Bootleggers & Baptists. Bruce Yandle
Moreover, the term “Baptist” does not necessarily indicate a religious motivation but rather group action driven by an avowed higher moral purpose or desire to serve the public interest. Since emerging in 1983, the theory has been used to illuminate countless examples of “strange bedfellows” who rally behind a shared political aim.
Bootlegger and Baptist interaction is as old as recorded history, but we limit ourselves to tales from the past few centuries in political contexts similar enough to our own that lengthy background exposition can be avoided. Every story we relate is told for a purpose, and each contains specialized content that contributes evidence to a richer theory of political action. Although historic legacy is interesting and may be instructive, it is the growing imprint of Bootlegger/Baptist–abetted regulation that we think deserves attention. Illuminating the dimensions of that imprint is the underlying purpose of this introductory chapter.
The chapter is organized into four parts. First, we introduce the Bootlegger/Baptist dynamic. In this part, we examine the growth of social regulation that has emerged because of Bootlegger/Baptist interaction and the impact of these relationships on economic performance. We explain how Bootlegger forces largely define how the regulation advocated by Baptist interest groups actually comes about in practice. The new set of opportunities afforded by social regulation biases the behavior of corporate leaders away from producing more and better goods and services in favor of regulation-seeking activities that reduce output. Then, we break down examples of social regulation into four modes of Bootlegger and Baptist interaction: (a) covert, (b) noncooperative, (c) cooperative, and (d) coordinated. We use these labels throughout the book to organize our various examples and episodes of Bootlegger/Baptist activity. Finally, we close out the chapter—as we do each chapter—with concluding thoughts.
The Bootlegger/Baptist Dynamic
The Bootlegger/Baptist theory provides a useful device for explaining crucial features of enduring social regulations that affect consumers and producers worldwide. The theory describes how special interest groups acquire gains through the political process, and why these two types of interest groups become more prevalent and vocal. Politicians are agents who serve the competing goals and objectives of special interest groups as well as the broader unorganized public. Bootlegger/Baptist theory tells a story of how public interest justification greases the rails for purely private pursuits.
Gifted politicians who seek to serve their constituencies can do more for economic interest groups if their actions can be clothed in public interest garb (Simmons, Yonk, and Thomas 2011). Politicians will rarely explain an effort to improve the profits of an economic interest group by saying, “I was just trying to help a good firm make more money.” The Bootlegger/Baptist theory explains how the cost of organizing demand for political action can be reduced while at the same time easing the politician’s burden when it comes time to justify those actions. When Bootleggers and Baptists unite, activity in the market for regulation flourishes.
We should hardly be surprised by private pursuit of regulatory benefits. None other than the patron saint of economics, Adam Smith, warned about efforts by early industrialists to seek political favors through laws and regulations. As Smith wrote in his magnum opus, The Wealth of Nations ([1776] 1827, 107):
The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.
Writing in 1776, Adam Smith had apparently not encountered situations where businesspersons were joined by clergy and others who wrapped the political enterprise in an attractive moral cloak, thereby improving the chances that politicians would respond favorably to their high-sounding petitions.
The government “pork” Bootleggers seek—with the witting or unwitting assistance of Baptists—can take myriad forms. The most straightforward example of Bootlegger/Baptist activity occurs when some private interest seeks a direct benefit from government—such as a subsidy, contract, or special tax break—on the premise that some higher moral aim or public interest will thereby be served. In these cases, nominal rivals within a sector of the economy may find themselves united in covert support of measures that benefit all, even if they subsequently find themselves at odds over the division of the loot.
Often, however, firms can profit as handsomely by hindering their market rivals as they could by seeking direct payouts from public coffers—and without the public scrutiny that typically attends such transfers. The simplest form of this situation is seen when regulatory measures are used to sock it to competitors (Salop and Sheffman 1983).
The noncooperative strategy of raising rivals’ costs is hardly a novelty of the Internet era: a prime example appeared some eight centuries before the South Carolina Amazon episode, when London weavers exploited a stricture contained in the Magna Carta to gain an advantage over foreign competition (Yandle 1984). As the historian W. F. Swindler (1965, 311) explains, chapter 25 of the “Great Charter” established uniform measures of ale, grain, cloth, and other goods to facilitate trade—a classic case of consumer protection at a time when buyers, ill-equipped for comparative shopping, dealt with traveling merchants who moved from market to market, and “traders and merchants found it practically impossible to conform to the standards that were different in each locality.”
Such imposed uniformity may have made sense on its own terms given the potential uncertainty of dealing with traveling peddlers, but enforcement of the standard was not uniform. As William McKechnie (1914) documents, the London weavers paid a bribe to local enforcement agents to avoid having the standard enforced on themselves but demanded that it be scrupulously applied to traveling merchants who came to London markets. Differential enforcement thus entered the picture, allowing the best organized merchants to raise rivals’ costs, and— unsurprisingly given the state of communications at the time—traveling merchants from assorted far-flung locales had little chance of being as well organized as the London weavers (Thompson 1948, 100–121). In short, the “uniform” standard meant to protect consumers became a barrier to entry for disfavored sellers.
Such regulatory gamesmanship may also take subtler forms, as when looming government action prompts an industry to rally in support of stricter regulation—perhaps to avoid an even more costly outcome—ultimately forming a government-assisted regulatory cartel. Almost invariably, regulation generates differential effects across member firms in the cartel. In other words, when noncooperative strategies are at play, there are winners and losers.
The interaction between Bootleggers and Baptists in pursuit of these aims can itself take a variety of forms. Starting again with the simplest case, Bootlegger firms may covertly advance Baptist arguments, as when film studios advocate for more stringent copyright protection by invoking either the moral claims of artists to remuneration or the promise of increased creativity and innovation spurred by greater rewards to creators. Strictly speaking, these are not Bootlegger/Baptist scenarios at all, but rather cases of Bootleggers covertly posing as Baptists. Such cases, however, often signal the first phase of an evolving political process that yields more complex forms of cooperation. Moreover, considering some of the drawbacks of this one-man-band approach helps illuminate why we so often find a division of labor between Bootleggers and Baptists, with members of each group doing what they do best: the Baptists making the moral argument and the Bootleggers providing financial support for cooperating politicians.
When separate independent Baptist groups enter the picture, at least initially they may find themselves backing the same cause as Bootleggers through a happy confluence of interests, as in the early stages of the Amazon example. Each group, in effect, pursues its own noncooperative lobbying and advocacy strategy, happily reaping any spillover benefit from the other’s efforts. Independence has its benefits—Baptist groups may seem more credible if they avoid any taint of association with self-seeking Bootleggers—but comes at the cost of whatever efficiencies might be achieved by pooling resources and acting under a unified strategy. In later