Author Interview: Economist Adam Smith Describes How 'Bootleggers & Baptists' Cooperate

Just over three decades ago, economist Bruce Yandle, then working for the Federal Trade Commission, published an article in the journal Regulation headlined “Bootleggers & Baptists: The Education of a Regulatory Economist,” which noted how groups presumably at odds with each other often collaborate, wittingly or unwittingly.

In 1999, in another piece for Regulation (PDF), Yandle described more fully the phenomenon after an additional 16 years of observation:

“Durable social regulation,” he said, “evolves when it is demanded by both of two distinctly different groups.” Those groups are the “Baptists,” a shorthand term for those who make a moral or ethical case for legislation or regulations, and the “bootleggers,” a term that applies to economic interests who benefit financially from legislation or regulations. (A synonym for “bootlegger” might be “rent-seeker.”)

“'Baptists' point to the moral high ground and give vital and vocal endorsement of laudable public benefits promised by a desired regulation,” wrote Yandle, while “'Bootleggers' are much less visible but no less vital. Bootleggers, who expect to profit from the very regulatory restrictions desired by Baptists … are simply in it for the money.”

What Yandle did was to apply public-choice economic theory to regulatory politics and, in the process, create a colorful concept that has been cited thousands of times since 1983 in attempts to explain how government makes rules.

Fast-forward to 2014, when Yandle, now a retired dean at Clemson University, has collaborated with his grandson, economist Adam Smith of Johnson & Wales University. Their new book is called Bootleggers & Baptists: How Economic Forces and Moral Persuasion Interact to Shape Regulatory Politics. The two authors spoke about it at a forum hosted by the Cato Institute in Washington on October 9, 2014.

'Aligned interests'
After the forum, I asked co-author Adam Smith a few questions about the book and his research.

Adam Smith speaks at the Cato Institute

Smith explained that the term “bootleggers and Baptists” originated during alcohol Prohibition in the 1920s, when “you had bootleggers and Baptists with aligned interests” even if they did not realize it.

Baptists, he explained, proclaimed “Down with legalized distribution of alcohol!” because they saw drinking as morally detrimental. Bootleggers, too, proclaimed “Down with legalized distribution of alcohol!” because Prohibition raised the price of illegal liquor and fed more profits to the bootleggers.

“It was a boon to the bootleggers,” Smith explained, “and the Baptists were kind of oblivious to that situation.”

Broadening the concept to include other kinds of regulations, Smith said, “what we see today in our modern political economy [are] many, many manifestations of the same kinds of strange bedfellows.”

More and more, he said, “we're seeing that those bedfellows are recognizing one another and coming together to form even more powerful would-be bootlegger/Baptist coalitions.”

There is also a relationship between “bootleggers and Baptists” and “crony capitalism,” when government grants preferential treatment to certain, well-connected businesses.

Smith said that, in the book “we call it 'bootlegger/Baptist' capitalism instead of crony capitalism.”

He added that “what I hope the book shows is that cronyism is more than just a bootlegger. That's the only thing that's usually recognized: There's just some special interest group.”

Yet, he explained, “a special interest group cannot move forward without moral cover, or at least can't get much out of the political domain without the Baptist” providing a beneficent reason for legislation, “and so we have to call attention the bad work Baptists are doing in creating opportunities for cronyism.”

Avenues for research
Both Smith and Yandle acknowledge that their book, while expanding upon the original thesis Yandle put forth in 1983, opens up new opportunities for further research by other economists and social scientists.

“There's obviously a lot of empirical work to be done,” Smith explained.

He pointed to “all these social regulations that people aren't looking at in terms of econometric work in the same way that they are [looking at] economic regulations, because we just don't think of it that way. We don't think of environmental policies and health-and-safety standards as giving money to anybody.”

Instead, he said, people “think of those as in the public interest. In other words, the Baptists have succeeded in convincing us of that fact but that's just not true. There are a lot of groups that benefit from that legislation and we need to put them under the microscope. We have to put those regulations under the microscope in the same way that we do economic regulations.”

Smith added that “this is a useful framework for recognizing groups” that may have self-serving (but hidden) economic interests in promoting new regulations.

“Never count a good bootlegger down,” he quipped. “A lot of times when we can't see the bootlegger, it doesn't mean they're not there. Seeing the Baptists can call attention to the fact that maybe there's a bootlegger standing in the shadows” during a debate about imposing new rules or restrictions on human action.

Bootleggers & Baptists, by Adam Smith and Bruce Yandle, was published by the Cato Institute on September 7, 2014.

(This interview appeared, in slightly different form, on Examiner.com on October 14, 2014.)

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'Justice and War in the Nuclear Age'

This book review was first published  in The Washington Times on May 11, 1983.  Another version of it appeared in in the May 19, 1983, edition of the Arlington Catholic Herald, the newspaper of the Roman Catholic diocese of Arlington (Virginia); it is that version that appears below.

A Book Review...
Applying Catholic Doctrine to Contemporary Issues

“Justice and War in the Nuclear Age,” edited by Philip F. Lawler. University Press of America, 1983. 113 pages, includes bibliography. Cloth $16.95, paper $5.25.


By RICHARD E. SINCERE, JR.*

Questions of morality and politics inevitably transcend particular political events. “Justice and War in the Nuclear Age” is a collection of essays by five scholars, all actively religious and concerned to examine their tradition — in this case Roman Catholic — and apply its ancient principles to contemporary issues.

Each writer succeeds in producing a useful and thought-provoking analysis of the premier problem of our time: how to secure peace with justice in an age of nuclear weapons. All agree ‘that nuclear deterrence is a moral good simply because it has prevented a general European war for the past generation. All, however, reject the doctrine of Mutual Assured Destruction (MAD) which has governed deterrence policies since the Kennedy administration. Instead they seek “a deterrent in which our preparations match our risks, and our potential for destruction is proportionate to the evils we seek to avoid.”

It is a curious paradox that those who accept deterrence begrudgingly often argue that the only way to prevent nuclear war is to make the weapons big and dirty and to target civilians (i.e., MAD). The prospect of war then becomes so awful that no sane leader would risk using nuclear weapons. Those who support deterrence, on the other hand, have since the end of the brief era of “massive retaliation” tended to find the idea of targeting civilians morally repugnant and strategically dubious. Therefore, they have made every effort to reduce the size of nuclear weapons, make them more accurate, and devise defenses against missiles and bombers — all in order to prevent collateral damage, save innocent lives, and mitigate suffering — and concomitantly to strengthen deterrence.

Only recently, culminating with the Catholic bishops’ pastoral letter on peace and war, have we heard arguments from the anti-deterrence side of the debate that counter-city targeting doctrine is intrinsically immoral. However, instead of expressing support for a counterforce or counter-military strategy, these critics have set about undermining the moral basis of deterrence itself. By some trick of logic they have decided if we can’t target people, we can’t target anything.

This volume persuasively shows the correctness of the pro-deterrence, pro-defense position from the perspectives of several disciplines: politics (Robert R. Reillyexamines “The Nature of Today’s Conflict”), philosophy (James V. Schall, S.J., on the “Intellectual Origins of the Peace Movement”), arms control (Thomas F. Payne discusses “The Amorality of Arms Control”), military strategy (Angelo Codevilla integrates “Justice, War, and Active Defense”) and theology (Bishop John J. O’Connor turns to “Traditional Western Criteria for Justice in War”). Together these five essays establish essential foundations for an intellectual defense of flexible deterrence policies and a moral argument for active defenses that will render nuclear weapons obsolete.

Professor Schall and Bishop O’Connor remind us that peace is not the mere absence of war — any tyranny, through coercion and mind control, can stamp out conflict. Peace is more, says Schall, and “always a consequence, not a direct object of our strivings, (but) a result of truth and mercy and charity.” Reilly says that in today’s struggle with the Soviet Union — whose leaders lack mercy, truth, and charity — our duty is to assess accurately “what is at stake in a war, otherwise we cannot judge what exertions are justified for defense.” As Pope Pius XII taught, “There are greater evils than the physical death and destruction wrought in wars.” Relating religious ethics to an empirical view of the global crisis leads to the conclusion that the quest for peace with justice does not automatically exclude the use or threat to use nuclear weapons: neither does it exclude any other means of conflict resolution.

On this subject. the more technical essays — Payne’s and Codevilla’s — have special relevance. Those who argue that any use of nuclear weapons would be immoral must reckon with technological developments over the past 20 years. Weapons can be more precisely targeted now than they were in 1962, when both the U.S. and the U.S.S.R. had to rely on bombers and primitive missiles, which were effective only against population centers. Today, we also have the means to ward off incoming nuclear weapons if necessary. Codevilla states: “The assertion that nuclear war must be either mass murder or suicide, or both, cannot be founded on fact.”

A 20th-century Voltaire might quip that Mutual Assured Destruction is neither mutual, assured, nor destruction. Recognizing the limited power of nuclear weapons is the first step toward eliminating their horrors. Ballistic missile defense and civil defense are moral and practical alternatives to self-generated vulnerability. The technology exists; only the will to use it seems absent.

Justice, peace, and freedom will be secured when we realize that the ethical foundations of our society face human, not merely technological, threats. Until humanity no longer suffers from sin, technology guided by charity and justice must stave off the evil that overshadows us.


*Richard E. Sincere, Jr., is research assistant for church and society at the Ethics and Public Policy Center and serves on the board of directors of the American Civil Defense Association.