Bootleggers and Baptists XV: Term Limits

Politicians often support policies that they indirectly benefit from. One example of this is supporting legislation or various forms of deregulation that has a populous bend to it. The kind of policies that set this individual apart from the political establishment. Typically, the politicians that support such policies tend to operate within the context of a Bootleggers and Baptist dynamic.

However,  these attempts to garner public support through supporting policies that attack the status quo are not the typical B&B dynamic. Much of the time these actors (the politicians)  economize the benefits on two fronts. Supporting their ideological agenda and securing firm endorsements from their constituency. Meaning that as economic agents in the marketplace of ideas, they operate as dual-role actors. Effectively they operate as the Bootlegger and the Baptists simultaneously. Through advocating for a specific policy position, the outspoken politician operates as a Baptist. They stress the moral and technical concerns of a specific stance on policy. Whether it is AOC advocating for the Green New Deal or Rand Paul arguing for term limits, both positions take on a moral dimension. For this very reason, both economic actors in the political sphere are Baptists.

But we would be remiss to assume that they also do not take on the role of Bootlegger concurrently. Why? I will give both Rand Paul and AOC the benefit of the doubt and assume the defense of their ideological pet projects is sincere. The economic agent’s sincere belief in the moral aspects of their advocacy is a crucial contingency for it being a true Dual-Role actor dynamic. All because some are sincere in their moral arguments for tax cuts (for example) doesn’t mean they do not stand to benefit.  Neither Dr. Paul nor AOC benefits monetarily from supporting policies that are popular among common people. The most conspicuous benefit is both political figures getting re-elected for another term. However, what they stand to gain through “pollical popularity” extends well beyond merely keeping their sear in the House or the Senate. In the age of social media, politicians now have a very different kind of relationship with their constituents. With platforms such as Twitter, there is a much higher degree of personal interaction. The days of listening to your public figure from afar as they pontific upon public policy at the podium (political pulpit) are over. The voter can now to a limited degree interact with their elected officials on social media. Many of them have amassed something of Fanclub on various social media platforms. Their social media presence has permanently shifted the dynamic between politicians and voters. Various political leaders are now being quoted, re-Twitted, and immortalized in internet memes at a mind-boggling magnitude. One only needs to remember the emergency of the Bernie Bros to see in current times the line between celebrity and political renown have been blurred. Formulating a subculture of political celebrity. That could have never existed without the on-ramp of cyberspace.

The cult of personality has morphed into a political bastardization of celebrity culture, politicians have quite a bit to gain through maintaining a positive image. These figures now carry social currency with people outside of their constituency. You have people in Hawaii following Rand Paul on Twitter and he is a senator for the state of Kentucky! Political forces such as Paul and AOC  carry enough populous clout they have mobilized political activism across the country. Their influence extends well beyond the jurisdiction of the state they represent. This is how they truly benefit! They reap the rewards of advocating for policies that concern the public. If James M. Buchanan was correct politics is a form of exchange. In most cases (except bribery, welfare programs, and subsidies) money is not being exchanged.  One of the most obvious examples of the non-monetary exchange in politics is log-rolling. Politicians trading votes in the House or Senate. However, the social currency earned through supporting policies popular among the public such as term limits is a different kind of exchange. The politician gives lips service to policies that benefit the average person. In exchange, you get the support of the people. The catallactics of this trade-off is quite salient once you give it some thought.   

Bootleggers and Baptists: XIV: Massachusetts Bans Menthol Cigarettes

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Introduction:

Legislators in Massachusetts recently passed a law prohibiting the sale of menthol cigarettes. The rationale behind this bold move, banning the sale of all flavored tobacco and vaping products. Presumably, to make tobacco products less alluring to children. The specific targeting of menthol cigarettes is slightly puzzling. This variety of cigarettes due have subtle flavoring of mint, it does not have the same degree of overt flavoring as a strawberry cigarette. In 2009, the FDA banned all flavored cigarettes excluding menthols. This prohibition was enforced under the Family Smoking Prevention and Control Act (FSPTCA). This act extended the ban to Kretek (colloquially known as a clove cigarette) cigarettes.  It is difficult to determine if methanol cigarettes were excluded from the 2009 legislation as a result of regulatory capture. Brands such as Kool, Salem, Newport, and so on have enjoyed immunity from the national ban.

All because the sale of menthol cigarettes is legal at the national level, does not mean that these products cannot be restricted at the state and local level. Case and point Massachusetts implementing a ban that included methanol cigarettes. Did the lawmakers in Massachusetts fully contemplate the consequences of this policy? Massachusetts is a relatively small state and borders several other states that still permit the sale of menthol cigarettes. Naturally, if a Massachusetts resident wants to buy a pack of Newports they just need to take a short drive to a neighboring state.  All because the Bay State’s government restricts the in-state sales through legislative fiat does not mean that smokers will not find alternatives.

Displaying the puritanical hubris of the Massachusetts state legislators. The state’s culture has long been a victim of its history. Outlawing the sale of Newports will not prevent people from smoking them. States such as New Hampshire and Rhode Island still selling menthol cigarettes will only serve to divert tax revenue away from the Bay State. Invariably, the state ended up shooting itself in the foot.  If the objective was to fill the coffers, Massachusetts provides every incentive to purchase cigarettes out-of-state. The state aggressively applies onerous taxes to tobacco products. Then takes it one step further and bars the sale of a tobacco product that is legal in every other state. Making it easy to suspect that these policies are not designed to generate state revenue. Rather operate as a confiscatory function.  A means of attempting to influence behavior through regulation and taxation. When it comes to victimless “crimes” these measures always fall short of the expected outcome.

The Baptists:

If we adhere to Bruce Yandle’s research on regulation, the Bootleggers and Baptists dynamic apply to this situation. The supposedly noble intentions of this law have created some passive beneficiaries. This benefit is obscured by the strong moral argument of banning menthol cigarettes to make smoking less appealing to kids. Regulation is never neutral or linear in its consequence. Health advocates, lawmakers, and the governor of Massachusetts are the Baptists. They obtusely champion this moral defense of this interdiction with no consideration of external consequences. Kids are not going to stop smoking cigarettes just because menthols are off the table. Only 36 percent of all brands of cigarettes are mentholated. It is highly unlikely that all underage smokers are reaching for menthols. This legislation places a burden on adults who actively choose to smoke mentholated brands. Adults are old enough to weigh the risks of smoking and should not be limited by legal restrictions. The Baptists in this scenario would claim that this is a small sacrifice for the greater good. However, shouldn’t it be the responsibility of the parents to thwart their teenager’s attempts to engage in the rebellious behavior of tobacco consumption?

The moral imperative of reducing teen smoking at all costs has a major blind spot.  If a child’s parents are willing to drive out-of-state to purchase mentholated cigarettes, couldn’t they just steal them from their mother or father?  The legal barrier of age restriction should pose enough of a bulwark to accessing tobacco products. If a minor opts to steal cigarettes or coax an adult to buy them a pack, what can you do? Any further action is either futile or unjustly punishes adults who possess the right to smoke. Adults also have the right to smoke whatever kind of cigarettes they desire, including flavored cigarettes. Investing tax dollars to enforce such an initiative is downright wasteful. Serves to penalize smokers and nonsmokers alike through a misallocation of their taxed income. The Baptist may be sincere in their efforts to curb youth smoking. Unfortunately, kids are still going to continue to smoke. Believing that this restriction is going to have any measurable impact is laughable. Everyone else pays the price for a policy that will not remedy the issue of youth smoking.

The Bootleggers:

There are two categories of bootleggers in this policy dynamic. On the microlevel, you have the state-line convenience stores that will see an influx in business. Even the grasp of the legislative body of Massachusetts cannot stifle the Invisible Hand! This operates on a similar principle as tribal smoke-shops. Since many do not apply state taxes to cigarettes, many non-Indians flock to the reservation to buy cheap-smokes. If Massachusetts bans, Newports, people will simple patronize establishments in New Hampshire and Rhode Island. Lawmakers such be all too aware of this phenomenon.  Considering  Rhode Islanders come in droves to Massachusetts towns on the state board to purchase alcohol. For the unacquainted among us,  Massachusetts does not have a sales tax on liquor.

I would never be one to advocate for taxation. However, if you are going to tax something you might as well do so in a manner that will generate some revenue. The true parties that benefit from this ill-advised law are the state governments of New Hampshire and Rhode Island.  In 2019, Massachusetts collected  $553 million in tax revenue from cigarette sales. That number is down by 9.7 percent as of the fiscal year 2020. The Department of Revenue projects that tax revenue will be down by  $93 Million in “FY 2021”. This large sum of money is filling the coffers of neighboring states.

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Bootleggers and Baptists XIII: The Dawes Act of 1887

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Frequently in public policy regulations that have nefarious intentions are obscured in a cloak of beneficence. Generally, the deeper you explore the history and the context behind the regulation or law its true purpose is eventually exposed. This is particularly true of many of the laws passed by the federal government intended to “help” Native Americans. Many of these paternal laws have done nothing more than subordinate the voluntary associate of tribal members to the authority of the federal government. I am not necessarily a proponent of the lofty, wide-eyed, and quixotic brand of social justice espoused by the contemporary left. But many of these laws impose notable restrictions on the natural rights of tribal members. Such as violating property rights, free association, contract enforcement, and even the right to self-determination. Regardless of the ethnicity of an individual, these rights should be upheld to all people. This isn’t so much a plea for equality of outcome, but rather a firmly held moral concern.  When the law is weaponized to legalize crimes against persons and property, the law has failed to achieve its ends.

One such act that codified a gross injustice against the native people of the United States was the Dawes Act of 1887. Colloquially known as the General Allotment Act. The legislation was sponsored by Massachusetts Senator Henry L. Dawes and was enacted in February 1887. The act provided the authority to the executive branch to allocate “.. portions of Reservation land to individual Indians..” for agricultural purposes. (p. 19-20) 160 acres would be provided to head-of-household and 80 acres to other individual tribe members.  The acreage was doubled if the land was only suitable for grazing (p.20). The aloof Baptists in this scenario justified this act on the moral grounds that this would help the native tribes in the long run. Alleviating the poverty tribal members experienced. Through providing land for cultivation the natives could be elevated to being a middle-class farmer and better assimilate to American society (p.19). If history is any indicator, good intentions and legislation have the propensity to result in tragic consequences for American Indians. Unwittingly, the good intentions of these nineteenth-century social justice warriors provided a moral smokescreen that allowed less sympathetic individuals to utilize the law for their callous benefit.

Land disputes between Natives and European settlers are nothing new. These disagreements date back to the early colonial period of America. Typically, the Native tribes received protection from the aggressive advances on tribal land by colonists from Britain. This is why during the revolution most tribes aligned themselves with the crown (p.10).  Then after the new republic was formed, the Articles of Confederation delegated the power of addressing Indian affairs with the federal government. This was done to preemptively avoid military conflicts with the tribes over land. Due to the financial stresses of the Revolutionary War (p.10). Under U.S. Const. Art I, Sec 8, Cl 3.  and Art II, Sec 2, Cl 2  congress was provided with the power to regulate tribal commerce and the President with the ability to make treaties with the tribes (p.11). All done in the name of stability. Placing the federal government in the precarious situation of balancing the interests of the Natives and settlers. Otherwise, the demise of the young republic may have been inevitable.

Fast-forwarding approximately a century, it clear there has been a long-established that many Caucasian Americans perceived tribal people as more of an obstacle than their indigenous neighbors. Making these individuals the proverbial bootleggers of the Dawes Act. Why?  What do the Americans vying with the Natives for land have to gain from this law?  The act was enacted in the absence of any consent requirements (p.21). Making it easy for the federal government to divide up the land without any tribal input.  To get the legislation to pass the law was amended to allow whites to purchase any remaining land. The result of the law being a drastic decrease in land ownership among tribal people. (p.21). Even worst, the land was not distributed in a manner that was logical to the needs of farming and grazing. Creating a  “checkerboard” pattern of “alternating white and tribal-owned land”. Making it impossible to utilize the land for grazing or farming (p.22).

 In the end, putting aside any good intentions, this policy only made matters worse. The policy not only was poorly implemented but was manipulated to benefit non-tribal members. Legislative rent-seeking at its finest!  Only provides further evidence that quite often all the downstream repercussions of regulations can rarely be considered. For a policy originally intended to lift Native Americans out of poverty did the exact opposite! Making this abject policy failure a shining example of what is referred to in the public policy as a cobra-effect. The Dawes Act only further deteriorated the economic quality of life of America’s Native people.  

Bootleggers and Baptists Part XII: Dual-Role Actors on Both Sides of Proposition 205 (Arizona, 2016)

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Back in 2016, election cycle Proposition 205 (Arizona) sought to establish a regulated market for recreational Marijuana. The measure failed to pass by a slim margin. Expounding upon the strategic flaws of the ballot question has already been thoroughly exhausted by local commentators.  What truly is interesting in retrospectively analyzing this failed legalization campaign was the coalition building. These strategic alliances were forged on both sides of the aisle.  Everyone from puritanical prohibitionists to cannabis aficionados teamed up with orthogonal allies to hedge their bets on achieving their desired policy outcome. Naturally the formulation of such coalitions invariable leads to Bootlegger and Baptists policy dynamics. By the very nature of regulations and policy decisions, someone stands to gain and someone stands to lose. Government action is never neutral. Even inadvertently a policy can provide a downstream benefit to an invested interest group. Sometimes these concentrated benefits are nontangible. Such as a positive public image or gaining notoriety. As the great moral philosopher, Adam Smith reminds social incentives to present us with powerful motives.

One of the more predictable opponents of legalization would be manufactures of prescription painkillers. Insys Therapeutic donated $500,000.00 to the 2016 opposition campaign in Arizona. Insys is a well-known producer of opioid-based medications. Their true motivations are somewhat puzzling.  Medical Marijuana was legalized back in 2010 which would have been a golden opportunity time for funding opposition. This could potentially be a strategic form of revenge. A thinly veiled attempt at settling a score with the Marijuana dispensaries that cost them business.  Why? Because the medical dispensaries would be among the first economic actors to enter the recreational market. It would take much in the way of resources to make a transition to selling both medical and recreational cannabis. In theory, this institutional form of retaliation would provide the benefit of instinct satisfaction to upper management within Insys. This theory assumes little to no economic benefit from this action.

An alternate theory could be Insys does finically benefit from keeping recreational Marijuana illegal. This move could signify a circuitous acknowledgment of the black-market for prescription painkillers. Whether big pharma wants to admit or not, recreational users do make up a portion of their profits. Their main customers need to operate as mid-level distribution. Either through an unscrupulous physician prescribing opioid narcotics to recreational users or through patients reselling the medications on the secondary market. Through going attacking recreational Marijuana they can protect their indirect profits made through the demand on the illicit secondary market.  Opioids are already in competition with alcohol, tobacco, kratom, Salvia Divinorum, and potentially marijuana. By eliminating a whole category of legal and accessible options they gain a slightly larger share of the quasi-legal American intoxicant market.

The question becomes whether this specific economic agent is a Bootlegger or a Baptist. They are unquestionably both. The company possesses some sort of murky incentive for keeping recreational marijuana illegal. Making them a Bootlegger. They assume the role Baptist when publicly justifying their generous donation to the counter-campaign. Citing the danger of marijuana to children. Also, expounding upon the dangers of ingesting substances that do not have FDA approval. All of these are arguments are laughable when you think about the pharmacological risks of the products Insys manufactures. Regardless, assuming good faith on the part of the firm, it is still a moral argument. Which may or may not be factually accurate. For this reason, they are a Dual-Role Actor.

In this scenario, there is another Dual-Role Actor that is on the other side of the fence. That would be the media. Numerous publications pick-up with this story and ran with it. Function as a Baptist through exposing the callous self-interest of pharmaceutical companies. This provides the appearance of a moral crusader who is attempting to reveal how big business attempts to manipulate the system. However, this public service is not done out of pure altruism. Media organizations are frequently willing to dispense with accuracy to be the first outlet to break a news story. Editors often do not focus on important stories but rather those that captivate their viewers/readers. Making news outlets more of a vehicle for entertainment than obtaining information. The best means of gaining and retaining viewership in an age where mainstream media is currently on life support is through sowing outrage.  Exploiting the public’s salient bias against corporations is a great means of generating click-bait worthy headlines.  Utilizing this tactic becomes much more imperative when your industry is presently clinging to life on a shoddy ventilator. The Schumpeterian gales are presently gusting. The creative destruction of alternative media is drawing many viewers away from FOX News and CNN.

Bootleggers & Baptists Part: XI: CVS and Tobacco

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Back when I was a broke college kid and was still a tobacco consumer, few tobacco products provided a better value than Parodi cigars. Yes, they were machine-made. However, they were mechanically bunched and wrap with robust and smokey fire-cured Kentucky/Tennesse broadleaf tobacco. These rugged little stoogies wouldn’t get too far in a beauty contest, but they were solidly constructed. Mimicked the rustic tuscano cigars smoked in Spaghetti Westerns. There was only one brick-and-mortar locational locally that sold these drug-store treasures happen to be CVS. This all changed in 2014 when CVS elected to stop selling tobacco products altogether in the name of promoting health. Sure there was still the internet, with the complexities of shipping cigars across state lines (tax-wise and legally) it was far from an ideal option. I was far from the only one frustrated with this decision made by corporate. In 2015, CVS speculated a slight drop in sales was connected to the corporate ban on tobacco sales.

It is understandable for a firm to strive to convey a consistent message. There is a fair amount of hypocrisy in a healthcare store selling tobacco. Eliminating tobacco makes sense, only if you stop selling all the other unhealthy products sold at CVS locations. Examples ranging from soda, energy drinks, candy, and liquor. Also, one cannot forget powerful opioid narcotics. Granted, there is purportedly “safe” way to ingest such medications. Why not take a stand against the addiction crisis currently plaguing America if the company is so concerned about public health? Needless to say, there is certainly an asymmetry in CVS as a corporation’s advocacy for public health. Bringing the whole rhetoric of voluntarily choosing to stop selling tobacco into question. Even leading the incredulous skeptics among us to question the organization’s true intentions.

The murky intentions of CVS once again bring us back to the economist Bruce Yandle’s famous Bootleggers and Baptists hypothesis. In instances of this coalition-building dynamic, there are always the virtue signalers that provide us with the moral argument for a policy. The silent beneficiaries are known as the bootleggers. Individuals that purely advocate for the policy out of self-interest. Our Baptists in this scenario become apparent when you review the various organizations that provided praise to CVS for this move. Establishments such as the Massachusetts Medical Society and The Harvard School of Public Health. The Bootleggers benefiting from this shift in CVS’s business practices is clear as day, companies producing smoking cessation products. One of the most prevalent examples being Nicorette.

Where does CVS fall in the equation? Surely they either benefit from this change in-store policy or are expressing concern for public health?  I would argue CVS is an example of a dual-role actor. A dual-role actor in Bootleggers and Baptists coalitions are an economic agent or collective of economic agents that fill the role of Bootlegger and Baptist. They may have a genuine concern for the more implications of policy. However, they also simultaneously stand to gain from the purposed or implemented policy. For the sake of being charitable, let’s assume the initiative to improve “wellness” is sincere. Inconsistent, yet sincere. By exalting the virtues of not selling harmful products such as chewing tobacco, cigars, pipe tobacco, cigarettes, etc CVS claims the moral high ground, making them a Baptist. However, they also at the same time gain through accumulating social currency. From the standpoint of publicity, this is gold. The detrimental effects of tobacco use have been well documented and overall public perception of tobacco consumption is quite negative. These factors make tobacco low-hanging fruit in terms of formulating policy. Whether it is the internal policies of a private company or the stroke of a legislator’s pen, tobacco is an easy target. There is no quicker way to look like a hero than to stick it to Phillip Morris. However, why continue to sell soda and candy if you are concerned about fostering public health? Would the customer backlash be too strong? That said, it is difficult to quell my continued skepticism of CVS’s motives for this move. There is a high probability that CVS is operating as an advocate and a beneficiary.

Bootleggers and Baptists: Part XI: Workplace Diversity

Diversity awareness programs on their surface appear to be noble endeavors designed to provide equal opportunity employment to historically disadvantaged groups.  Over the years, there has been some controversy over the conclusive impact and application of workplace diversity programs. Due to claims of only marginal success in increasing the diversity of the workforce. One major shift has been to couple diversity with “inclusion”, having a diverse workforce is not enough. The company now needs to also provide a welcoming environment.  This is a profoundly difficult task considering the subjective evaluations of what is defined as “welcoming” may vary wildly depending upon the perspective of the individual employee. There is a growing prevalence of what is known as “diversity fatigue”. Many managers and H.R. personnel succumb to the stress of attempting to fulfill lofty and unstandardized goals.  Making the achieving the goals of diversity and inclusion an ever-present uphill battle. Especially with the hyper-dynamic and ever-changing trends in what is deemed as being politically correct by the intellectual upper crust.

The move for diversity for its very sake is not without adverse consequences. Beyond merely making aimless strides towards an arbitrary and idealistic goal. If mismanaged minority employees may feel alienated or there may be an increase in the incidence of conflicts between employees. Two downsides are often not accounted for in the application of diversity programs. Neglecting these variables not only determines the purported objectives of diversity programs but the inevitable flaws of human nature.  The old expression “… you can bring a horse to water, but you can’t make him drink…” comes to mind. Prejudice cannot be eradicated by the edict of corporate policy nor by the stroke of a lawmaker’s pen. Freewill and personal perception have a massive role in fostering and maintain prejudice. A naively wide-eyed and idealistic diversity awareness program provided by an employer will not inculcate the virtue of tolerance into their employees. These are conclusions that the individual must independently arrive at deep introspection.

These lofty expectations mirror the Holier-than-thou virtue signally exposited by contemporary Progressives. Modern Progressive has firm ideological roots dating back to the early 20th century. A careful examination of history will lead any thoughtful observer incredulous of the true aims of the diversity movement. Many of the moral objectives of the Progressive Era were nothing more than circuitous means of rent-seeking. Making the whole notion of workplace diversity truly about diversity dubious at best. Few employees ever question how their employer benefits from promoting diversity programs. A business enterprise exists to provide a product or service not to proliferate the virtues of tolerance. What do they stand to gain through attempting to cultivate a culture of hyper-tolerance?

What emerges from this situation is a potential example of  Bootleggers and Baptist coalition.  An internal coalition between the human resources department and upper-management. Typically, the individual representing the moral argument for a diverse workplace is the “Diversity Ambassador”.  A role within the company that carries quite a bit of prestige, yet how this position direct benefits day-to-day operations is questionable at best. Even when employees who are crucial to daily business are laid-off the Diversity Ambassador gets to keep his job.  Although such a role is nothing more than a luxury. This actor is undoubtedly our Baptist due to his incessant persistence in exalting the values of diversity and inclusion. His rhetoric comes just short of mirroring a political propaganda campaign. Boldly asserting that everyone possesses some degree of prejudice or implicit bias. His obtuse repudiations make countering his claims (regardless of the accuracy of his claims)  a futile endeavor. Below details a scenario witnessed by the author that demonstrates the zero-sum nature of the accusatory discourse of the typical Diversity Ambassador:

Diversity Ambassador:

“ I have conducted this exercise for over twenty years and not once has anyone ever mentioned that I was black. I told you all to list the inferences you can make from just looking at me. No one even mentioned the most obvious characteristic of me. I am black. Why is this? None of you have followed my instructions! Why?!

Audience Member (Attempting to answer his question):

“ Because none of us see color.”

Diversity Ambassador:

“ Don’t ever tell a diversity and inclusion coach that you don’t see color!!”

The above conversation between a corporate Diversity Ambassador and an hourly employee exhibits the perverse quiddity of this wanton advocating for diversity. This is not the tone of a man who wants to educate, but rather who wishes to indoctrinate. Pedagogically and condescendingly force-feeding us the moral imperative of admitting our own biases. Versus attempting to foster understanding or attempting to provide us with the genuine precepts for being more tolerant. The man was simply describing our sins without truly prescribing a means of reconciling them. Paralleling the fervor of an Evangelical preacher, we can do no right. We must fully accept that we are in the wrong with no hope of ever being right. Presenting a situation where the participant can only lose. Generating such a compelling moral narrative for the imperative to proselytize the virtue of diversity that it also doubles as an impenetrable smoke-screen that insulates the company from accusations of discrimination.

The Bootleggers in this dynamic are the individuals in upper-management.  There are two main benefits of this variety of moral rent-seeking are deflecting the possibility of having a hostile work environment and social currency for appearing to be forward-looking. Over the years the United States has become quite a litigious society. Considering the increased sensitivity towards various minority groups, the opportunities for discrimination lawsuits have only become expanded. Providing a sizable incentive for those at the helm of the company to avoid any transgressions against their employees that could be viewed as discriminating in nature. By painting the opposite picture, even if this image is illusory, diverts, or weakens claims of discrimination. Not only does promoting diversity and inclusion have monetary incentives, but it also fosters a positive image for the company. It creates the facade of being open, progressive, modern, and may lead to the company to earn accolades for their culture. All of which will benefit the company and make the jobs of the CEO, CFO, etc. more secure. The reputation of the company for inclusive will attract talented young professionals that will only add value to the organization. One only needs to look at the example of Google to see how company image matters when it comes to acquiring skilled employees. Work culture almost operates as a form of non-monetary compensation. It is another variable that may sway top-notch young professionals towards one company versus another. Merely operating to the benefit of those in the top-tiers of management.

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Bootleggers and Baptists X: Marijuana and Taxes

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Presidential election years seem to be the Super bowl for ballot initiatives. The ballot questions typically presented in the midterm election aren’t exciting enough to stir any fervent enthusiasm. Then again, like with anything else, there are always exceptions!  Superficially, it appears as if activists and lobbyists save the real blockbuster ballot questions for Presidential election years. This perception could be entirely illusory. It looks like Arizona is going to attempt to legalize recreational Marijuana once again. The first go-around in 2016, under Proposition 205 failed by a slim margin. Leading some proponents of legalization to believe that the tides are changing in the Grand Canyon state.  The opinion polls are demonstrating the popular sentiment that the majority of Americans favor legalization. Now maybe the golden opportunity for Marijuana activists and consumers to direct their efforts towards advocating for Proposition 207, The Smart and Safe Act.

While Marijuana activists are hopeful that the bill will pass, lawmakers are more concerned with the consequences of the bill passing. Legalizing Cannabis presents the herculean task of establishing all the regulations governing recreational sales. Just looking at the number of regulations in states such as Massachusetts who already allow recreational sales, it becomes apparent that regulating Marijuana is far from a perfect science. Many of these rules imposed by state governments are nothing more than a compromise. The prospect of a complete laissez-faire Marijuana market is pure fantasy. Advocates of legalization need to provide something in the bill to appease those uncomfortable with the concept of a recreational Cannabis market. Many of these burdensome regulations aim to foster public safety and provide revenue to the state government. That being said one of the most notable concessions in this exchange is in the form of taxation. Whether it is pot, tobacco, alcohol, or even sugary sodas consumers gripe at the very thought of having to pay the premium due to the excise taxes imposed on their favorite vices.

Most consumers may find these taxes to be annoyances, they play a crucial role in the legalization of recreational marijuana. For those who are fearful of the externalities that society will bear due to the use of recreational  Cannabis. The taxes levied on marijuana sales can be earmarked and allocated to a state program for substance abuse treatment or increased funding for DUI patrols on the state highways. Operating as a form of vice-specific  Pigouvian taxation meant to offset any of the harms caused by legal Marijuana consumption. Tax revenue generated from recreational sales can also be utilized more flexibly. Not being relegated to compensating for the societal costs of Marijuana. The Smart and Safe Arizona Act plans to allocate fire departments, and the “highway user fund”. Demonstrating that tax money obtained through legal sales can be more broadly applied to regular state expenditures such as emergency services. marijuana tax revenue towards community colleges, police and

Does the question become in the states that have already legalized cannabis, have the excise taxes been effective in generating state revenue? The results have been somewhat mixed. On the whole, the economic benefit has been less than promising. For example, Colorado rakes in an estimated $250 million annually from Cannabis sales, however, that is less than 1% of the state’s total budget. It is hard to speculate whether this an indictment of the prospect of legalization or the excise taxes being too high. If the goal is to generate revenue it would be prudent to avoid making the taxes confiscatory. Otherwise, consumers will not purchase from the legal market when the transaction costs of patronizing the black market are low.  Effectively derailing one of the core objectives of the legalization movement, curtailing illicit sales. It is difficult to determine when taxes become too onerous in the eyes of the consumer. There are a lot of subjective factors that influence consumer sensitivity to price elasticity, which has been estimated to be between “-0.40 and -1.51%” in the illicit market. Having the largest impact on the purchasing behavior of moderate users more so than heavy and light users. However, parallels can be drawn between the taxation of marijuana and other legal vices such as tobacco and alcohol. New York has arguably had one of the highest tax rates for cigarettes in the country and simultaneously has a thriving illicit smuggling market. Resulting in “..30% to 45% of all cigarettes..” having been “… illegally smuggled across state borders”. Smuggling efforts to avoid excessive taxes are not limited to merely tobacco, but also alcohol. One sobering statistic (no pun intended) is that globally 20 % of all alcohol consumed is acquired through illegal sources.  The rate of direct taxation does not include the costs of regulatory compliance on the part of producers which is passed to the consumers in the retail price. Merely nothing more than another form of implied taxation.  This is a fact that regulators need to thoroughly contemplate when proposing a tax rate. Is the purpose of the tax to generate revenue or deter people from consuming the product?

Superficially, the tax has purposed for the Smart and Safe Arizona Act mirrors the present excise tax on alcohol and tobacco. The proposal is aiming for a 16 % excise tax, which has done little to hamper alcohol consumption in Arizona. Potentially the tax as purposed may help in assisting the state drawn in more revenue to fill its coffers. It is important to try to have realistic expectations of the impact of legalization on tax revenue. It can be stated with confidence that if the taxes are excessive, it will only benefit the black market. Regardless of what is being taxed if it is exorbitant people will find ways to circumvent the tax.  If we consider the inferences implied in the model of a Laffer Curve heavy taxation reduces tax revenue. Creating something of a paradox. When the tax burden is high, the productive output will decrease because the incentive to produce is greatly reduced. Hypothetically this could lead to not only diminished output but also reductions in investments.  

                                                    (Image from the Foundation For Economic Education)

Needless to say, if the transaction cost of avoiding a tax is low, determining the tax rate is a precarious balancing act. It could be safe to say that there are proponents of taxing marijuana at a high rate, but for various reasons. Once again, we encounter a Bootleggers and Baptists coalition. In this scenario, the Baptists are the individual who naively believes that a higher tax rate will automatically equal more money for government services. In a static model or a perfect world, this may be the case. Such an assumption ignores human nature, which has the proclivity to exploit any possible loopholes. Those in the coalition possessing the naivete of a moral do-gooder exhibited the laudable goal of wanting to collect money to improve infrastructure and services.  The Bootleggers are the individuals supporting a high tax rate and fully understanding it will prevent people from buying legal Marijuana. There are two subgroups among the Bootleggers. There are two-dimensional and obvious beneficiaries who sell or distribute marijuana on the black market. Their incentives model is transparent and due to the illegality of their businesses, they operate as silent beneficiaries. I highly doubt even the Mexican Drug cartels could get away with forming a lobbying organization in the United States. Despite their political clout and economic power just south of the border.

The second subject of Bootleggers is not quite so obvious. They are individuals who oppose recreational marijuana use. They are fully hopeful that high taxes will serve a confiscatory function. Due to popular sentiment growing increasingly in favor of legalization, the fight to keep pot illegal is becoming significantly more difficult. The next best thing you can do is influence consumer behavior by making it prohibitively more expensive to purchase the intoxicant. This perspective could be a naïve one if the individual actor does not account for the black market. Those in favor may also want marijuana sellers and users to experience the legal consequence of doing business on the black market. Even if the fallout is less severe than it was during prohibition. The self-serving motive behind this logic stems from the prejudice the members of the subgroup hold against Marijuana consumption. Whether justified or unreasonable this would be the impetus. It could be feasible that such actors are dual-role agents.  Not only do they personally dislike Marijuana, but they also truly believe it is a dangerous plant and the public needs to be shielded from the adverse consequences of its consumption.

My Response to Bruce Yandle

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Dr. Yandle,

 

I greatly appreciate your quick reply to my previous e-mail.  I apologize for taking so long to get back to you. As an amateur blogger, I will most likely continue to explore novel applications of the B&B dynamic, both in regulation and in the mundane day to day examples. Not only will this provide me with an endless array of topics to write about, but it will also increase my understand of the B &B theory. I have to say there is something about framing behavior in the Bootleggers and Baptists context that never gets stagnant.  It will make writing about regulation to be dynamic for years to come.

 

Above all I appreciate your encouragement, I will proceed to navigate my way through the murky and convoluted world of regulation. Fully acknowledging that most regulation (if any) does not benefit the general public. Rather, it serves as a form of rent-seeking that is barely noticed by the average voter/ taxpayer due to the costs being distributed through higher consumer prices or taxes. Before familiarizing myself with Public Choice Theory I was already skeptical of regulation. Through theories like the Bootleggers and Baptists dynamic, I now have better precepts for refuting the validity of ineffective and self-serving regulations.

 

Again, Dr. Yandle, I appreciate you taking the time to respond to me. I will continue to expand my understanding of the political decision-making process. An election year is a prime time to do so! There will be a multitude of living examples of Public Choice concepts coming to life.  Animated by the all too human and fallible nature of politicians and interest groups.  I just wish I had been aware of this economic school of thought back in 2016. Considering the impending cataclysm that many pundits were speculating in the wake of the Trump Presidency. Which I can only see as being a form of rent-seeking either from the standpoint of increasing viewership ratings or maintaining the credibility of political factions that the mass media finds to be more favorable. Then again, Trump is awful on trade. However, I am still waiting for the apocalyptic dystopian future many of our friends in the media predicted nearly four years ago. It would be nice to have a more economically laissez-faire president that holds individual rights in high esteem. However, due to invested interests, current public opinion, and the nature of American politics such wishes seem likely a lofty pipedream.

 

P.S.: I also enjoyed your essay The Next Fifty Years: Optimistic or Pessimistic?, published in The Independent Review. Working from home has eliminated my 45-minute commute back and forth from work. Leaving me with more time for reading and research, last quarter I subscribed to the print edition of  TIR. That was a novel and interesting study you conducted. I am not sure if I have the faith to say the next fifty-years will be promising. I certainly believe that material comfort and convenience will only continue to exponentially improve with innovation. In terms of moral development, it is difficult to say. While technology has provided us with a lot of positive developments it has also been correlated with social decay. A steady decline in civility and decorum. Then again, correlation does not necessarily equal causation, having the third-variable problem rearing its ugly head. I could potentially be unfairly singling out the technology. The COVID-19 epidemic seems to have only compounded this issue as people are staying home and becoming more atomized. Don’t get me wrong, as a Classical Liberal/ Libertarian  I am all for individual rights. However, the paradox becomes as people become more individualistic they drift away from the private institutions that previously held communities together (such as church, I am personally not religious, but I have nothing against religious observance). The surrogate that fills this vacuum almost always ends up being government.  As we become more individualistic our affairs end up becoming more collectivistic. I want to remain hopeful that the human species flourishes not only materially but morally and socially. As a society, we need to figure out how to reconnect again.

 

Thank you again for your time Dr. Yandle,

 

Peter C. Clark.

 

 

Bruce Yandle’s Reply

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Yesterday, I received a response from the legendary Public Choice scholar, Dr. Bruce Yandle. There were three main takeaways from his response to my e-mail. Even through e-mail communications, Dr. Yandle exhibits all of the decorum and humility you would expect from a southern gentleman. It truly is a privilege as a nonacademic to be able to have such an exchange with one of my intellectual heroes.

 

 

Takeaway #1- He was Humbled by the Fact that His Theory Was So Influential Upon My Thinking

 

I was slightly surprised that he was humbled by the impact his theory has had on my thinking. He was particularly humbled by the fact that I find his theory to be a powerful means for explaining the world. I could not agree more. The Bootleggers and Baptists’ paradigm is not relegated purely to the sphere of politics and regulation. As he mentioned in his response you start to notice examples everywhere once you are familiar with the concept. That speaks volumes of the conceptual transcendents of the theory. Making all the more brilliant observations. Above all, I am glad that Dr. Yandle was able to see that his theory has influenced others. That it is a “living idea” not just a sterile postulation that is confined to dusty economic textbooks. But a profound theory that explains the world how it is. Not imposing value judgments of what should be.

 

It should also be noted that he did see some sound reasoning in equating  Bootleggers and Baptists to the Id and Superego. He also alluded to Adam Smith’s Theory of Moral Sentiment, citing that both roles also paralleled Smith’s” the man within the breast” and the “impartial spectator”.

 

 

Takeaway #2- Dr. Yandle conceptually finds the prospect of a Dual-Role Actor to be valid.

 

Dr. Yandle stated that he like the term “Dual-Role Actor” and agrees with it as a premise. Using the example of how Donald Trump as addressed immigration policy for how many times politicians fall into this category. Utilizing arguments around reducing crime from the standpoint of the moral high road. Then in the next breathe stressing the point of how immigrants take jobs from American citizens. Simultaneously appeasing the Bootleggers and Baptists  Making Trump’s clumsy balancing act a pure example of a “Dual-Actor” paradigm. He assures me that I am correct in my assumption that the B&B dynamic does not explain the origin of these coalitions, but rather the details of the occurrence.

 

Takeaway #3- Keep Writing and Thinking About Regulation.

 

Dr. Yandle also encouraged me by stating “I wish you well and hope that you will keep thinking and writing about regulation”. That is a suggestion I will certainly follow!

Letter to Bruce Yandle: Dual Role Actor Dynamic: Bootleggers and Baptists

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Dear Dr. Yandle,

 

Throughout the pandemic, I have been reading more journal articles on Public Choice Theory.  I would have to say that now I am a convert. Previously being a layperson who was fond of the Austrian School. While there are many captivating concepts expressed in the Public Choice literature, the concept of Bootleggers and Baptists has so far been my favorite. In my opinion, the depth of your observations in this conceptualization extends beyond oddball coalitions and the transactional aspects of regulation. The Bootlegger and Baptists dynamic provides us with candid commentary on the nature of regulation.  Raising the important question of who stands to benefit from this law passing? Making the moral considerations for advocacy of specific law questionable. Does the benefit secured by implementing more safety regulations outweigh the decrease in market competition? As you have mentioned in previous interviews and podcasts, many of these costly measures end up acting as means for established producers to gain greater market share while circumventing anti-trust laws. The smaller businesses simply cannot afford to comply with the new and onerous requirements.

 

The insights into the self-serving quiddity of regulation aside, conceptually the Bootleggers and Baptists dynamic has been proven to be very versatile. It can be applied to just about any policy position and is applicable even outside the realm of political decision-making. I have seen countless examples of unlikely bedfellows teaming for a shared objective at work. The possibilities for application are seemingly endless and can even be applied to traditionally apolitical institutions.

 

It is the very versatility of the Bootleggers and Baptists concept that entices me to come up with novel applications of the theory. Leading me to the question why cannot the Bootlegger and Baptist be the same individual or group? An actor can possess multiple motives for the same action, the same could be true for advocacy of various regulations.  An individual actor or a group of actors could have a sincere moral concern but also simultaneously stand to gain from the regulation. This is not to say that the ratio of moral concern and self-interest is equal. For the individual actor or group self-interest or moral concern may take primacy over the other set of incentives and motives. If the individual or group provides a moral argument and is concurrently a silent beneficiary, they are both a Bootlegger and a Baptist. Regardless of the degree to which they qualify for either category.

 

I adorn this potentially novel observation with the title of a “Dual-Role Actor Dynamic”. Whether we examine the advocacy of a single economic agent or the collective action of a group there is the potential of Dual-Role dynamic. Even getting as granular as the level of an individual actor there is the potential for alignment of incentives and motives. In a sense, the individual is combining their self-interest and moral concerns into one action. Expressing an internal agreement between their moral convictions and self-interest. The best analogy that can be made is if the psychoanalytical stratifications of consciousness, the ID and Superego,  wherein complete unison. The proverbial devil and angel on our shoulders decided to shake hands signifying a truce. All because our selfish and moral motives are in agreement. In a group setting, the collective action is merely an aggregate of each group member’s own moralistic and selfish inclinations.

 

Recently, I believe to have found a real-life example of a “Dual-Role Actor Dynamic” in the domain of ballot access laws. After reviewing a few legal papers detailing the issue, I began to realize many of the moral arguments for stringent requirements also were silent beneficiaries. In theory, moral arguments such as shielding voters from frivolous candidacies, confusion, and political instability may be sincere. However, they are being made almost entirely by legislators, bureaucrats, and public officials affiliated with one of the major parties in the United States. Their moral concerns may be merely a thinly veiled-cloak to obscure blatant self-interest. Due to my inability to test the veracity of the sincerity of the invested interests advocating for stricter laws, I will have to take their claims at face value. While these invested interests purportedly feel a duty to protect the voter and maintain the integrity of democracy they still stand to gain. By imposing heavier burdens upon third-party candidates it redirects votes that would go to minor party candidates towards the two major parties. Effectively leaving the political duopoly in the United States intact. Making these advocates potentially Dual-Role Actors.

 

Dr. Yandle, I am aware you are very busy and most likely have a lot of other projects in the works. That being said, I appreciate you taking the time to read my letter. I understand that I am a far cry from a professional economist, however, any constructive feedback would be greatly appreciated. Even if my expansion of the Bootleggers and Baptists dynamic is conceptually flawed it was still an engaging intellectual exercise to grapple with this idea conceptually.

 

 

Thank you again, professor, for your innovative contribution to political economy,

 

Sincerely,

 

Peter C. Clark.

 

 

Bootleggers and Baptists IX: Ballot Access Laws- An Example of A Dual Role Actor

 

 

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Introduction:

 

Many Americans have expressed their displeasure with our current two-party political system. Back in 2016, opinion polls suggested that the majority of young voters were unhappy with the established political parties. Some experts even suggest that the days of the Republican-Democratic duopoly may be numbered. Such conjecture ignores the incentives of the self-interest legislators to maintain the status quo. Legislators are generally affiliated with one of the major parties that monopolize American politics. By any realistic estimate, the Republican-Democrat paradigm in the U.S. is here to stay.

 

The irony is that prior to the 1930s third-party candidacies were quite common.  The Republican party started as a minor party focused on the abolition movement of the 19th century. In the 1930’s the trepidation surrounding the potential growth of the Communist party in the United States laid down the substrate for stricter ballot access laws. Per the research of the political scientist, Richard Winger, the requisites to appear on the ballot have only increased over the years. Typically presenting an asymmetrical burden upon independents and third-party candidates. Unfortunately, previous case precedence has shown that the Supreme court seldom takes these insurmountable barriers to entry seriously. Presenting notable threats to the First and Fourteenth Amendment rights of minor party candidates in elections. The courts typically skirt over these considerations through loose technicalities making it impossible for the underdog to have a favorable ruling. This is particularly alarming when presented with the fact that ballot access laws are typically utilized to exert political control and maintaining dominance.

 

There are several core arguments for maintaining the status quo of the two-party system. One of the standard points is a state interest to look out for the best interests of the voters. By eliminating voter confusion, ballot overcrowding, and eliminating frivolous campaigns. While many proponents of stricter ballot access requirements provide lips service to the concern of ballot overcrowding it has never been a serious issue in American elections. The other category of concern expressed by ballot access law advocates is that of keeping political stability.  Although per attorney Oliver Hall of the Center for Competitive Democracy there is little evidence to suggest that the absence of stringent requirements would result in instability.

 

Bootleggers and Baptists:

 

Bruce Yandle’s examination of coalition-building in his conceptualization of Bootleggers and Baptists tends to have two acting parties. The Bootleggers that stand to benefit from the policy position, action, or regulation. On the other side of the alliance are the Baptists who provide the moral justification for the suggested course of action. The Baptists provide the moral smoke-screen that enables the Bootleggers to obscure their self-interested motives.

 

Ballot access laws like most policies have their moral proponents and silent beneficiaries. However, it can be argued that the instance of American ballot access laws the moral advocates, and the beneficiaries are the same. Presenting a scenario of a “dual-role” actor coalition advocating for these policies. Dual-role actor coalitions can be found in a wide array of social organizations the actions of a solitary economic agent to the aggregated motives of a group. The event of a dual-role actor coalition is more than just a coincidental alignment of motives within a single group or person. It is the unification of self-interest and moral goals. If an individual can hold multiple motives simultaneously, there is the possibility of an agent to be both a Bootlegger and a Baptist. Even if the moral element is being subverted and the self-interest is taking primacy in the individual’s advocacy. Moral concerns and the allure of potential benefits may not necessarily be equal in the decision-making process. If an actor or group provides a moral argument for policy and stands to benefit, then they are a dual-role actor.

 

Ballot access laws exemplify the previously described dynamic of coalition building.  Most legislators fall into either one of the dominant camps in the bipartisan divide. Making their self-interest quite salient. Placing a great burden on third-parties will help retain the power of Democrats and Republicans in American political life. Especially when the Supreme court has marginalized the Constitutional concerns of ballot access laws for third-party candidates. Reinforcing the institutional barriers imposed by the legislator. The same self-interested lawmakers also voice concern over political stability,  voter confusion, and weeding out frivolously campaigns. These objectives may or may not be laudable, but are moralistic in tone making them the rhetoric of a Baptist.

 

The legislator making itself the white knight that saves the common voter from confusion, joke candidates, ballot overcrowding, and political chaos is unnecessary.  Many of these issues can be remedied at the ballot box rather than through passing bills. Often pro-market economists will expound upon the concept of consumer sovereignty.  I would like to suggest that matters of voting are best resolved by voter sovereignty.  Meaning that voters and the electoral college will ultimately determine whether it is permissible for satirical political parties to be on the ballot.  There isn’t an ever-present moral duty to shield society from such issues.  Weak third-parties rise and fall on their own merits.

The notion of this creating instability is laughable at best. Third-parties have next to no electoral representation in the United States. The platitude of voting third-party squandering votes is so pervasive throughout American society, the oddball candidate doesn’t stand a chance. Political candidacies mirror advertising campaigns. There are voter demographics, candidate/party branding, and behind the scenes marketing. As with any consumer product, brand recognition is important. Most of the ideologies supported by minor parties tend to be conceptually foreign to the average voter. Making the probability that even in the absence of strict ballot access laws the two major parties would still be in power.

Bootleggers & Baptists VIII: Can The Bootlegger and The Baptist Be The Same Person: A Drive-Thru Revelation

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This morning I felt particularly stir crazy from being cooped up in the house, so I decided to go to pick up some coffee. When I finally reached the drive-thru window, I was met by one of the employees. He began to detail to me how several local restaurants had employees who had contracted COVID-19. Even blatantly pointing out the window to the adjacent establishment. Claiming that the franchisee owner was going so far to cover it up to prevent a loss in business.  Naturally, I was initially shocked by this individual’s candor. However, he made one fatal error which led me to start questioning the integrity of his accusations. He revealed the fact that he was a former employee of the adjacent building.  Informing me that he knew both the owner and the manager well. It doesn’t take a rocket scientist to understand why this individual would have the incentives to levy such claims against the other business. For anyone out there that has been fired or layoff, you aren’t going to have too many kind words for the former employer that released you.

 

The employee I was conversing with stated he obtained this information from speaking with the present manager of the neighboring eatery. As implausible it may seem for the manager to disclose such information to an employee of a competitor will have to be dispensed with. It degenerates into nothing more than he said/ she said scenario. There isn’t enough evidence on either side to make a definite claim. So I will be charitable and give him the benefit of the doubt. Let’s assume that his statement about the other establishment was true. There may have been multiple motives for him informing me of this development in the local culinary scene. He may have felt some unbridled compulsion to inform of the potential hazard of dining at the other restaurant.  He may have had personal moral code that would not allow him to withhold such information from innocent parties. Such as adhering to Kantian morality or having strong religious beliefs. Perhaps he is an admirer of George Washington. The conviction to want to shield innocent parties from exposure to COVID-19 is certainly a laudable objective. I would perceive this as the behavior of a Baptist.

 

Assuming the information was true and he possesses pure intentions for proliferating this news, he can be considered a Baptist. However, it is also possible for him to simultaneously be the Bootlegger as well? I would argue yes. As individuals, we can have multiple motives for engaging in an action. It isn’t outlandish to assume that he had subordinate motives for detailing to me that the neighboring establishment’s staff had tested positive for COVID-19. How does he benefit from disclosing knowledge to me? What are his incentives for doing so?

 

There are two potential self-seeking motives for his actions. The first reason would be attempting to enact vengeance on a former employer. Doing so by creating a rumor that damages their credibility in the community.  If the purported facts are completely fictitious the Bootleggers and Baptists dynamic dissolves. Any pure intention is no longer present. The second reason for his shocking candor that sways into the territory of defamation would be increased job security. The pandemic has likely chewed into the profits of his current employer. To avoid getting laid off for budgetary reasons, he is attempting to divert business to his restaurant. Done out of self-interest and exhibiting behavior that is in line with that of a bootlegger.

 

Bruce Yandle’s concept of Bootleggers and Baptists was intended to demonstrate how unlikely coalitions are formed in the political arena. Considering we as humans can have multiple reasons for advocating for a policy or engaging in various forms of rent-seeking, it is possible for an act to severe in both roles. Providing they are being honest about their moralistic motives, but also stand to benefit from their attempt to influence public opinion.  For instance, I could advocate for a ban on smoking in public parks. Truly feel that I am attempting to save others from the health effects of secondhand smoke. At the same time also be advocating for a smoking ban because I dislike cigarette smoke.  The roles of Bootleggers and Baptists are not always mutually exclusive.

 

It is analogous to the ID and Superego allying. Both are satisfied with the cause and both are the deep-rooted psychoanalytical manifestations of the Baptists and the Bootlegger. When an individual strikes a balance between their hyper-moralistic inclinations and darker impulses they can assume both roles. When avarice and morality align themselves in the intentions of one person this phenomenon becomes possible. Yes, this application of Yandle’s trope does exercise a bit of artistic license. However, Yandle never said that individuals couldn’t form coalitions within themselves.  Doing so by combining various rationals for advocacy and then vocalizing them. Typically under the guise of concern for the moral imperative of the situation.

Bootleggers & Baptists Part VI: Unlikely Foes of Universal Medicine

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Introduction:

 

I have just recently started reading Matthew Miller’s book The 2% SolutionThe book aims to provide solutions to social problems that both Democrats and Republicans could compromise on. As Miller put it “using conservative means for liberal social ends”. The work in this book is slightly dated due to being published in 2003. Despite the references to the bygone era of the Bush administration many of the problems detailed today still have not been solved. Reforms in the arenas of health care and education are to this day hotly contested issues.  Maybe if more people had read this modern political treatise written by a self-proclaimed “radical centrist” perhaps we would have more clarity on these issues today? Then again, this might be wishful thinking. It is highly likely that the apparatus of the state is too marred with vested interests to adequately administer educational and medical services. Regardless, it is a thought-provoking read.

I would have to agree with The Hill’s 2003 review of the book. One of the most notable chapters so far was Chapter 5: Universal  Coverage, American Style. Why? Because it details a rare instance of bipartisan compromise on the emotionally charged topic of healthcare. The chapter focuses on a discussion that Miller had with than members of the Ways and Means Committee Jim McCrery (R) and Jim Mc Dermott (D) back in the early 2000s. Diving into intricacies such as the utilization of vouchers, tax write-offs, and even a cash-out system for employees who receive insurance from a private enterprise (p.104).  Even entertaining the notion of allowing participants to choose between several state-approved health insurance carriers with their allocation of funds allocated for healthcare (p. 98-99). Kind of riff on the School Choice voucher system, only for health care.

 

These intriguing suggestions are not what I found to be the most surprising. Nor was it the civil and serious tone of the discourse. It was a comment made by McCrery about potential opposition to this proposal:

” The Union boss will not like it because we are essentially taking away one of the goodies that they claim to provide to their members” (p.107).

 

Pardon my ignorance, I wasn’t aware that the traditionally Democratic-leaning labor unions opposed government-funded healthcare! The majority of polled Democratic voters tend to perceive the decline in union membership as being negative. It is interesting to see that certain segments of the labor movement are not in lock-step with the DNC’s platform. I was thinking that the democratic-union coalition was impenetrable. However, this counter-initiative political position by unions is quite rational.  One of the largest labor unions in the state of Nevada is the Culinary Workers Union of Nevada, UNITE HERE Local 226. Many of the members present have excellent healthcare. Fear that if they were mandated to take a government healthcare plan they would experience a decline in the quality of care.  Putting aside my issues with the labor movement, I have to admit that is a valid concern. Union members even heckled Sen. Sanders ( a labor-friendly politician) demonstrating their concern with a universal system.

 

Bootleggers: 

 

Labor Unions that oppose government health care (E.g. Local 226 of Nevada)

 

Baptists: 

Organizations  (coalitions, think tanks) that advocate for fiscal responsibility ( E.g. National Taxpayers Union)

 

The Unlikely Bedfellows:

 

The concept of the Bootleggers and Baptists troupe is derived from a 1983 paper written by economist Bruce Yandle. Yandle observed that often you have seemingly opposing interests coming together on a certain issue. One group providing a “moral” justification for their policy position and the other side is mainly concerned with self-interest. The National Taxpayer’s Union is advocates of limited government and fiscal conservatism. They have been longstanding opponents of any kind of government involvement in health care. The organization even is willing to praise incremental alterations to the healthcare system to veer towards a more free-market approach. Typically all in the name of consumer choice and fiscal virtue signaling. Then again, if you were to look at America’s present deficit, NTU certainly has a point. The fact that they assume the moral highroad of proper economic stewardship, the organization falls into the category of the Baptists.

 

In terms of addressing the labor unions on this topic, it prudent not to paint with a broad brush. Not all unions oppose universal medicine. Particularly nursing unions and teacher’s unions generally support universal medicine initiatives. For the unions that do not endorse such measures, their rationale is quite salient. They are concerned about receiving healthcare that is inferior to their current plan. This is a valid concern. One that many individuals employed in private industries shares in common when faced with the prospect of handing over this service to the state. There is good reason to suspect that there is potential for the level of care to decline. There are countless examples of government mismanaging healthcare. For example, the Phoenix VA hospital controversy. Citing such examples is far from a conclusive indictment, but enough to raise reasonable concerns. Labeling union workshops such as local 226 the proverbial “bootleggers” is not a value judgment.  Rather, they fall into this category due to their justification being based on the benefit of the union members. Versus striding for a moralistic argument, like  NTU.

 

The irony is certainly rich. It is mind-boggling that unions and the conservative National Taxpayers Union could ever come together on an issue. Health care happens to be the quirky impetus for this usual alignment of political interests.

 

 

 

 

 

 

 

 

 

 

 

Bootleggers & Baptists- Part I- Gun Control Act of 1968

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Introduction:

 

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) [1]. The true benefit of such restrictions was the reduction in competition (Yandle, 1983, p.2) [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 [3]. 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) [4]. 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 [5]. 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 [6]. Some commentators have even hinted towards gun control measures in the 1960’s being racial bias [7]. 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) [8]. 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) [12]. 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) [9]. Heavier licensing fees were directed at mail-order gun vendors (Newhard, 2015, P.2) [10]. 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)[11]. 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) [13].

 

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) [14]. 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.