There is a tendency to assume that regulation is implemented for the betterment of society. Consumer protection measures and other regulations are seen as necessary for the common good. Safety laws typically require amendments to product design which would result in costly alterations. Ironically, there are some unlikely beneficiaries of safety regulations.
As economist Bruce Yandle came to find out while working as for the Federal Trade Commission. To his surprise, many industry representatives actually were on board with these regulations. They were even concerned that that government agencies would abolish these laws. Yandle found this to be quite counter-intuitive many safety regulations impede efficiency (Yandle, 1983, p.2) . The true benefit of such restrictions was the reduction in competition (Yandle, 1983, p.2) . Larger corporations would be able to financially withstand the new safety requirements. For smaller companies, these restrictions operate as a barrier to entry. Regulations can put severe hardships on small businesses that have a cartelization effect . Eliminating competition without even violating the Sherman Antitrust or the Clayton Act.
These consequences are the byproduct of what Dr. Yandle has dubbed the Bootleggers and Baptists effect. It is the phenomenon in public policy where improbable coalitions are formed to achieve the same goal. This analogy is drawn from Baptists wanting to prohibit liquor sales on Sundays for moral reasons. The bootleggers in tandem supporting this restriction due the eliminating the competition of legitimately licensed bars and liquor stores (Yandle, 1983, P. 2-3) . Bootleggers are able to advocate for their own self-interest under the aegis of the moral concerns of the Baptists. Forming a dynamic where moral concerns provide cover for those who can enrich themselves. As the Bootleggers are criminals and laws are not a deterrent for them. A law banning liquor sales on Sundays will deter law-abiding alcohol vendors. Leading to us to question who the true beneficiaries are of any zealously petitioned regulation.
This essay will be the first installment of a continuous series of real-life applications of this theory. Considering the wide breadth of practical examples there will be many essays to come. The first essay will be dedicated to the impact of the 1968 Gun Control act.
Who are the Baptists and who are the Bootleggers:
Baptists: Gun control Baptists
Bootleggers: Domestic gun manufacturers
Parameters of the 1968 Gun Control Act:
This specific piece of gun control legislation was popularly believed to be in direct reaction to the civil unrest of the turbulent 1960s. Political press mounted after the assassinations of high profile political figures. Including president John F. Kennedy and civil rights activist Martin Luther King Jr . The fervor to pass gun control laws only was compounded by a series of inner-city riots that occurred throughout the course of the decade . Some commentators have even hinted towards gun control measures in the 1960’s being racial bias . More extreme civil rights advocates such as the Black Panthers were well known for regularly carrying semi-automatic rifles.
Slain public figures and the raucous carnage of urban riots superficially like an appropriate context for restrictions on gun ownership. After all, the outcry for gun control laws came out of concern for the safety of the public. However, was this 1968 law evenly applied to all gun makers and vendors? Not exactly. The legislation tended to skew in favor of domestic gun manufactures. Dating back to the late-1950’s domestic gun companies in New England’s “gun valley” expressed to local politicians concerns over foreign competition (Newhard, 2015, P.2) . Blatantly exposing the desire stifle competition from foreign producers. Much of the gun control rhetoric of the 1960s was pointed at imported guns. The emphasis that Lee Harvey used an Italian mail-order purchased rifle to kill JFK (Newhard, 2015, P.4) . Complaints of “surging” numbers of cheap guns being imported into the United States. Blurring the line between genuine concern for public safety and protectionism.
Beyond the salient nature of the protectionist proclivities of U.S. gun makers, there is also some evidence that the legislation was disproportionately angled at foreign gun producers. It can be argued that there were some asymmetries the parameters of enforcement in the 1968 bill. Restrictions were established for vendor licensing, mail-order arms purchases, and the sale and transportation of imported weapons (p.4-8) . Heavier licensing fees were directed at mail-order gun vendors (Newhard, 2015, P.2) . Many may argue that placing such restrictions on mail-order sales were worth the price of keeping firearms out of the hands of children. Such a stance ignores the implicit benefit of domestic producers. Mail-order prior to the internet was the main avenue for obtaining European rifles and pistols. Making more difficult to purchase anything from Beretta but guns from Ruger could easily still be bought brick and mortar.
It can be speculated that shortly after the bill was signed that there may have been deliberate delays on the approvals of gun importation licenses. The bill was signed into effect in October 1968 and gun dealers had a deadline of December 15th (Newhard, 2015, P.5). Anyone versed in economic-behavioral patterns or just plain common sense could foresee the litany of vendors racing to get their licenses prior to the law passing. Despite the upsurge in requests for licenses, government officials dragged their heels when it came to approving them. It was suggested at the time to be a means of preventing a “flood of foreign handguns” into the country prior to the enactment of the new law. This circuitous form of bureaucratic activism did more to hurt small firearms dealers than did promote public safety. Small-time foreign gun dealers found it easier to stop selling guns than continue to comply with the new laws (Newhard, 2015, P.4) .
Final Thoughts on the Dynamics of this B&B Dynamic:
This example is a classic example of ignoring the incentives of invested interests. I would argue that this is a defining feature of most Baptists and Bootleggers relationships. On one side you have the advocates compelled by moral convictions. Who unwittingly provides the veiling moral cover for the self-interested bootleggers. If the bootleggers ever directly advocated for the policies that benefited them without the moral smokescreen they would be derided by the average voter. Doing so under the guise of the common good the story changes.
The example of the 1968 Gun Control Act touches upon a point made by Bruce Yandle back in 1983, there is a demand for regulation. There is an economic dimension to the supply and demand of regulation produced by the government. When there is a profound increase in market competition many major companies favor regulation. Yandle cites technological changes, demographic changes, significant changes in factor costs, and new information as being factors swaying the demand for regulation (Yandle, 1983, p.3-4) . Often there are anti-competitive consequences of imposing new safety regulations. Time and money are required to adapt business practices to the contingencies of compliance. This will often be devasting to small businesses.