A recently highlighted study on corporate political donations from researchers at Rice University, to be published soon in an issue of Strategic Management Journal, reported some interesting results. From a press release about the study:
[The researchers] found that firms’ political investments are negatively associated with market performance…[that] cumulative political investments worsen both market and accounting performance, and that firms placing former public officials on their boards experienced inferior market performance and similar accounting performance than firms without such board members.
In other words, it would seem that campaign donations and lobbying by business interests does not provide financial rewards to those business interests. Not surprisingly, media coverage of this study focused on this overall finding.
This would seem to be good news for conservatives (and liberals), right? It means that businesses both big and small will be financially better off just getting out of the political realm altogether.
For conservatives, the study’s most important finding – given passing mention in news reports – was that “corporate political giving is positively associated with market performance for firms in highly regulated industries,” including health insurance, utilities, oil, and telecommunications. In other words, the bigger government gets and the more government regulations spread through the economy, the more corporations gain from lobbying and campaign donations.
In a world where the number of federal regulations finalized in 2010 alone topped 3,500, and where the cost of complying with all federal regulations was estimated to be $1.752 trillion in 2008 – almost 16 times the value of the entire Utah state economy (about $112 billion) that year – this is a troubling fact.
It is also another piece of evidence that Big Government and Big Business go together. Ironically, the bigger government sought by most liberals is an invitation for businesses to boost their political activities so they can reap the financial rewards that big-government regulation creates, which liberals (and many conservatives) dislike. The only way to actually roll back the influence of Big Business in government is to advocate for the smaller regulatory state that conservative, limited government creates.