Thursday, March 01, 2012

What do they mean?

Paul Solman of the Jim Lehrer PBS News Hour reported "Benefit Corporations Aim to Make a Profit -- and a Positive Impact" on last evening's broadcast.  Just after viewing that, I came across The Economist's Special Report on "Financial Innovation:  Playing with fire".  The latter highlights "social impact" bonds.

"Social" means different things to different people.  I had thought that passing the market test indicates "social" success.  Absent force and fraud, all parties (shoppers, owners, workers) willingly assent to mutually acceptable contracts.

But as the two cited reports confirm, many others use a much broader definition of "social" success.  There may be external costs (who will fix them?); there may be distributional consequences that do not match some people's dreams (who will measure them?); there may be all sorts of irksome qualities ("tacky" products and services; who will decide?). 

The answer to all three of these questions that many are seemingly comfortable with is politics.  The political process will resolve all three.  But is that what the people who are comfortable with the free and easy use of "social" really have in mind?


Perhaps many critics are not comfortable with the choice sets available (as for low-income workers).   Again, who will fix that?


Politicization in action.  (H/T Jenny S.)