It’s been popularized by the media, pundits and pols (including the U.S. Chamber of Commerce) that business in America does better when Republicans are in office.  It sounds good but rather than accept the platitudes, let’s let the data tell the story.

Since 1930, the average annual growth rate in GDP when Republicans held the White House (39 Years) is 1.82%. When Democrats have held the White House (41 Years), the average growth rate is 4.92%. During the Bush years, the average was 2.1%, Clinton 3.9%, Bush + Reagan 3%, Carter 3.3%, Nixon 2.8%, Kennedy + Johnson 4.9% and so on. While this does not reflect the party controlling Congress or the balance of the two, the data shows that Democratic party control of the White House has been better for GDP growth and consequently for business too. We often look at emotions or subjective arguments when facts tell a completely different story.

But why is just the opposite what so many believe?  There are several reasons, one being the Democrats own fault because they constantly accuse the Republican party of being the party that protects business in the U.S.  Republicans, for their part, like to say that Democrats have done nothing for jobs and that if we only reduce the tax burden placed on businesses, more jobs will be created.  The data, however, tells a different story and it’s hard to dispute facts.  There is another factor which should tell us that Democrats are better for business:  they tend to be protectionists, leaning against global, free trade.  This should translate to more jobs being kept in the U.S.  Republicans, however, can be expected to protect offshoring and outsourcing.  While I’m an ardent free trader, I still find it hard to understand why the myth exists about political parties and business.

There also is a third reason.  Republicans are much better at getting their message out there.  Democrats always seem to be the gang that can’t shoot straight.  The U.S. electorate likes simple messages and stories and Republicans are just better at telling them.

Finally, you might ask why the U.S. Chamber of Commerce hasn’t pointed out the dramatic difference in business growth under different party rule.  The Chamber should be a champion for all businesses in the U.S., not just those that benefit most from tax cuts or free trade.  While difficult for us in many ways, free trade makes a lot of sense and ultimately forces U.S. businesses to do better in order to compete.  But when we’re talking about whether the economy, hence all U.S. businesses, do better under party rule, let’s make sure we know what has actually happened in the past.

Tags: Americans, Assumptions, Democrats and business, Electorate, Free Trade, GDP growth, Media responsibility, Politics and business, Republicans and business, Trade Associations, U.S. Chamber of Commerce