Bootleggers & Baptists. Bruce Yandle
role—and among the most prominent was the nicely named Center for American Progress (CAP), which received at least a half-million dollars in Walmart funding.
Also joining the fray on the Bootlegger side was the Service Employees International Union (SEIU), whose logo appeared alongside those of Walmart and CAP atop a letter announcing the retailer’s support for the Affordable Care Act (Podesta, Stern, and Duke 2009). The union, too, backed its words with cash. Tax documents show that in 2010 alone, CAP’s activist arm, the Center for American Progress Action Fund, received $625,345 from the SEIU.
Like Walmart, the union was interested in raising the costs of its competitor—nonunion labor. Although conventional wisdom often paints labor groups such as SEIU and capitalist employers such as Walmart as eternal and inherent antagonists, both had a shared interest in using government regulation to raise their rivals’ costs. Yet the Bootleggers could have never done it without the Baptists leading the charge.
CAP is a genuine leftist advocacy group that promotes its values across a wide array of policy areas—and there’s little doubt it would have backed the Affordable Care Act (though perhaps less effectively) even without corporate or union funding. Sometimes, however, Bootleggers find it more expeditious to organize and fund their own ad hoc Baptist associations—typically with high-sounding names designed to help them pass as public interest groups. For example, firms in the housing industry formed a group called the National Homeownership Strategy (NHS) that lobbied for more federal housing assistance for lower-income families.
Bootlegger-spawned Baptist groups may also serve a secondary function: when an industry’s existing trade associations encompass members whose interests are normally aligned, but diverge on a particular issue, a subset of the industry may find it necessary to combine and focus its efforts through a new and separate entity that has more of a Baptist flavor. We find an example of this situation in a controversy that emerged in the trucking community. It exposed a division between larger commercial enterprises, such as Schneider National, and small driver-owned firms that compete for freight forwarding and delivery (Greenfieldboyce 2011).
The controversy started with a proposal from the U.S. Department of Transportation that mandated Global Positioning System (GPS) devices for all trucks. The devices cost roughly $2,000. They monitor and record a truck’s location and activity, making possible more effective enforcement of adherence to Department of Transportation regulations limiting excessive driving time, which can lead to drowsy drivers and accidents. Most larger trucking companies already had their trucks equipped with the devices; they use them to encourage efficient hauling (Peter Klein 2011). Smaller operators keep written logbooks; these would be replaced by the more costly GPS monitors. Requiring small operators to go high tech would impose no cost on the already equipped larger firms.
The initial Baptist role in this story is played by Jackie Gillan, president of Advocates for Highway and Auto Safety, which is described on its website as “an alliance of consumer, health and safety groups and insurance companies and agents working together to make America’s roads safer.”4 Tired truckers, Gillan argued, “are a major, major safety problem. Paper log books are easily manipulated. They are easily falsified” (Greenfieldboyce 2011). Todd Spencer, executive vice president of the Owner-Operator Independent Drivers Association, an organization with about 150,000 members—many of whom own just one truck—thought otherwise. Spencer didn’t buy the argument that GPS devices would detect tired drivers or catch cheaters: “The only thing that it will automatically record,” he argued, “is when a truck is moving.”
What about the Bootlegger element? The American Trucking Association, which represents thousands of trucking companies, supported the Department of Transportation proposal, but not all of the group’s members were strongly committed to the effort. As usual, there were differential effects across industry members. Thus, five of the largest trucking companies formed a new lobbying group with a conspicuously Baptist name: the Alliance for Driver Safety and Security. The alliance supported the rule, perhaps expecting to raise rivals’ costs.
An official with alliance member Schneider National praised the GPS plan as an effort to “elevate the expectations and the performance of all motor carriers” (Peter Klein 2011). The spokesperson for the independent owner-operator drivers’ group took a more jaundiced view: “When they talk about leveling the playing field, what they are really saying is we need to get behind efforts that will increase costs of our competitors. We don’t find that to be an especially noble effort.”
One final intermediary type of scenario is worth considering. Instead of forming their own Baptist groups or merely funding Baptist efforts already under way, Bootleggers may seek to influence the positions or priorities of existing Baptist groups to ensure they align with the Bootleggers’ interests. An example of this approach is seen in the debate over a controversial new technology called fracturing—more popularly known as “fracking”—that uses hydraulic pressure to access natural gas deeply embedded in shale. Old gas fields in Ohio, Pennsylvania, and elsewhere have become highly productive thanks to fracking. But the technique has also spurred environmentalist concerns about the potential for earthquakes, damage to water supplies, and harm from the disposal of chemicals used in the fracking process.
However, environmentalists also have reasons to welcome fracking: expanded natural gas production could help enable coal-fired electric utilities to switch to the cleaner fuel. The Sierra Club is the leading environmental group dedicated to ridding the United States, if not the world, of high-carbon-emitting fuels—and coal, in its view, is the chief culprit. Natural gas producers are rather keen on this idea, because it favors their product over coal.
Now, enter the Bootlegger. Chesapeake Corporation is one of the nation’s most innovative and successful natural gas producers. It, too, would like to see coal displaced by gas. Chesapeake made a $26 million donation to the Sierra Club to help fund an attack on coal directed to the EPA, with Sierra leading the charge (Martosko 2012). As it turned out, Sierra Club and other like-minded groups were successful. Citing the harmful effects of carbon emissions, the EPA issued final rules that, when implemented, will shut down or force fuel switching for 20 percent of America’s coal-fired power generation. To the chagrin of environmentalists, President Obama postponed implementation of the rules.
But the story doesn’t end there. Perhaps sensing growing concern among environmentalists about natural gas fracking, the Sierra Club shifted its stance—but only after receiving the Chesapeake payment. The organization disavowed support for natural gas but chose not to return the $26 million. One need not be an incorrigible cynic to wonder whether the group might have altered its view on the perils of fracking earlier had it not been for the promise of those Chesapeake funds.
Meanwhile, natural gas producers may have gotten what they wanted: a regulation that raises rivals’ costs. Sierra Club got what it wanted as well: $26 million in funds. At first blush, the whole thing sounds like a case of gains from trade, but it is far from clear that society gains. Instead, vast resources have been devoted to restricting output and padding the pockets of a handful of businesses and advocacy groups.
Coordinated Strategy
The fourth and final category of Bootlegger/Baptist interactions involves political actors—often presidents—taking the initiative to yoke together interest groups and regulators in pursuit of national political goals. As a first example of this sort of activity, we turn to the recent financial crisis.
The 2008 credit-market meltdown brought with it the collapse and taxpayer bailout of Fannie Mae and Freddie Mac; the nation’s gigantic quasi-public mortgage refinance units suddenly became fully owned by American taxpayers (Wallison 2008). For years, the two agencies formed a backstop for private mortgage lenders who made loans and sold them to the two agencies. The agencies in turn securitized the mortgages with their own bonds, which were sold in global credit markets.
In 1995, a new interest group emerged, dedicated to expanding government efforts to help Americans purchase homes: the NHS, which we mentioned in our last section as an example of a Baptist group created by Bootleggers. The 56 NHS members included the American Bankers Association, the Appraisal Institute, Fannie Mae, the Federal Home Loan Bank System, Freddie Mac, the Mortgage Bankers Association