Here is a sample of articles published within the past week alone: “The Right’s Anti-Business Turn“; “The GOP-Big Business Divorce Goes Deeper Than You Think“; “Republicans Will Regret Their Breakup With Big Business“; “Existential Threat-Or Politics as Usual,” and “Is the Business Community At Last Falling Out of Love With the Republican Party?“
The situation is fluid and hard to interpret. Our predictions are inevitably influenced by our assumptions about how business generally relates to politics in the USA. In that spirit, I’ll disclose my own premises.
First, businesses influence government. There is no consensus among political scientists that campaign contributions and paid lobbying matter very much. It’s certainly not evident that companies can decide who wins elections. The main source of influence is what Charles E. Lindblom called the “privileged position of business.” The basic idea is that businesses create jobs in a capitalist economy; politicians want jobs to be created; therefore, politicians cater to business. Direct communications from corporations to politicians are effective mainly because they convey information that politicians are eager to hear. Although companies may exaggerate the costs of taxing and spending, politicians take their predictions seriously because they think their own interests are at stake. Compared to other politicians, liberal Democrats are more skeptical of business and more likely to want to hear from labor, but even most liberals listen hard when a company is deciding whether to move in or out of their own district. This dynamic is built into a mixed economy (or what Lindblom called, following Dahl, a “polyarchy”).
However, people see the world through ideological frames. We do not just behold the truth and maximize our self-interest (profits for firms; reelection for politicians). Instead, we use conceptual frameworks to interpret the world. A politician who believes in “free markets” is primed to assume that a tax increase will cost jobs even if it won’t. At the same time, a business that sees itself as a fair and inclusive workplace is primed to see xenophobic rhetoric as bad for the bottom line (even if it isn’t).
The dominant framework in corporate boardrooms is pro-market, pro-technology, meritocratic/elitist, cosmopolitan, and self-congratulatory about the business’s own fairness and inclusivity. This is partly because of the demographics of the corporate ranks: heavily “coastal” and international and highly educated. The most coveted employees and consumers–the ones with the most buying power–share those characteristics. Businesses observe politics through this lens.
At the same time, businesses do not particularly want to engage with politics. Government can be helpful, particularly if you want big government contracts. But it also presents risks. Politics is controversial, so involvement can hurt your reputation. The last thing you want is to be targeted by boycotts from several directions. Politicians can also extract rents. Businesses contribute to candidates not only to get benefits but also to stave off harms. A stable policy that is fairly expensive to business (such as a higher corporate tax rate) may actually be preferable to a rapidly changing and highly contested policy environment.
Finally, it is much easier to advocate a narrow policy, particularly one that has low public salience, than to try to steer the whole ship of state.
As a result, most businesses probably prefer outcomes in this order:
- A particular politician of any party and persuasion who champions their highly specific interests–a given tax break, an import permit, etc.
- Traditional Republicans who instinctively favor business interests, focus on economics, and don’t court controversy.
- Moderate Democrats, who are practically tied with #2.
- Quite liberal Democrats, as long as they are forced to compromise. If Sen. Sanders could write the tax code, that would be expensive for corporate America. If he has a seat at the table, it’s OK.
- Trump. He’s a loose cannon. He’s protectionist. Business doesn’t like his explicit stances on race and immigration; and he may hurt traditional Republicans against Democrats. For instance, with a different Republican president on the ballot in 2020, the GOP would probably control the White House and at least one house of Congress. right now Sanders and Ocasio-Cortez would be in the minority party now, rather than the majority. This means that Trump presents, overall, a bigger problem for business than Bernie does.
If this ranking is correct, then the relationship between business and the GOP is fraught; however, corporations’ calculations are complicated, and they will surely hedge their bets.