Democrats: The Party of Big Labor, Big Government...and Big Business

There is a widespread perception that the Democrat Party is the party the working class and the Republican Party is the party of big business.  Even though Republicans on average received slightly more from corporate employees prior to 2002, the overall difference between both parties from 1990 to 2020 is statistically insignificant (Table 1).  In fact, Democrat reliance on big labor gradually shifted toward big business following the involvement of solidly Democrat corporate giants in 2002, and from 2014 to 2020, Democrats consistently surpassed Republicans in corporate donations (Tables 1 & 2).

Based on data compiled by Open Secrets, Soros Fund Management, Fahr LLC (Tom Steyer), and Bloomberg LP ranked among the top ten for political contributions that gave over 90% to Democrats.  In sharp contrast, the right-leaning Koch Industries made the top ten only in 2014.  In nearly all other years, Koch ranked well below the top twenty.

Whether or not this trend is long-term, there is no denying that large corporations on average no longer lean right.  But what does it mean to be "the party of big business"? Donations are not definitive evidence.  What ultimately matters is what politicians do once they get elected.

Many liberals believe that big government is needed to "rein in" big business and that in the absence of federal intervention, corporations will "run roughshod" over the average American.  Many liberals also believe that corporations are the main beneficiaries of laissez-faire economics and that free-market conservatives who want to scale back regulations are somehow "in the pocket" of big business.

In reality, the opposite is true: big business and big government go hand in hand because government meddling in the economy encourages rent-seeking by businesses that can afford to pay for the lobbyists.  This crony capitalism grew exponentially as a result of New Deal regulations that squeezed out competitors during the 1930s.  Establishment politicians and well connected corporations are beneficiaries of the myth that big government and big business are adversaries because it hides their unholy alliance.

In all fairness, neither party has had a monopoly on the dispensation of corporate welfare: the TARP funds that propped up financial institutions deemed "too big to fail" during the Great Recession were released by the Bush administration.  In addition, establishment Republicans are no better than Democrats at stemming the flow of illegal immigration because big businesses reap the benefits of this cheap labor without incurring any of the social costs.

If both parties are playing this game, what is the basis for labeling the Democrat party "the party of big business"?  What policies from Republicans support small business?

Free-market conservatism benefits small businesses because the government does not pick the winners and losers by means of subsidies, tax breaks, and cumbersome regulations.  You will not see policies like these coming from Washington in a major way because proposals for shrinking the federal government rarely see the light of day in Congress.

Based on data collected by Gallup and Thumbtack, red states far outscore blue states in small business friendliness (Table 3).  This may be why less affluent Americans are fleeing states that score abysmally like California, Illinois, New York, and Hawaii.  This might also be why small business–owners are more likely to vote Republican.

The Trump administration has been good for businesses of all sizes mainly due to the unprecedented rate at which it scaled back stifling regulations.  This may be why some of the president's highest approval ratings now come from small businesses.

Donald Trump set himself apart from the ruling class when he latched onto the third-rail issue of illegal immigration and called out the corporate darling Jeb Bush (AKA "Low Energy Jeb") for his lack of grassroots support.  This may explain in part why Bain Capital, the firm co-founded by Mitt Romney, switched teams and contributed solidly Democrat in 2018.  In 2012, Democrats accused Bain Capital of destroying jobs by systematically dismantling the companies it bought off.  Times have changed...

Small businesses generate well over half of all new jobs.  Most importantly, many are family-owned, have strong ties to their communities, and provide upward mobility for millions of Americans who never attended college.  The Democrats' undermining of this quintessentially American institution is shameful and disqualifies it as the "party of the working class."  Contributions from big labor do not count toward "labor-friendliness" because mega-unions care more about recruitment than about the welfare of working Americans.  This is why the SEIU supports blanket amnesty for illegal aliens.

Democrats fed up with the corporate status quo are now choosing their own anti-establishment candidate, not realizing that socialism is just a more impoverished version of the crony capitalism they are rejecting.  Many Sanders-supporters are also morally shallow because they want to harness the power of the state to muscle in on the wealth of Americans who borrowed responsibly and worked hard to pay their bills.

After the Constitutional Convention, Benjamin Franklin said, "This Constitution ... is likely to be well administered for a course of years, and can only end in despotism ... when the people shall become so corrupted as to need despotic government."  If Democrats implement the dystopian policies of California on a national level, their corporate allies will do fine.  It is small business–owners and working-class Americans with nowhere to flee who have the most to lose. Be careful what you wish for.


To view the tables below, click the links.

Table 1: Top contributors to Democrats and Republicans as compiled by Open Secrets.

*The red lettering highlights a funding advantage for Republicans.  The blue lettering highlights a funding disadvantage for Republicans.

**Based on a T-test, the difference is insignificant at P = 0.46

Table 2: Top ten contributors to Democrats and Republicans by category (union, corporate, and ideological) as compiled by Open Secrets:

*In 2008 Goldman Sachs donated 74% to Democrats.  All other groups in this column donated between 40 and 69% to both parties.  This column does not differentiate between giving equally to both parties and giving 70–79% to Democrats or Republicans.

**This number includes the "City of New York."  Although it is officially listed as "other" by Open Secrets (not corporate, union, or ideological), I was personally informed by someone from the organization that Michael Bloomberg was the main source of this funding.

Table 3: Small business scores states scored by Thumbtack ranked according to their Democratic advantage by Gallup:

*GPA scores are based on the following numerical equivalents: A = 4, B = 3, C = 2, D = 1, F = 0, A+ = 4.3, A- = 3.7, etc.

** Not scored.

***Mean GPA ± standard error. Based on a T-test, the difference is significant at P = 0.00001.

Image: OccupyFightsForeclosures via Flickr.

There is a widespread perception that the Democrat Party is the party the working class and the Republican Party is the party of big business.  Even though Republicans on average received slightly more from corporate employees prior to 2002, the overall difference between both parties from 1990 to 2020 is statistically insignificant (Table 1).  In fact, Democrat reliance on big labor gradually shifted toward big business following the involvement of solidly Democrat corporate giants in 2002, and from 2014 to 2020, Democrats consistently surpassed Republicans in corporate donations (Tables 1 & 2).

Based on data compiled by Open Secrets, Soros Fund Management, Fahr LLC (Tom Steyer), and Bloomberg LP ranked among the top ten for political contributions that gave over 90% to Democrats.  In sharp contrast, the right-leaning Koch Industries made the top ten only in 2014.  In nearly all other years, Koch ranked well below the top twenty.

Whether or not this trend is long-term, there is no denying that large corporations on average no longer lean right.  But what does it mean to be "the party of big business"? Donations are not definitive evidence.  What ultimately matters is what politicians do once they get elected.

Many liberals believe that big government is needed to "rein in" big business and that in the absence of federal intervention, corporations will "run roughshod" over the average American.  Many liberals also believe that corporations are the main beneficiaries of laissez-faire economics and that free-market conservatives who want to scale back regulations are somehow "in the pocket" of big business.

In reality, the opposite is true: big business and big government go hand in hand because government meddling in the economy encourages rent-seeking by businesses that can afford to pay for the lobbyists.  This crony capitalism grew exponentially as a result of New Deal regulations that squeezed out competitors during the 1930s.  Establishment politicians and well connected corporations are beneficiaries of the myth that big government and big business are adversaries because it hides their unholy alliance.

In all fairness, neither party has had a monopoly on the dispensation of corporate welfare: the TARP funds that propped up financial institutions deemed "too big to fail" during the Great Recession were released by the Bush administration.  In addition, establishment Republicans are no better than Democrats at stemming the flow of illegal immigration because big businesses reap the benefits of this cheap labor without incurring any of the social costs.

If both parties are playing this game, what is the basis for labeling the Democrat party "the party of big business"?  What policies from Republicans support small business?

Free-market conservatism benefits small businesses because the government does not pick the winners and losers by means of subsidies, tax breaks, and cumbersome regulations.  You will not see policies like these coming from Washington in a major way because proposals for shrinking the federal government rarely see the light of day in Congress.

Based on data collected by Gallup and Thumbtack, red states far outscore blue states in small business friendliness (Table 3).  This may be why less affluent Americans are fleeing states that score abysmally like California, Illinois, New York, and Hawaii.  This might also be why small business–owners are more likely to vote Republican.

The Trump administration has been good for businesses of all sizes mainly due to the unprecedented rate at which it scaled back stifling regulations.  This may be why some of the president's highest approval ratings now come from small businesses.

Donald Trump set himself apart from the ruling class when he latched onto the third-rail issue of illegal immigration and called out the corporate darling Jeb Bush (AKA "Low Energy Jeb") for his lack of grassroots support.  This may explain in part why Bain Capital, the firm co-founded by Mitt Romney, switched teams and contributed solidly Democrat in 2018.  In 2012, Democrats accused Bain Capital of destroying jobs by systematically dismantling the companies it bought off.  Times have changed...

Small businesses generate well over half of all new jobs.  Most importantly, many are family-owned, have strong ties to their communities, and provide upward mobility for millions of Americans who never attended college.  The Democrats' undermining of this quintessentially American institution is shameful and disqualifies it as the "party of the working class."  Contributions from big labor do not count toward "labor-friendliness" because mega-unions care more about recruitment than about the welfare of working Americans.  This is why the SEIU supports blanket amnesty for illegal aliens.

Democrats fed up with the corporate status quo are now choosing their own anti-establishment candidate, not realizing that socialism is just a more impoverished version of the crony capitalism they are rejecting.  Many Sanders-supporters are also morally shallow because they want to harness the power of the state to muscle in on the wealth of Americans who borrowed responsibly and worked hard to pay their bills.

After the Constitutional Convention, Benjamin Franklin said, "This Constitution ... is likely to be well administered for a course of years, and can only end in despotism ... when the people shall become so corrupted as to need despotic government."  If Democrats implement the dystopian policies of California on a national level, their corporate allies will do fine.  It is small business–owners and working-class Americans with nowhere to flee who have the most to lose. Be careful what you wish for.


To view the tables below, click the links.

Table 1: Top contributors to Democrats and Republicans as compiled by Open Secrets.

*The red lettering highlights a funding advantage for Republicans.  The blue lettering highlights a funding disadvantage for Republicans.

**Based on a T-test, the difference is insignificant at P = 0.46

Table 2: Top ten contributors to Democrats and Republicans by category (union, corporate, and ideological) as compiled by Open Secrets:

*In 2008 Goldman Sachs donated 74% to Democrats.  All other groups in this column donated between 40 and 69% to both parties.  This column does not differentiate between giving equally to both parties and giving 70–79% to Democrats or Republicans.

**This number includes the "City of New York."  Although it is officially listed as "other" by Open Secrets (not corporate, union, or ideological), I was personally informed by someone from the organization that Michael Bloomberg was the main source of this funding.

Table 3: Small business scores states scored by Thumbtack ranked according to their Democratic advantage by Gallup:

*GPA scores are based on the following numerical equivalents: A = 4, B = 3, C = 2, D = 1, F = 0, A+ = 4.3, A- = 3.7, etc.

** Not scored.

***Mean GPA ± standard error. Based on a T-test, the difference is significant at P = 0.00001.

Image: OccupyFightsForeclosures via Flickr.