In Defense of Corporations

Occupy Wall Street is pointing at the wrong guys.

The Occupy Wall Street movement is built on overt disapproval for corporations and the pressure they exert on governments.

But this position runs right past the actual structure of a corporation.

Corporations are associations of people freely working to maximize returns for stakeholders. Such freedom is inherent in a few kids in a lemonade stand or thousands of workers at a multi-national conglomerate.

You don't acquire any "new" rights by joining a corporation, just as you don't for joining a book club, a union, a gym or any other group of individuals. No corporation or individual has the right to a bailout--these are granted or agreed upon by governments.

In the United States, the protesters should be occupying Washington, not Wall Street, asking why and how politicians bend to corporate pressures. As Ayn Rand Institute analyst Don Watkins observed, the goal should be to take the "crony" out of crony capitalism, not the capitalism.

When left free to collaborate and trade, corporations are immensely productive. For example, while deserving praise has been lauded on Steve Jobs' incalculable wealth creation at Apple (AAPL), the company's success includes the specialized efforts of thousands of individuals, from product designers to maintenance.

Or take IBM (IBM), which earned a net income of $3.8 billion dollars last quarter, even after paying each of its 427,751 voluntary employees. Such profit was achieved by creating goods and services of value.

In fact, the Occupy Wall Street movement, because of its core ideals, is actually value destroying. Operating by force and intimidation, the occupiers barge into private businesses disrupting workers and customers alike. In New York, where sales for local establishments have dropped 20% in the area around the protests, occupiers commandeered patrons at Union Square Cafe, warning the restaurant "will not be peaceful" because owner Danny Meyer sits on Sotheby's (BID) board.

As protestors finally confront the corporations they so vehemently despise, their supposed enemies are revealed not as oppressors, but as everyday people; bar patrons, bank tellers, and restaurateurs each engaging in voluntary trade.

I'd take a corporation over a mob any day.

—Jonathan Hoenig is managing member at Capitalistpig Hedge Fund LLC.

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