are roughly three New Yorks:

1) The New York of the man or woman who was born here
2) The New York of the commuter
3) The New York of the person who was born somewhere else and came to New York in quest of something

On the third:

[T]he greatest is the last — the city of final destination, the city that is a goal. It is this third city that accounts for New York’s high-strung disposition, its poetical deportment, its dedication to the arts, and its incomparable achievements. Commuters give the city its tidal restlessness; natives give it solidity and continuity; but the settlers give it passion. And whether it is a farmer arriving from Italy to set up a small grocery store in a slum, or a young girl arriving from a small town in Mississippi to escape the indignity of being observed by her neighbors, or a boy arriving from the Corn Belt with a manuscript in his suitcase and a pain in his heart, it makes no difference: each embraces New York with the intense excitement of first love, each absorbs New York with the fresh eyes of an adventurer, each generates heat and light to dwarf the Consolidated Edison Company.

I returned to visit the place I grew up this weekend to take a trip with my family. “Home” is how I’d referred to the place for years. Yet slowly there was that tension between the place you lived and the place you live, the “were” and the “is,” the past, the present, and perhaps the future. And “home” — a four-letter word of a different kind — transforms.

More than a decade ago, I arrived in New York, but never intended to stay. I might (if I may), say then there are roughly four New Yorks:

Fourth, there is the New York of the man or woman who was born somewhere else and came to New York never intending to stay. Of these four incomparable cities, it may be the fourth that is the most unflappable, the most infallible, the most loyal. You see it is she who has understood love of a city, of its natives, and its commuters, of its messy seams and its buttoned-up asphalt, of its uptown arts and its devoted downtown. And she’s been spat on and praised, she’s been carried home, and cheered on. It is she, who embraces the city, knowing she had a choice otherwise. Yet her goal is to make this her home.

Fraud isn’t used when describing the ‘responsible’ officials in the cities, countries and other agencies of New York that have systematically ignored their obligations to fund health care benefits for retirees, but it should be.

Mary Williams Walsh, New York Confronts $200 Billion Bill for Retiree Health

The cities, counties and authorities of New York have promised more than $200 billion worth of health benefits to their retirees while setting aside almost nothing, putting the public work force on a collision course with the taxpayers who are expected to foot the bill.

The total cost appears in a report to be issued on Wednesday by the Empire Center for New York State Policy, a research organization that studies fiscal policy.

It does not suggest that New York must somehow come up with $200 billion right away.

But the report casts serious doubt over whether medical benefits for New York’s retirees will be sustainable, given the sputtering economy and today’s climate of hostility toward new taxes and taxpayer bailouts.

The daunting size of the health care obligation raises the possibility that localities will be forced at some point to choose between paying their retirees’ medical costs and paying the investors who hold their bonds. Government officials aim to satisfy both groups, and have even made painful cuts in local services when necessary to keep up with both sets of payments.

Only a few places have tried to rein in their costs, by billing retirees for a portion of the premiums, for example. Retirees have responded with lawsuits, but ratings agencies and municipal bond buyers have shrugged off these warning signs.

“So far, the market doesn’t care,” said Edmund J. McMahon, the director of the Empire Center. “The market seems to assume, on the basis of nothing, that at some point all of these places are simply going to stop paying retiree health benefits.”

The health benefits are entirely separate from the pensions that New York’s public workers have earned. Governments have reported their pension obligations for years, but their retiree medical obligations have been building up unseen, because governments were not required to account for them. The information is starting to come to light because of a new accounting requirement.

So, the rule is ‘if you don’t have to report it, you don’t have to fund it,’ apparently.

This is just another element of the coming realignment of politics around pension default and trade populism (see Blame The Pensioners And The Democrats, One Billion Will Reach Retirement Age By 2050, Trade Populism As The Defining Issue Of 2012). And one of the major drivers for that realignment is widespread pension and health benefits default by governments and corporations.

And as Edmund McMahon said, the markets are assuming default is coming.

Where’s the Attorney General? Isn’t this illegal? We should start by throwing these people out of office, and into jail.