It’s easy to understand why a group of environmental activists would support new government rules promoting the use of “renewable,” “green,” or “clean” energy sources. Misguided as the rules might be, they would appear to align government policy more closely to the environmentalists’ goals.
More difficult to explain: support for the same rules from large electric utility companies, the types of companies the same environmental activists skewer on a regular basis. But as long as the utility companies have a seat at the table when the rules are developed, it’s likely that company officials will support those rules — often using the same language as the activists. (See North Carolina’s decade-old debate over “Clean Smokestacks” legislation.)
If this set of political bedfellows isn’t strange enough for you, what about anti-smoking advocates and large-scale tobacco companies — eternal antagonists — joining in support of a massive tobacco lawsuit settlement that has funneled billions of dollars into government coffers since the late 1990s? Or temperance societies and illegal bootleggers singing the same tune when it comes to laws limiting alcohol sales on Sundays?
This last example offers a name for the economic theory that describes these unusual political pairings. It’s a theory explored in detail in the book Bootleggers & Baptists: How Economic Forces and Moral Persuasion Interact to Shape Regulatory Policy.
Co-author Bruce Yandle, economist and retired dean of Clemson’s College of Business and Behavioral Science, first coined the “bootleggers and Baptists” phrase more than 30 years ago. Now Yandle and his grandson Adam Smith, an economist at Johnson & Wales University, have updated the theory and applied it to such present-day regulatory debates as those involving global warming and government-mandated health insurance.
It’s more than just an academic debate. The federal government’s regulatory burden is estimated to cost $1.7 trillion to $1.8 trillion per year, Smith and Yandle tell us, or “$14,768 for each U.S. household. … The pace and burden of U.S. regulation is rising and large. Almost endless opportunities exist for Bootlegger/Baptist interaction.”
To clarify, the “Baptists” in these modern-day interactions do not necessarily find religious motivation for their causes. Instead, Smith and Yandle’s Baptists deploy “group action driven by an avowed higher moral purpose or desire to serve the public interest.” Meanwhile, today’s “bootleggers” are not necessarily pursuing illegal activity. Instead the term “applies to political action in pursuit of narrow economic gains.” In other words, Baptists’ pure-hearted goals could end up helping bootleggers’ bottom line.
The two groups can interact in four ways, in Smith and Yandle’s estimation. Covert interaction takes place when bootleggers employ Baptist language. Noncooperation occurs when bootleggers and Baptists pursue similar ends without working together. The two forces can cooperate when bootleggers offer direct support for Baptist groups. In the fourth and most complicated scenario, savvy political actors coordinate the activity “with government-led coalition building that organizes Bootleggers and Baptists in support of large-scale cartels encompassing entire economic sectors and the regulatory agencies governing them.”
This is where Obamacare enters the story. Smith and Yandle devote a full chapter to the Affordable Care Act, publicizing the way in which “the president himself constantly shaped and reshaped the initiative to garner Bootlegger support, even while heaping public scorn on big business elements in the health sector.”
The result of this coordinated approach led to results no one necessarily wanted. “Although the aims of reform were widely agreed upon — expanding coverage, reducing costs, and improving the overall quality of the system — they were also vague enough to leave plenty of room for Bootleggers and Baptists to operate,” Smith and Yandle explain. “[T]he fuzzier the ends of a reform campaign, the greater the opportunity for Bootleggers to fill in their desired fine print when choosing the means. And of course, with 17 percent of the economy weighing in the balance, suitably designed health care reform legislation could pump billions of dollars in the direction of the hard-working Bootleggers.”
Given Baptist cover for bootleggers’ activity, the authors conclude, “This is ultimately how Americans ended up with a ‘reform’ package that seems highly unlikely to achieve its twin purposes: reducing health care costs while expanding health care coverage. … We submit that the twin demands of winning Baptist sympathy while placating Bootlegger economic interests played a decisive role in determining the final shape of Obamacare.”
Beyond the health care debacle, Smith and Yandle emphasize that bootlegger/Baptist interactions lead to “a real deadweight loss on society.” What they label “political wealth extraction,” or government goodies, proves more attractive to bootleggers than “private wealth generation.” “In other words, scarce resources that might be allocated to the production of valuable goods and services become obligated to the task of maintaining the supply of pork provided by politicians.”
Don’t look for a solution to the problem from Smith and Yandle. Since some people always will pursue causes for moral reasons, while others always will be out to make a buck, the “Bootlegger/Baptist phenomenon is driven by forces rooted deeply in the human psyche.”
Still, decentralizing regulation to the states would raise bootleggers’ operating costs, in Smith and Yandle’s estimation, and the authors also recommend exposing bootleggers and embarrassing Baptists for supporting them. In this respect, this book could play a valuable role.
Mitch Kokai is an Associate Editor of Carolina Journal.