Bootleggers & Baptists: How Economic Forces and Moral Persuasion Interact to Shape Regulatory Politics by Adam Smith Page A
Authors: Adam Smith
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Final Thoughts
This chapter laid out the basic theory of Bootleggers and Baptists, giving examples of four modes of interaction between them, and described the regulatory context from which our model emerged. Our examples have been drawn from as far back as the 13th century up to recent days. The operational content of the theory applies equally in the oldest and most recent episodes.
We have highlighted the extraordinary 1970–80 regulatory period, when the new social regulatory agencies were first emerging, along with thousands of new pages of rules focusing on the environment, safety, and health. The explosion of social regulations set the stage for Bootleggers and Baptists to converge in the regulatory process. The goals of social regulation were, more often than not, the goals of interest groups that included civic and religious organizations along with the newly emerging environmental and consumer groups. In many cases, the regulatory fine print sought by environmental and other public interest groups turned out to be precisely what major firms and industries wanted as well. The resulting rules often brought output restrictions, higher costs for smaller firms than for larger ones, and higher profits for firms well adapted to the new regulatory environment—even while often delivering the goods desired by the Baptists.
As we prepare to turn to the next chapter, which examines where Bootlegger/Baptist theory rests in the broader, evolving body of regulatory theory, we return to the previously mentioned executive order by the Obama administration, which we believe adds new vigor to Bootlegger/Baptist activity.
On January 18, 2011, President Obama issued an Executive Order for Improving Regulation and Regulatory Review, which affirmed the principles of the 1993 order specifying how executive branch agencies would manage development, review, and implementation of regulations (White House 2011). Broadly speaking, Mr. Obama’s order represents the next stage in the evolution of White House regulatory review processes that date back to Richard Nixon.
Mr. Obama’s order directed agencies to identify old regulations for retrospective review to ensure that they were still justifiable and called for more transparency in the regulatory process, so interested parties could more easily learn what is going on as regulations develop. But the order also, for the first time, allowed agencies doing the required benefit-cost analysis to consider effects far beyond the usual economic considerations.
The order states, “Where appropriate and permitted by law, each agency may consider (and discuss qualitatively) values that are difficult or impossible to quantify, including equity, human dignity, fairness, and distributive impacts” (White House 2011). With equity, dignity, fairness, and distributive impacts now part of the official regulatory lexicon, groups organized around a higher moral purpose should become even more valuable allies for Bootleggers who just want an easier ride to the bank. And with presidents showing new savvy in assembling interest groups for the purpose of forming regulatory cartels, we may expect still wider smiles and louder hallelujahs on the lips of Bootleggers and Baptists.
2. Bootleggers, Politicians, and Pork
Having introduced Bootlegger/Baptist theory and presented four modes of interaction, we need to take a step back and examine just who these Bootleggers and Baptists really are. As a simple definition, a “Bootlegger” is any individual, group, or organization that seeks political favors for financial gain. “Baptists” are individuals or groups that seek political favors for loftier reasons. The favors they seek might take the form of benefits to causes they favor or simply actions that magnify the importance of the values they embrace.
Most groups, of course, are not exemplars of either category: there’s a bit of yin in every yang. Surely firms that
Final Thoughts
This chapter laid out the basic theory of Bootleggers and Baptists, giving examples of four modes of interaction between them, and described the regulatory context from which our model emerged. Our examples have been drawn from as far back as the 13th century up to recent days. The operational content of the theory applies equally in the oldest and most recent episodes.
We have highlighted the extraordinary 1970–80 regulatory period, when the new social regulatory agencies were first emerging, along with thousands of new pages of rules focusing on the environment, safety, and health. The explosion of social regulations set the stage for Bootleggers and Baptists to converge in the regulatory process. The goals of social regulation were, more often than not, the goals of interest groups that included civic and religious organizations along with the newly emerging environmental and consumer groups. In many cases, the regulatory fine print sought by environmental and other public interest groups turned out to be precisely what major firms and industries wanted as well. The resulting rules often brought output restrictions, higher costs for smaller firms than for larger ones, and higher profits for firms well adapted to the new regulatory environment—even while often delivering the goods desired by the Baptists.
As we prepare to turn to the next chapter, which examines where Bootlegger/Baptist theory rests in the broader, evolving body of regulatory theory, we return to the previously mentioned executive order by the Obama administration, which we believe adds new vigor to Bootlegger/Baptist activity.
On January 18, 2011, President Obama issued an Executive Order for Improving Regulation and Regulatory Review, which affirmed the principles of the 1993 order specifying how executive branch agencies would manage development, review, and implementation of regulations (White House 2011). Broadly speaking, Mr. Obama’s order represents the next stage in the evolution of White House regulatory review processes that date back to Richard Nixon.
Mr. Obama’s order directed agencies to identify old regulations for retrospective review to ensure that they were still justifiable and called for more transparency in the regulatory process, so interested parties could more easily learn what is going on as regulations develop. But the order also, for the first time, allowed agencies doing the required benefit-cost analysis to consider effects far beyond the usual economic considerations.
The order states, “Where appropriate and permitted by law, each agency may consider (and discuss qualitatively) values that are difficult or impossible to quantify, including equity, human dignity, fairness, and distributive impacts” (White House 2011). With equity, dignity, fairness, and distributive impacts now part of the official regulatory lexicon, groups organized around a higher moral purpose should become even more valuable allies for Bootleggers who just want an easier ride to the bank. And with presidents showing new savvy in assembling interest groups for the purpose of forming regulatory cartels, we may expect still wider smiles and louder hallelujahs on the lips of Bootleggers and Baptists.
2. Bootleggers, Politicians, and Pork
Having introduced Bootlegger/Baptist theory and presented four modes of interaction, we need to take a step back and examine just who these Bootleggers and Baptists really are. As a simple definition, a “Bootlegger” is any individual, group, or organization that seeks political favors for financial gain. “Baptists” are individuals or groups that seek political favors for loftier reasons. The favors they seek might take the form of benefits to causes they favor or simply actions that magnify the importance of the values they embrace.
Most groups, of course, are not exemplars of either category: there’s a bit of yin in every yang. Surely firms that
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