Lost in Donald Trump’s pro-Confederate, neo-Nazi messaging meltdown in the last ten days was a major moment in modern American political history: the Republican brand has become toxic to the business community. Although the economy has historically shown a strong tendency to do better under Democratic presidents in terms of job creation, wage gains, deficit reductions, and even the stock market, Republicans have generally been perceived in conventional wisdom and by a lot of businesspeople as the "party of business.” Their platform has always included things that sound like they’d be good for business, such as lower taxes on rich people and corporations, less regulations and government spending, weaker unions, and lower wages.
Of course these economic strategies have never worked because trickle-down economics doesn’t work. Lower wages mean less disposable income for consumers; less government spending means less investment in roads and schools; more concentration of wealth means a stagnant economy; and less regulation leads to lots more cheating and speculation in the financial markets. As a result, every Republican president since Herbert Hoover presided over a major recession at some point in his time in office. The last Republican president's policies led to the worst financial collapse since the Great Depression. In spite of that history, many businesspeople are simply more comfortable being Republicans. However, nothing will do more to harm business in America than an association with Donald Trump and modern Republicanism. In a country growing in diversity every single day, in a global market where the vast majority of people are people of color, businesses cannot afford to be associated with the racism of this man and his party. And that’s why corporate America is fleeing him.
That puts the business community, which is far more diverse than even most businesspeople think it is, in a distinctly uncomfortable place. They can choose to remain loyal to Trump and the Republican Party brand, reaping the negative consequences as their diverse customer base becomes increasingly agitated and motivated to seek out alternative products. They can look to align themselves with the Democratic Party on a variety of big issues. Or they can splinter as a political force, and try to navigate a rocky, constantly shifting battlefield.
My guess is that there will be a lot of splintering, with many business leaders fleeing the GOP, but some who still want to reap the benefits of sweetheart deals for Trump insiders. And many CEOs really don’t give a damn about looking like racist jerks anyway. See, for example, Wall Street billionaires Dan Loeb and Stephen Schwarzman.
This sets up an important choice for the Democratic Party, one that will help define our identity in the decades to come. We can go back to business as usual since the 1990s, and welcome Wall Street and big business into the fold without asking anything in return. Or, we can use this moment to forge a new social contract, based in part on the values of an older Democratic Party, whose number one mission was to look out for working families.
There are two main ways for Democrats, given their constituencies and historic beliefs, to define themselves as a "pro-business” party. The first is the way the Clintons and Obama positioned themselves over the last two and a half decades, to be the party that continued to do some decent things for working people, while becoming very close to many big business players.
Do a collection of modest-sized, decent things for low- and middle-income folks: some small minimum wage increases, Family and Medical Leave, more money for student loans, an increased Earned Income Tax Credit. Work to pass some big economic reforms that make things fairer for middle income folks, so long as the legislation doesn’t fundamentally change the way big industries make money (Clinton’s attempt at health care reform, the ACA, Dodd-Frank).
Appoint pro-labor people to some good posts in government that directly impact workers, such as Secretary of Labor, OSHA Director, and the National Labor Relations Board, but on bigger economic positions, like Secretary of Treasury and the National Economic Council, appoint more pro-Wall Street people. Support labor law reform, but don’t put any political muscle into actually getting it passed. Give into the big business agenda on trade, anti-trust, and industry consolidation in general (NAFTA, letting China into the WTO, the Telecommunications Act of 1996, the bill deregulating Wall Street and repealing Glass-Steagall in 1999, TPP, etc). Fine big businesses for breaking laws, but never send any executives to jail, no matter how egregious their lawbreaking.
In other words, low- and middle-income folks would get some decent benefits, but Wall Street and other big business interests would get the biggest things they want. On the surface that might seem fair enough and it made some political sense for a while at least. The problem is that over time, the economy becomes more and more rigged in favor of the biggest businesses, and working people receive fewer of the rewards. Big corporations grow bigger and bigger, more and more economically and politically powerful, and everyone else is squeezed. Workers’ wages stagnate, while CEOs and Wall Street speculators see astronomical payoffs.
And when all that reckless excess at the top creates a bubble that bursts and the economy collapses, screwing all those working-class people, while the speculators don’t get held accountable, voters get pissed. And for good reason. This is not only bad economics: it is not a sustainable political model.
But there’s another way for Democrats to reach out to both business and working people. In the Democratic Party’s half-century run as the country’s majority party from the 1930s through the 1970s, we embraced the idea of a social contract between business, workers, and government. Government would break up big monopolies that were abusing their power, and maintain enough oversight that markets were fair. There would be an even playing field for businesses willing to play by the rules, and businesses who did right by their workers and communities would be honored and celebrated. Government policies would treat them fairly, too.
The reason that there was no retail behemoth like Walmart that crowded out smaller retailers from the 1930s to 1970s was because anti-trust laws were being vigorously enforced, and because other laws on the books promoted small business over big business. The reason the financial industry was so diversified, so many community banks flourished, and that there were no significant financial market panics was because of Glass-Steagall and other safeguards put into law after the crash of 1929.
If sleazy businesspeople like Loeb and Schwarzman want to stay aligned with Trump Republicans, the GOP is welcome to take that part of the business sector. But Democrats and the progressive community can and should be in alliance with socially responsible businesses, those that won’t tolerate hate or discrimination; that are happy to compete honestly on a level playing field; and that give respect to their workers, customers, and the communities they serve. There are plenty of companies that fall into that category, and we are happy to welcome them into our party and political coalition.