The situation was ripe for coordinated Bootlegger/Baptist interaction. On April 13, 2012, President Obama issued an executive order that demonstrated his expertise in extending an altar call to suffering industry leaders (White House 2012a). Following the blueprint for his highly visible fuel-economy cartel, the president appointed a multiagency task force that would coordinate clean production and distribution of natural gas.
Members of the task force included every federal agency that had anything to do with regulating, subsidizing, pricing, and planning energy production and use in the U.S. economy. Key trade associations were sent the draft executive order prior to its becoming final, along with a request for letters of endorsement. When industry groups responded to the invitation, offering glowing support for the president’s foresight, their letters were publicized by the White House (White House 2012b). In effect, President Obama cartelized the government regulatory agencies by way of the task force, then he used this as leverage to cartelize the energy sector. The episode’s truly interesting feature is the formation of a cartel within a cartel.
What does this have to do with Bootlegger/Baptist interaction? The environmental community forms the Baptist component. Highly critical of the new fracking technology that had dramatically increased natural gas production—and even more critical of coal—environmental organizations stood at the forefront of those supporting the president’s effort. The American Petroleum Institute, the American Gas Association, the American Natural Gas Alliance, the American Chemistry Council, Dow Chemical Company, Marcellus Shale Association, and the National Association of Manufacturers each came forward with letters of support. And for understandable reasons. In a world full of federal regulation and price uncertainty, each organization had a lot at stake.
The president artfully circled the wagons. By bringing all the regulators to the table, he reduced infighting and the tendency of each agency to take its own bite from the apple. And by bringing all major energy producers to the table with supporting letters in hand, the president reduced the likelihood that the resulting regulatory cartel would fall apart. The results of this effort remain to be seen, but it seems a safe bet that pork will be divided up across sectors and interest groups, as the combined regulators create industry-wide rules that raise prices and reduce output.
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 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