Bootleggers & Baptists: How Economic Forces and Moral Persuasion Interact to Shape Regulatory Politics by Adam Smith

Author:Adam Smith [Smith, Adam]
Language: eng
Format: epub
ISBN: 978-1939709363
Publisher: Cato Institute
Published: 2014-10-15T04:00:00+00:00

Final Thoughts

It is no surprise that activities viewed as sinful would attract Bootlegger/Baptist interaction. Purveyors of sinful products are eager to serve their customers, especially in restricted markets. And guardians of moral high ground readily mobilize opposition when sin arrives on the political agenda. But we must look closely to see how the interaction occurs and what result obtains. We have examined three products that are sold in either heavily regulated or illegal markets.

The regulation of alcoholic beverages has matured in a cartelized industry where Bootleggers and Baptists openly cooperate to solidify favorable legislation. The resulting division of labor places the 50 states in the driver’s seat, but Bootleggers are concerned about some competitive clouds on the horizon.

By comparison, tobacco products have been regulated for centuries with little in the way of open cooperation between Bootlegger and Baptist interests. But the pace of regulation has accelerated in recent decades. Indeed, tobacco-delivered nicotine as a consumer good may well be on the way to becoming illegal. Yet so far, industry profits have increased with each new restriction.

Finally, marijuana exists in a halfway house between being a regulated and an illegal consumer good. Pot’s illegal status does not mean that no profit is to be made in the illegal market—just the opposite. Indeed, Bootleggers have fought to maintain the status quo, while some unexpected Baptists joined the movement to legalize the product.

We draw one general conclusion from the three case studies presented in this chapter. Bootlegger/Baptist interaction rises to a high level when changing voter attitudes threaten to upset the relative fortunes of Bootleggers—and open wide a door for Baptist influence. As lobbying becomes more intense, politicians become more important, and more valuable. Some members of an industry coalition may like things the way they are. Those who have achieved financial gain under the status quo prefer a stable, government-coordinated cartel. They like the briar patch.

Others in the industry, who never made it to their particular briar patch, are apt to be more eager for disruptive reform. Savvy politicians profit from both groups. Similarly, those who strive to make the world a better place but who have been walled out by government cartel managers also love it when the regulatory walls begin to crack and crumble.

Political power brokers become more important in times of flux. Regulatory turbulence brings brighter days to political entrepreneurs. The successful politician can craft regulatory reforms that serve both Bootleggers and Baptists, creating a new equilibrium. This may be observed when newly designed strictures enhance Bootlegger profits and generate large government revenues that can be spent to “serve the public interest,” as we saw in the cases of alcohol and cigarette regulation. On other occasions, the new political balance seems to serve one group at the expense of the other, as when Congress intervened to counter the FTC’s efforts to require stronger warning labels on cigarette packages.

When change is in the air, it is also time for Baptists to rethink their strategies and in some cases break off their support for past regulations.

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