Bruce Yandle's metaphor of bootleggers and Baptists (B&B) has become justifiably famous for its insights into the politics of government regulation. The idea is this: bootleggers favored banning the sale on Sundays of legal (taxed) alcoholic beverages that competed with their sale of illegal (untaxed) moonshine. Yet their financial interest alone might not have been sufficient to get a legislative ban on Sunday sales. Enter the Baptists. Baptists also opposed alcohol sales on Sunday, but their support for a ban was not based on narrow self-interest. Rather, it was based on a moral view that alcohol consumption on their Sabbath was evil.
Yandle then applies this B&B framework to other government regulations—and it explains a lot. Regulations often come about because of an alliance, often implicit and sometimes explicit, between bootleggers and Baptists. These are not bootleggers or Baptists in the literal sense, of course. Henceforth, following Yandle, I use the term "bootleggers" to refer to people whose motive in seeking regulations is financial gain and "Baptists" to refer to people who want regulation because of their emotional satisfaction from pursuing, and often achieving, objectives that they regard as noble. Groups represented by Baptists are less likely than bootleggers to be organized around financial interests and less directly effective at influencing legislative details, but their noble concerns can generate critical public support for the passage of legislation. So despite different motivations and political strengths, bootleggers and Baptists benefit by joining forces politically, explicitly or implicitly.
But the standard rendition of the B&B story leaves out something that bootleggers and Baptists need to achieve their goals: emotion. One of the common emotions is anger, and the group whose anger is most important is voters.
Anger as Motivation
"Anger enters in political outcomes on two main levels: as a motivator and as a tool."
Anger enters in political outcomes on two main levels: as a motivator and as a tool. First, consider anger as a motivator. Let's examine, in turn, bootleggers, Baptists, and voters. Bootleggers don't always pursue their goals in a dry, clinical manner. Instead, they often feel anger at those who oppose them—after all, large amounts of their wealth are often at stake. Even so, for them, anger is somewhat of a luxury. Baptists, though, because their motivation is moral and/or ideological, often do feel and act on anger. But they, too, because of their awareness of their potential influence, must economize on their expression of anger. That leaves the most important group motivated by anger: voters.
Voters make no appearance in Yandle (1983) and are given little explicit attention in Smith and Yandle (2014) beyond being seen as duped by bootleggers, who take advantage of their rational ignorance and "moral sympathy." (p. 67) Nor is anger discussed in the article or the book. But a critical reason for the importance of voters here is that their political views are more responsive to emotions than are those of bootleggers and even those of Baptists. Why do voters so often vote on the basis of anger or other emotions? Because an individual's vote in an election in which millions, or even thousands, of others vote, does not matter. One person's vote has effectively a zero probability of determining the election's outcome and thereby affecting his financial gains or losses. So the expression of anger by a voter is "free"—that is, costless. But how he votes decisively determines the satisfaction he receives from expressing himself in accordance with his feelings, whatever the content of those feelings. In the privacy of the voting booth, voters agitated by anger can express their feelings without being concerned about a negative public response, as bootleggers and Baptists commonly are when considering their public pronouncements and actions.
Anger as a Tool
By contrast to individual voters, organizations represented by bootleggers and Baptists make decisions that can noticeably increase the chances that their favored policies are enacted. Therefore, those organizations face a trade-off between acting on their own emotions and achieving their desired policy outcome.
Also, since the decisions of Baptist organizations have more influence on political outcomes than those of individual voters, Baptists are less prone than voters to respond emotionally to political opponents. Similarly, since Baptist organizations have less influence on political outcomes than bootlegger organizations have, the former are more prone than the latter to respond emotionally to political opponents. Indeed, as discussed next, bootleggers with a financial interest in regulations often respond to political attacks with carefully calculated support for their attackers.
Turning the Other Cheek
Bootleggers and Baptists clearly influenced the passage of Obamacare, as Smith and Yandle discuss (2014, Chapter 7). Several important Baptist groups (such as the American Medical Association and the American Cancer Society) provided moral cover for bootleggers by arguing that the proposed legislation would achieve noble-sounding objectives. But these Baptists were not as effective as President Obama had hoped. As Congress debated the health plan, public disapproval of more government control over private health care increased from 28 percent to 50 percent, with approval decreasing from 41 percent to 32 percent. One reason for this—one not addressed by Smith and Yandle—is that other Baptist groups were opposing Obamacare with arguments of their own for noble-sounding objectives. They argued that the legislation would harm many whom it was supposed to help and advocated policies relying on freedom and markets to achieve the objectives that, they claimed, Obamacare couldn't deliver. Each side saw angry attacks on its opponents as an effective way to create political support for its noble objectives. Obamacare advocates portrayed their opponents as unconcerned about the poor; those opponents responded by depicting advocates as wanting to expand political power for personal gain without concern for the harm created. These arguments were particularly effective at inflaming voter hostility toward their ideological opponents and increasing voter turnout. The result was escalated political hostility on both sides.
Organizations represented by bootleggers occasionally respond with anger to their opponents' arguments. But because such responses are likely to harm them financially, bootleggers often see more advantage in dampening hostility than in reinforcing it. For example, Obama attacked the unpopular pharmaceutical industry as part of his effort to increase the appeal of his healthcare proposal to voters. The pharmaceutical industry, more interested in profits than in ideological combat, responded to this criticism—and the political threat to its profits—with calm defenses and increased financial contributions to Democrats. The pharmaceutical industry was an effective bootlegger for Obamacare and helped get it passed with provisions that protected the industry's profitability.
Similarly, President Obama was critical of Wall Street financial firms, already publicly unpopular for their large size, high profits and salaries, and opposition to provisions in the Dodd-Frank banking regulation moving through Congress. Baptists who favored increased banking regulation to protect consumers reinforced Obama's criticisms. But, like the pharmaceutical industry, Wall Street firms avoided vitriolic responses to the Obama administration, while working with it to protect their financial interests. Although voters were aware of, and most of them were pleased by, the political attacks on Wall Street, they were less aware of the backroom deals that the Obama administration was cutting with those firms. Today, the Wall Street firms remain highly profitable and continue to pay high salaries, and large banks are getting larger by taking over smaller community banks less able to compete because the compliance costs created by Dodd-Frank regulations impose greater burdens on small banks than on large ones.
Moral Appeals from Voters
Smith and Yandle (2014, p. 107) state that "[m]oral appeals through the political process, without accompanying hidden financial beneficiaries, are like a sailboat without a breeze." If that were true, then there would be no need for them to include any other factors in their political model. But it is not true. Some regulations exist because of the moral support they have, with little, if any, of that support motivated by the financial concerns of bootleggers. Furthermore, many regulations receive little support from an organized group of Baptists.
Consider laws against "price gouging" after natural disasters. The enforcement of these laws is arbitrary because of the vagueness of what constitutes an illegal price. According to Giberson (2011, p. 50), a New York law "applied to retailers offering 'consumer goods and services vital and necessary for the health, safety, and welfare of consumers' at an 'unconscionably excessive price,' and applied during an emergency declared by the governor." To look for bootleggers behind these laws, one might consider local merchants in disaster areas who recognize that "price gougers" would subject them to additional competition by making more goods and services available. Realistically, however, local merchants would be worried that, by also keeping their prices down, a law against "price gouging" would make them worse off. But even if they did favor the law, they wouldn't need Baptists to provide effective moral support for it. Merchants could depend on politicians knowing that 1) "price gougers" are almost universally detested as immoral and 2) failure to take a tough stand against "price gouging" would put them at serious risk of defeat by angry voters in the next election. In this case, voters, operating independently and motivated by uninformed morality, are effective substitutes for Baptists and bootleggers.
Contrary to Smith and Yandle's claim, moral appeals, when communicated through the political process, can create a strong breeze that propels the enactment of regulations without bootlegger support, or Baptist support either.
Smith and Yandle would be correct if, as they seem to assume, the moral appeals are communicated to voters. But moral appeals can be communicated by voters, as well. This means that they can create a breeze without Baptists that is strong enough that politicians will respond to it independent of the activities of bootleggers. This is true even if the moral appeal is latent, with no opportunity to explicitly communicate it with a direct vote, when the feelings behind the appeal are widely held and intensified by the anger of moral indignation.
"All political decision makers are influenced by emotions, but voters are particularly sensitive to emotions, both benevolent and hateful."
The B&B metaphor provides a useful way of thinking about how regulations are enacted in response to the political interaction of groups that have different interests and motivations and face different incentives. Smith and Yandle (2014) are to be congratulated for expanding on the insights from Yandle (1983) by creatively applying the B&B logic to a number of recent examples. This article expands those insights further by highlighting the role of voters and adding in anger as an important political motive. All political decision makers are influenced by emotions, but voters are particularly sensitive to emotions, both benevolent and hateful. And as government has increasingly become an arena for negative-sum competition over the distribution of existing wealth, political outrage can be expected to become an even more common influence on government decisions.
See Bruce Yandle, "Bootleggers and Baptists: The Education of a Regulatory Economist," Regulation, May/June. 1983: 12-16. Smith and Yandle (2014) extended the insights of Yandle (1983) to recent examples of political support for regulations. See Adam Smith and Bruce Yandle, Bootleggers and Baptists: How Economic Forces and Moral Persuasion Interact to Shape Regulatory Politics, Washington, D.C.: Cato Institute, 2014.
Surely, many of the Baptists were motivated to support outlawing selling alcoholic drinks on Sundays, as voters or otherwise, because they were angered by the sale of those beverages by anyone, bootleggers included. Wives with drunk husbands come to mind.
See Dwight R. Lee, "Do the Poor Vote Their Self-Interest?" Library of Economics and Liberty, August 5, 2013.
The most complete treatments of expressive voting are, Geoffrey Brennan and Loren Lomasky, Democracy and Decision: The Pure Theory of Electoral Preference, Cambridge: Cambridge University Press, 1993; and Bryan Caplan, The Myth of the Rational Voter: Why Democracies Choose Bad Policies. Princeton, N.J.: Princeton University Press, 2007.
Of course, voters can, and often do, convince themselves that the animosity they feel is motivated by their noble desire to oppose evil.
See Tom Hamburger, "Obama gives powerful drug lobby a seat at healthcare table", Los Angeles Times, August 4, 2009.
See Chapter 7 of Smith and Yandle for more on the political maneuvering for financial advantage by Obamacare bootleggers. The health insurance industry, and its bootleggers, had a more contentious relationship with the Obama administration over health care policy than the pharmaceutical industry, but its bootleggers remained courteous in its public statements; now Obamacare is paying health insurance companies large subsidies. See Doug Badger, "Congress Must Stop the Flow of Corporate Welfare to Insurers", Real Clear Health, December 8, 2015.
See Giberson, Michael (2011). "The Problem with Price Gouging Laws" Regulation, Vol. 34, No. 1, Spring: 48-53.
Dwight R. Lee is a Senior Fellow with the O'Neil Center for Global Markets and Freedom at Southern Methodist University.
For more articles by Dwight R. Lee, see the Archive