Just to clarify, the difference between being pro-business and pro-market is categorical. A politician who is a “friend of business” is exactly that, a guy who does favors for his friends. A politician who is pro-market is a referee who will refuse to help protect his friends (or anyone else) from competition unless the competitors have broken the rules. The friend of business supports industry-specific or even business-specific loans, grants, tariffs, or tax breaks. The pro-market referee opposes special treatment for anyone. …
… Democrats, who often look longingly at the way they do things across the pond, don’t have the same dilemma as Republicans. For a century or more, progressives have believed in public-private partnerships, industrial policy, “Swopism,” corporatism, and other forms of picking winners and losers. The winners always promise to deliver the “jobs of tomorrow” in return for help from government today. (Solyndra is running behind on keeping its end of the deal.)
Many Republicans are rhetorically against this sort of thing, but in practice, they’re for it. (Even Ronald Reagan supported trade protections for Harley-Davidson.) This is especially true at the state level, where GOP governors are willing to do anything to seduce businesses their way. Texas is a good example. Governor Rick Perry has been heroic in keeping taxes and regulatory burdens low. But he’s also helped his friends — a lot. Few on the right in Texas care, because Texas has been doing so much better than the rest of the country.
GOP politicians can’t have it both ways anymore. An economic system that simply doles out favors to established stakeholders becomes less dynamic and makes job growth less likely. (Most jobs are created by new businesses.) Politically, the longer we’re in a “new normal” of lousy growth, the more the focus of politics turns to wealth redistribution. That’s bad for the country and just awful politics for Republicans. In that environment, being the party of less — less entitlement spending, less redistribution — is a losing proposition.