Bootleggers & Baptists: How Economic Forces and Moral Persuasion Interact to Shape Regulatory Politics by Adam Smith Page B
Authors: Adam Smith
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pursue economic profit are not totally bereft of moral values (or at least, so they often assure us). Groups that pursue regulation for avowedly public-spirited reasons can’t be wholly indifferent to whether a little cash falls into their coffers. Still, in most situations it is relatively easy to pick out those groups drawn to legislation more for economic gain and those with more of a moral interest in the outcome. It is easy because they identify themselves.
In this and the next chapter, we explore what motivates these Bootleggers and Baptists. We show how politicians find it in their interest to cater to each of these groups when crafting legislation or developing regulations. Our theory is largely a positive or descriptive one, in the scientific sense of aiming to understand and predict human behavior rather than to render value judgments. We want to know how the world works. Still, the theory has obvious policy implications, which we try to draw out. Let’s put it this way. We also want to know if things work out well overall for a society that assigns high value to freedom and wealth-creating opportunities.
Bootlegger/Baptist theory also rests in a much larger body of work that applies economics to politics, which we navigate for the reader as well. The body of research called “public choice” was pioneered by Nobel laureate James M. Buchanan and Gordon Tullock (1962) in their seminal book, The Calculus of Consent . Public choice analysis uses standard economic logic to develop a model of how government works—as opposed to a model of how it should work—or what should be done by government regulators to alter human action. James Buchanan (2003, 16) calls it “politics without romance.” Public choice exposes how incentives work in the realm of political theater, just as they do in markets. The differences arise from context, as political institutions create different incentives for people making decisions through politics rather than through economic markets.
We begin this chapter by giving a more complete discussion of public choice theory as it pertains to Bootlegger behavior. (Though we occasionally brush against Baptists as well, they get their turn in the next chapter.) As we look through the public choice lens, we describe four theories of regulation that have evolved in an effort to explain why so much regulation exists. We illustrate these evolving theories by drawing on comments from a series of the Economic Report of the President , starting in 1965 and moving forward to 2010. 1 By reviewing 45 years of focused commentary from the same source, we are able to describe in crude terms the linkage between theoretical work and recognition of the work by White House officials. In this way, we identify how and when academic theory came to influence political practice. We understand, of course, that White House recognition of anything will be politically biased—but knowing which biases prevail at different times may be illuminating. We close the chapter with some final thoughts about pork-loving Bootleggers.
Politicians, Incentives, and Pork
Let’s start with a simple notion: politicians are people just like the rest of us. They weigh costs and benefits when taking actions. Like most of us, they attach substantial weight to career concerns: which is to say, they want to keep their jobs or advance to better ones. Even the most idealistic politicians, after all, have little opportunity to implement their ideals unless they first get elected and then manage to hold on to their offices. For politicians, employment requires votes. Securing votes requires running costly campaigns that run costly ads. Politicians need revenue. And revenue can come from happy Bootleggers. Like the rest of us, politicians are smart about some things and naive about others. They cannot know everything, so they logically choose to become best informed about things that matter most to their day-to-day pursuits. They, too, are
In this and the next chapter, we explore what motivates these Bootleggers and Baptists. We show how politicians find it in their interest to cater to each of these groups when crafting legislation or developing regulations. Our theory is largely a positive or descriptive one, in the scientific sense of aiming to understand and predict human behavior rather than to render value judgments. We want to know how the world works. Still, the theory has obvious policy implications, which we try to draw out. Let’s put it this way. We also want to know if things work out well overall for a society that assigns high value to freedom and wealth-creating opportunities.
Bootlegger/Baptist theory also rests in a much larger body of work that applies economics to politics, which we navigate for the reader as well. The body of research called “public choice” was pioneered by Nobel laureate James M. Buchanan and Gordon Tullock (1962) in their seminal book, The Calculus of Consent . Public choice analysis uses standard economic logic to develop a model of how government works—as opposed to a model of how it should work—or what should be done by government regulators to alter human action. James Buchanan (2003, 16) calls it “politics without romance.” Public choice exposes how incentives work in the realm of political theater, just as they do in markets. The differences arise from context, as political institutions create different incentives for people making decisions through politics rather than through economic markets.
We begin this chapter by giving a more complete discussion of public choice theory as it pertains to Bootlegger behavior. (Though we occasionally brush against Baptists as well, they get their turn in the next chapter.) As we look through the public choice lens, we describe four theories of regulation that have evolved in an effort to explain why so much regulation exists. We illustrate these evolving theories by drawing on comments from a series of the Economic Report of the President , starting in 1965 and moving forward to 2010. 1 By reviewing 45 years of focused commentary from the same source, we are able to describe in crude terms the linkage between theoretical work and recognition of the work by White House officials. In this way, we identify how and when academic theory came to influence political practice. We understand, of course, that White House recognition of anything will be politically biased—but knowing which biases prevail at different times may be illuminating. We close the chapter with some final thoughts about pork-loving Bootleggers.
Politicians, Incentives, and Pork
Let’s start with a simple notion: politicians are people just like the rest of us. They weigh costs and benefits when taking actions. Like most of us, they attach substantial weight to career concerns: which is to say, they want to keep their jobs or advance to better ones. Even the most idealistic politicians, after all, have little opportunity to implement their ideals unless they first get elected and then manage to hold on to their offices. For politicians, employment requires votes. Securing votes requires running costly campaigns that run costly ads. Politicians need revenue. And revenue can come from happy Bootleggers. Like the rest of us, politicians are smart about some things and naive about others. They cannot know everything, so they logically choose to become best informed about things that matter most to their day-to-day pursuits. They, too, are
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