Prisoner’s Dilemmas XXI: (Part A): The Fiasco on the Vineyard

Photo by PhotoMIX Company on Pexels.com

The Martha’s Vineyard Immigrant debacle encapsulates the hideous nature of contemporary politics. It is a saga that depicts partisanship, hypocrisy, and lack of concern for effective policy. Both conservatives and the quixotic-minded and progressive residents of Martha’s Vineyard are responsible for this situation.

The controversy began when Republican Governor Ron DeSantis (using tax dollarsflew 50 migrants to the left-leaning tourist island of Martha’s Vineyard. The coordinator of the island’s homeless shelter has publicly expressed that their facility does not have the resources to provide services for the new arrivals. Even stating that the influx of migrants will exacerbate the current housing crisis. Economist Tyler Cowen addresses the scarcity of affordable housing on the island in his latest OP-ED piece:

“…Real estate is very expensive. And the island is strictly zoned, making it hard to build a lot of dense, low-cost housing…

Wages there are below the Massachusetts average, and living expenses are prohibitively expensive. Those realities stem from decisions about land use made by the island’s population. (I am OK with such community-supported zoning restrictions when they apply to very limited local areas, such as Martha’s Vineyard, and there are many options to look elsewhere. The problem arises when they start infesting a larger part of the U.S., as they have.)..”

Stringent zoning ordinances and below-average wages are a recipe for a housing crisis. In 2012, the average home was valued at “..$535,000 but average Islander could afford only $310,000..”.The cost of housing is prohibitive even for U.S. citizens residing on the island, never mind impoverished immigrants looking for better opportunities.

It is difficult to refute that this situation fits within the definition of a Prisoner’s Dilemma because two defecting coalitions made the scenario worse by not compromising. If anything, this occurrence might be a multifaceted Prisoner’s Dilemma; DeSantis owning the Libs isn’t the only game contributing to Martha’s Vineyard fiasco. The progressive islanders have conflicting desires politically, they effectively have had an intra-temporal Prisoner’s Dilemma with themselves. This is where Tyler Cowen’s observation, but the community’s hypocrisy regarding income inequality, comes into play. Because the island’s residents vocally support progressive policies in the name of economic justice. But concurrently, favor zoning ordinances that restrict the supply of homes and artificially inflate the cost of housing.

The model for Validating the Intra-institutional Prisoner’s Dilemma

Applying the model used by Nordstrom to validate Prisoner’s Dilemmas:

Condition 1:

The temptation to Defect (2= Signifies implementing both favorable zoning and left-wing economic policies)> Reward for Cooperation (1= The island recognizes the opportunity cost and amends its zoning laws; only one of the preferred policies is implemented)> Punishment For Defection (0= The majority of residents do not see that both policies cancel each other out)> Sucker’s Payoff (-1= The costs of creating political division by not favoring both varieties of policies).

T(2)> R(1)> P(0)> S(-1).

Condition 2:

(T+S)/2<R

(2+-1)/2 <1 ; (1)/2<1; .5 < 1

Even though the Fiasco on The Vineyard does numerically match the two conditions for a prisoner’s dilemma, this application of the PD incentives dynamic was creative. Game Theory purists might claim that it is erroneous to apply this lens so abstractly. However, the attributes of this intra-coalitional game do look like a cooperative game superficially. But the fact that local government and the constituents are attempting to balance conflicting interests. This situation may even validate Peter Clark’s Paradox of Implicit Logrolling (2021); however, there may be other factors at play. Per the public choice literature on rational ignorance, voters still select policies and elected officials even though they face severe information asymmetries. 

The DeSantis versus Martha’s Vineyard game will be reviewed in part B.

Bootleggers & Baptist- LIX: California Fast-Food Bill (Did Someone Say Automation?).

Photo by RODNAE Productions on Pexels.com

The advocates of worker rights have always been in a precarious position; reforms often do not align with the interests of employers. This is an enduring pattern that supporters of California Assembly Bill 275 need to consider. Most initiatives for economic equality tend to be more moralistic than practical and do not account for how firms will respond to such measures. Depending on how establishments defined in the bill as Fast-Food Restaurants (only the larger companies with 100 + stores) adjust to the requirements set by AB 275.

The law aims to establish a governor-appointed council (comprised of workers, union representatives, etc.) that reviews and amends workplace standards and wages. Even boasting a requirement where any measures would need signatures from 10,000  (consent of the governed?) fast food workers employed in California to move forward. On the surface, this new bill sounds like it will provide reforms that will improve the lives of millions of workers struggling to make ends meet on a low salary. However, the lofty aspirations of AB 275 may have the exact opposite effect.

When analyzed from the framework of Bruce Yandle’s Bootleggers & Baptists (1983) theory of coalitions, it is easy to see the fast-food workers as the proverbial Bootleggers. But such an assumption is flat-out erroneous; the hourly employees at the local Jack In The Box are the ones who will pay the price for this new labor reform.

Prima Facie, it sounds like the hourly fast-food employees of California make out like bandits. The prospect of escaping penury wages and making $22/hour. Then there is the bonus of having a voice in shaping the regulation that will impact your work life. These benefits will be short-lived; because the titans of the drive-thru will eventually respond to the monetary and transaction costs of fulfilling these new legal mandates. Few (if any) companies in any sector of business can whether a significant increase in labor costs ( there is a potential for labor costs to increase by 60 %). Depending on how large the increase in worker compensation becomes, menu prices stand to increase by 22 %. (p.7). Some may speculate that firms such as Mcdonald’s would benefit from passing along labor costs to the consumers at higher prices; there is a strong likelihood that patrons may just opt for cheaper or higher quality alternatives. There is also an increase in transaction costs because of the additional layers of complexity added to the relations between the management of franchise owners and hourly employees. AB 275 may discourage smaller regional fast-casual restaurants from expanding to avoid the onerous conditions of this new law.

Ultimately, our Bootleggers, the established fast-food eateries will gain from decreased labor costs. How? These firms will decide to automate operations and benefit from long terms savings in not having to pay salaries and benefits or cope with the loss in productivity from theft or employee absence. Only increasing the minimum wage is enough to drive many firms to reduce costs. Creating a price floor is a price control that causes disruption throughout the market. Because businesses will attempt to avoid the artificial increase in labor costs. For the workers that are lucky enough to keep their jobs, certain nonmonetary forms of compensation disappear (p.10-11); no more free coffee in the breakroom.

The Billionaire and The Average Voter: Moral Equals

Photo by Edmond Dantu00e8s on Pexels.com

It is easy to forget that not everyone shares similar needs and desires as you. This is a fact that is validated by contemporary public policy debates. All too often, voters and participants in the political process conflate (either inadvertently or strategically) their self-interest with the common good. Public interest or social welfare is an abstract metric open to interpretation; the terms operate as a form of persuasion than a concrete standard (p.77). For some, it is difficult to think that someone would not want free college or a single-payer healthcare system; this stems from an individual being too fixated on their values and policy preferences.

If it is likely that every political actor (including the average voter) acts in their self-interest, then why is it perceived to be immoral when a wealthy voter does versus an impoverished or middle-class voter does so? If the Republican and Democratic parties are moral equivalents, it is not outrageous to surmise that the poor person voting for “free” healthcare and the billionaire that votes for tax cuts are ethical equals. Neither individual is genuinely concerned by the potential externalities their favored policies impose on the rest of society. They only want initiatives that work in their self-interest. The concerns for the feasibility of these programs and processes are not even the equation for these people!

Admittedly, this is a heterodox position; most people would derisively dismiss it. The underlying assumption is that wealthy people do not need more money or institutional advantages. Most refutations would cite the imperative of actual need, especially if people lack necessities. There is some veracity to this argument, but the United States is not on par with the plight of a third-world country. Only 10.5 percent of households in 2020 suffered from “food insecurity”; in 2021, the United States outranked Germany in food security. Overall, impoverished people in the United States are better off than their counterparts abroad. While the wealthy may have market power and the connections to exert their political influence, the stakes for the average person in the US are often embellished. 

The belief that wealth inequality is the only determining factor in assessing the morality of voters acting in their self-interest is a fallacy. This suggests that the ethical responsibility for advocating and selecting bad policies (at the referendum level) is only subject to the size of a voter’s bank account. While a single vote is inconsequential in an election, a myriad of like-minded citizens voting in unison is a formidable coalition. Should these individuals be excused for electing representatives and choosing government programs that bankrupt this country or get us tangled in another foreign war? It would be reasonable to suggest no. Ultimately, neither the billionaire nor the average citizen truly cares about what is best for the country, only what benefits their interest. In the consumer market, this is not an issue, as acting in your interest does not require a redistribution of resources. In contrast, the same cannot be said about the political marketplace. 

Terrorism as a Factor of Production in a Coup

Photo by ali Shot80 on Pexels.com

The subtle differences between various forms of political violence makes it easy to confuse and conflate these categories. The Politics of Violence: Revolution in the Modern World (1968), cites Brian Crozier  as asserting that “… terrorism is a weapon of the weak..” (p.33). There may be veracity to this statement since creating an atmosphere of fear and unrest requires fewer resources than an actual coup d’état. A complete government takeover is likely to fail (p.82); due to onerous coordination costs. However, is it reasonable to separate terror from a coup? Temporally, terrorism campaigns could be an antecedent to a full-on takeover by an aspiring political faction.

It is feasible to see terrorism as a higher order good in the political entrepreneurship (p.143) of a coup d’état. Terror alone will not provide a subversive faction with global domination. However, “… countries may be more vulnerable to coups if they have weak political institutions and lack informal institutions that could support resistance against a regime that itself came to power by staging a coup..” (p.5). Terrorist tactics could weaken faith in the existing regime and even persuade the citizenry to support the more capable insurgent faction.

Much of this is subject to institutional scale; utilizing terrorism to cajole a constituency in a tiny banana republic to abandon the current regime is far easier than forming a global caliphate. The topic of scale becomes pronounced when we consider the costs of communication, organization, and reaching consensus on the direction of the political movement. In terms of networking, the costs of striking consensus increase with the size of the take over/ terror plot; as participating actors not only have to consent to the terms of the political action but also contend with “..local power struggles..” (p.621). Reasonably, if terrorism is fraught with organizational costs, a government takeover is much more costly. Although terrorism by design, aims to wear down the enemy (p. 20), it is not farfetched to assume that it could be a long-term strategy for effectively implementing an extralegal regime change Especially, when Palestinians have used terror tactics to advance their aspirations in the territorial expansion (p.32). It would not be outlandish to extrapolate this phenomenon to government takeovers.

If the dissenting organization is to use terrorism as an effective implement in staging a regime overthrow, the coalition needs to be successful. In the event of foiled terror plots, the group losses support among would-be citizens (p.9). Whether it is a legitimate political campaign, an uprising, or a marketing campaign for a consumer product, bad publicity stalls success. Much how recalls have a deleterious effect on the success of companies producing consumer products, failure on the part of terrorists has a similar effect. Reducing the perception of legitimacy and political clout, making it more difficult for citizens to accept the governance of the new regime.

The Third Condition For Log-Rolling to Occur

Photo by Sora Shimazaki on Pexels.com

In a recent blog post, professor Bryan Caplan suggests that bipartisan log-rolling (vote trading) is frequently untenable on wedge issues. Since there is a high degree of polarization in the climate of American politics, winning on contentious political topics that have clear ideological divisions (e.g. abortion and gun control is a zero-sum exchange. Not towing the party line of these policies is tantamount to political suicide for elected officials. Dr. Caplan does provide two conditions under which log-rolling is likely to occur:

“….First, when the two sides, protestations notwithstanding, share similar principles and don’t disagree very much. Like the budget. Or any ultra-boring issue, like fisheries or snow removal. This is what most democratic log-rolling comes down to.

Second, to avert large, sudden deteriorations. The polity will forgive you for passing up endless opportunities to make the country richer or safer. But if life quickly gets much worse, even the most silver-tongued demagogues struggle to keep holding the reins of state…”

Professor Caplan is a very astute and innovative Public Choice scholar, but he ignores a potential third condition under which vote trading may transpire; intrapersonal vote exchange. This example of vote trading is a form of implicit log-rolling (p.101), where policies are entrenched in a specific political party’s platform. By voting for a candidate affiliated with a coalition, the voter must accept all of the planks in the campaign platform, as we cannot cherry-pick the policies an individual candidate or party advocates.

 Because of this, we must engage in some degree of policy preference ranking. Potentially, engendering an intrapersonal collective action problem, if a voter favors gun rights ( a conservative position) and open-borders immigration ( a liberal policy), odds are they effectively choose one over the other when voting for the president or another variety of political representatives ( a tradeoff). The policy or sets of policies the voter prefers more; will be the deciding factor. If Jim is a proponent of lax gun laws and lenient immigration laws; but votes for a conservative candidate, we can only surmise he values gun rights more than free immigration. In this scenario, Jim engaged in log-rolling with himself.

The most common form of intrapersonal vote trading is when people contour all of their policy preferences to the platform of a political party. The likelihood that every diehard Republic sincerely agrees with the party on every issue is exceedingly small, but most partisan political participants don’t even allow themselves to question their political beliefs. These individuals exchange any disagreements with their party of choice for the designated status as a loyal member of the political faction. An excellent example of this is former Reaganites supporting the presidency and 2020 candidacy of Donald Trump. Regan was the American king of Neoliberal trade policy; Trump echoes the paleoconservative concerns for globalization. We could provide a convoluted explanation for this discrepancy, but such gymnastics would be superfluous. It is much more probable that these individuals tailored their policy preferences to fit an evolving Republican party than they had a sincere paradigm shift. 

Bootleggers & Baptists: LVII: The Downfall of Georgetown Cupcakes (Damn Health Inspector)

Photo by Malidate Van on Pexels.com

Many believe that food saf­­­ety measures are necessary for promoting public health. We do not consider these desiderata as conferring a benefit to competing eateries. The renowned Washington D.C. bakery Georgetown Cupcake was shut down due to several health code violations. For a licensing issue, mouse dropping, and mold on consumable items. It is easy to become disgusted by these findings; there are several questions we need to answer. Outside of the cost of internalizing the externalities of a food-borne illness outbreak; (estimated at a scale of “…$4,000 for a single outbreak in which 5 people..” and 1.9 million for a single outbreak in which 250 per person). Even if no patrons become ill after consuming baked goods from Georgetown Cupcake, they still stand to lose business from the bad publicity alone.

While most people wallow in the grotesque of such hygienic incompetency of this bakery, it is easy to lose sight of the covert beneficiaries of their misfortune. One man’s loss is another’s gain. Per Superpages, there are at least thirty bakeries of the high esteem in the Georgetown section of Washington D.C. At a minimum, there at least thirty Bootleggers stand to gain from the bakery’s momentary lapse in cleanliness. It would be rational to apply Bruce Yandle’s framework of Bootleggers and Baptist (1983) coalitions to this situation. While the Washington D.C. metro health inspectors emerge as the white knights shielding the public from deleterious dining options, their published findings effectively divert business to other food vendors. Who wants to eat at a restaurant where there are rat feces everywhere? Many of the giddy Bootleggers may not be as squeaky clean as they seem. Since budgets for health inspections have decreased most restaurants are only inspected annually. There is a correlation between the number of health evaluations and instances of outbreaks of food poisoning originating in restaurants. Georgetown Cupcakes may have gotten the short end of the stick this time; next time, one of their callous competitors may pay the price.

Prisoner’s Dilemmas- XX: City Council Cartels

Photo by Adrien Olichon on Pexels.com

Anyone who has observed the chaos of local politics has seen the Machiavellian dynamics of a municipal committee elected by the town. The best example is seated on the town council. The incentive structure of the council members; is driven by the fact that their position is secured or eliminated by the will of the people. Setting up the classical variables for any Public Choice analysis, as the council members tailor their platforms and rhetoric to the voter preferences. If the same council members are either reelected or run unopposed, there is the incentive to form a coalition with the other recurring council men, formulating an informal agreement to have each other’s back. Effectively creating a cartelization since the other sitting council members have consented to support your policy prescriptions and justify your controversies. Per Katz and Mair (2018):

“…The mainstream parties, and most minor parties as well, have effectively formed a cartel, through which they protect their interests in ways that sap the capacity of their erstwhile principal—the electorate—actually to control the parties that are supposed to be the agents of the electorate. While the appearance of competition is preserved, in terms of political substance it has become spectacle (p.7)…”

By forming tight bonds and backing the rest of the elected officials on the council, each works to consolidate the power within this single unit of governance. Forming an impermeable oligarchy that the voters cannot vote out office due to a lack of policy competition. Analogous to an economic cartel, where consenting producers all fix prices in unison, all politicians “fix policy” to conform to the rest of the representatives on the council. This keeps external influences out of the fold, enabling all to retain their seats if they play ball. Much like all participants in an economic cartel enjoy larger profit margins, if no one reneges.

Hypothetically, let’s say there are four council members; one of the incumbents decides to resign mid-term. The replacement candidate is an insurgent candidate, breaking the unanimity among the colluding council members. This loosens the relational foundation among the incumbents; we start to see instances of defection among them. What was once complete accord among the old boys club quickly devolves into a prisoner’s dilemma. It is important to remember that cartels seldom are sustainable indefinitely. Eventually, the temptation of one party to undercut the rest of the colluding companies will cause them to defect (Tullock, 1985, p. 1076). For example, one particularly narcissistic council member may claim responsibility for policy reforms that his other cohorts co-sponsored. This type of behavior only undercuts the contributions of the others, leading them to undermine this arrogant council member. The cadre of incumbents suffer from the eroded trust. The newer member with innovative policy prescriptions; only proceeds to dimmish the creditability of the old boys club.

The Economics of Protesting

Photo by Sides Imagery on Pexels.com

Michael Huemer’s substack post Political Activism: What’s the Point, raises some intriguing inquiries regarding the actual utility of participating in political demonstrations. Much like other forms of collective action, the contributions of individual actors will have virtually no impact on the outcome. This parallels the dynamics of another notable form of collective action in politics, voting. If you divided your individual by the sum of all other votes, the aptitude of your single vote altering the results is exceedingly minuscule (p. Bohanon & Cott, 2002, p.592). But it is far more cumbersome to measure the influence of individual activists in comparison to single voters. Professor Huemer goes beyond the pure futility of the efforts of a single protester; and suggests that effectual change could not be the main force driving participation as people value their “..own welfare hundreds or thousands of times more than the welfare of strangers..”. It is more likely that people gain more from networking, personal ideological motives, and rights to virtue signal more than their concern for others being equal to their welfare.

However, he lists Dr. Martin Luther King and Rosa Parks as being exceptions to the drop-in-the-pan theory of effective activism. Both individuals are far different from the average protestor holding a sign at a demonstration. King and Parks undertook the costs of distributing communication and organizing activistic events. In theory, we could perceive them as being political entrepreneurs. A political entrepreneur per Public Choice scholar Randall G. Holcombe defines as:

“…Political entrepreneurship occurs when an individual observes and acts on a political profit opportunity. As with market entrepreneurship, entrepreneurial actions require, first, that a profit opportunity exists, second, that someone is alert enough to spot the opportunity and recognize the opportunity for profit, and third, that the individual is willing to act on the opportunity once it is spotted…” (p.143).

While civil rights advocacy did benefit people beyond King and Parks, they were still able to garner reputations as civil rights leaders. In effect, establish careers. Neither activistic leader would be able to have gained a following if there was not a demand for equality under the law. Mimicking the demand for a product or service in private markets. Regardless of our normative perception of civil rights, they both capitalized on the opportunity for social change. Analogous to how an economic entrepreneur fulfills a need in the consumer market. It is not necessarily morally objectionable that King and Parks benefitted from acting as political leaders since the changes they advocated for did achieve betterment from these societal advances. It would be wrong to classify these efforts as rent-seeking.

A high-profile activist such as Dr. King may act entrepreneurially in protest efforts, what about the rest of the demonstrators supporting King’s activist events? There is a certain amount of free-riding transpiring as this individual did not have to incur the coordination costs of planning the protest. Sure the costs of time and effort are present for even the lower-effort protestors, but King has already reduced the transaction costs of communication and coordination. Because these other demonstrators forfeited these enormous planning costs and the institutional risk, it only stands to reason that these other protestors are not even a footnote in history. Big risk equals big rewards. Dr. King paid the ultimate risk-cost for his political advocacy when he was assassinated. Few of King’s followers had to take on the costs of marching by side him. If anything his penchant for drawing like-minded followers exemplifies how he operated like a corporation for political activism. His ability to dimmish transaction costs for many protestors mirrors what corporate employers do for their employees. Corporations lower the transaction costs of employees finding clients needing service, typically on a large scale. A juggernaut; in the sphere of political protests like King effectively connects members of the same political movement in a superior manner to lesser community organizers. It is evident that without a strong unifying force, the collective action process fails and imposes costs on those less talented organizers that still opt to protest.

Prisoner’s Dilemmas-XIX: Labor Negotiations & Strikes

Photo by Kateryna Babaieva on Pexels.com

For now, President Biden was able to pump the breaks on the railroad strikes. Biden appointed arbitrators to negotiate mutually agreeable recommended revisions to the current labor contracts. This action kept “..115,000 rail workers on the job..” and narrowly side-stepped work stoppages from occurring on Monday (July 18th). In a time of preexisting supply-chain constraints, labor disputes would only exacerbate matters (the best real example would be the situation in the UK).

The dynamics of organized labor have a long history of being contentious, and striking is their secret weapon in gaining leverage at the collective bargaining table. If a policy does not contour to union interests, the relationship between the government and the labor movement devolves into a standoff. Since both factions have competing goals, this negotiation process is a Prisoner’s Dilemma. Lawmakers tailored policies to the preferences of the majority (union members only make up 13% of the US labor force). Also, in the anti-union camp, management possesses a fiduciary responsibility to enforce policies that are advantageous for the firm. 

These sets of incentives are opposed to the interests of the unions. Organized labor aims for higher wages, better benefits, more safety measures, and other generous forms of compensating differential. These new desired measures may be more costly for the firm or adversely impact consumers with higher prices or a lower grade of customer service (inefficiency). The demands of the labor unions tend to concentrate the benefits and impose costs on the rest of the economy. Even in sectors that are only tangentially connected to the industry where the workers are on the brink of striking. When their proposals are ignored or rules they dislike come into play, they defect by halting production and picketing. 

How neither party can reach a consensus generates Pareto-inefficient outcomes; should be self-evident. Because employers and policymakers might not want to cooperate or even meet the unions in the middle, they are defecting. In turn, the unions initiate strikes which create product scarcity, production bottlenecks, and higher prices. The ripple effects of the lack of agreement will hurt every economic actor in the market.

Fireworks, Coase’s Theorem, and HOAs

Photo by Saeed Khokhar on Pexels.com

Coase’s Theorem is frequently applied to the dilemma of environmental pollution, but could this predominate model of New Institutional Economics also apply to Noise Pollution? In the United States, it is common for people to have neighbors hosting a loud party or to be a member of a rock band rehearsing in the family garage. Local noise ordinances emerged to help establish limits where Coase’s theorem may fall short. Who precisely owns the airwaves between you and your neighbor’s homes? Could not the obnoxious riffs from the untalented punk rock band practicing next door also be distributing spillover effects to households further down the block? Soundwaves permeate far beyond a ten-foot radius around a single housing unit.  Most municipalities have ordinances placing limits on the right of your neighbor to butcher classic tracks from Bad Brains

On the 4th of July, a holiday commemorating the American colony becoming a sovereign nation, it is customary for people to purchase fireworks or attend organized events with a fireworks display. There is some overlap between noise complaints and fireworks, but it takes on a different dimension because of the potential for bodily harm and damage to private property. Not everyone is going to be out blasting off roman candles, Avenger missiles, and Black Cat bottle rockets with gusto. For sleeping infants, pets, early risers, and mild-mannered people, such private exhibitions of dazzling pyrotechnics are a nuisance. For military veterans grappling with PTSD, the blasts could conjure up memories of rocket-propelled grenades demolishing buildings and vehicles in Fallujah; which is downright injurious to their mental health. Not everyone is jumping for joy when their neighbors decide to purchase a treasure trove of fireworks every July. There are even negative externalities beyond the decibels of the fireworks detonating; such as potential damage to private property when armature efforts to deploy pyrotechnics go awry. An issue one would hope that homeowner’s insurance can remedy, but there will likely be variance based upon jurisdiction and insurance provider. 

Unlike noise ordinances, laws governing the private use of fireworks are implemented at multiple tiers of government. Including HOA rules, local laws, county laws, and even laws at the state level regulating the purchase, sales, and use of fireworks and related products. For example, Massachusetts is the only state that bars retail firework sales altogether; but many permit the sales of non-aerial varieties of pyrotechnics; however, this does mean that residents of jurisdictions where aerial are prohibited refrain from purchasing them. 

Courtesy of Reader’s Digest.

Since the spillover effects of fireworks extend past an individual property line, laws regulating the use of fireworks clarify the ambiguity. This is not blind deference to legal positivism, but clarification of the use rights of citizens of a specific locality. If an individual plans to relocate to a state with looser firework laws, they should research the state and local laws before moving. In many cases, the states with less stringent fireworks laws tend to lean conservatively (correlating with a lower cost of living and taxes). Those who dislike fireworks may already be compensated through lower cost living, making gains from Coasian bargaining superfluous, per Boudreaux and Meiners:

“… A common example: someone who buys land located near a busy airport should expect to regularly hear noise from airplanes.148 That person’s property right to her land does not include the right to be free of airport noise. In the language of the common law, the person “comes to the nuisance.”149 The price that she pays for this land is discounted to reflect the absence of this particular “stick” in the bundle of rights received when she purchased the land. This price discount reflects the internalization of this landowner of airport spillover effects..” (p.24).

Even if transaction costs are high and the rights violated by shooting off fireworks are unclear, could neighbors still strike private bargains to resolve this conflict? Hypothetically, it is possible, but there is the potential for suboptimal results. It is arduous to gather all the “…relevant agents to the negotiating table..” either due to other neighbors not being aware of any private agreements in the neighborhood or other factors (time, social capital within the community, costs of organizing, and reconciling different preferences) making group bargaining prohibitive. Organizing the community for group bargaining mirrors the collective action problem we see in public policy. If there is no feasible way to represent the preferences of every household, the private agreement misses the mark on Pareto-efficiency. Any broad agreement or rule aimed at achieving social welfare without complete unanimity will fail; will not be achieved (p.72). A bargain between two households to cease all fireworks by 11:00 pm will not work for all residents. Some households would prefer no fireworks; others enjoy the positive externalities of the free pyrotechnics display and would love for it to go on all night. Regardless of the decision made, costs will be placed on at least one household, and it is unlikely to devise rules that will make everyone happy.

Unfortunately, there needs to be an organized authority for rule promulgation and enforcement. A plethora of individual households forming fractured agreements will not mitigate the spillover effects throughout the community. Should this authority by the local or state government? Not necessarily. It is important to remember that group decision-making is subject to institutional scale; management of an individual household is a form of group governance within a minuscule scope. What about the rules regarding the private use of fireworks enacted and enforced by a Homeowners Association?

Many homeowners who reside in HOA communities bemoan the existence of these apolitical governing institutions, but they are more valid than the local city government. By purchasing a home in a specific community, a person consents to the established rules in the HOA charter. A prospective homeowner can easily withdraw consent by acquiring a home in another subdivision if they disagree with the terms of the charter. It is not only the opt-out features of HOAs that make them more legitimate, it is also the degree of impact the constituency has on the decision-making process. There are no formal political parties to muddy the process, and coalitions are inevitable but lack the cohesive strength without an anchoring institutional identity. Public Choice concerns like rent-seeking are impossible to tease out, but lose traction by the increased individual costs in the absence of sustained formal factions. It is also to note that due to the lack of party politics, the elected representatives on the HOA board are held to a narrow set of interests, making it more likely that they will act per the preferences of their fellow residents. With the development of social media, HOA Facebook groups; have been established; these applications provide direct feedback on various issues within the community. The criticism can be ruthless; most residents have no qualms about voting out ineffectual representatives. 

Bootleggers and Baptists-LVI: The War of the Wok

Photo by Jay Abrantes on Pexels.com

Labor Unions have historically held anti-immigration and nationalistic sentiments on their platforms. This makes the fact Progressives romanticize organized labor somewhat puzzling, as both factions of political actors often have conflicting objectives. One example of the prevailing nativism in the labor movement was Cesar Chavez’s hostility towards immigrants; how contemporary liberals square this cognitive dissonance when they proudly proclaim they are “Pro-Labor” is beyond the veil of reason. It should not be shocking that labor unions were one of the driving forces in implementing anti-Chinese legislation in the early 20th Century. 

The article THE ‘WAR’ AGAINST” CHINESE RESTAURANTS, published in 2017 by Regulation Magazine, provides a historical example of the anti-Chinese sentiments of organized labor. In the early-1900s, the United States excluded Chinese immigrants from most spheres of economic life in the United States; since many jobs required licensing that was only available to U.S. Citizens (p.32). The growing communities of Chinese immigrants in cities like San Francisco were able to enter the food service industry and laundry services. Chinese restauranteurs succeeded in providing a quality and low-cost dining option; birthing the American love affair with chop-suey. This was not without resistance since these new exotic restaurants were siphoning away business from eateries owned and operated by native-born citizens. The American Federation of Labor affiliated, The Cooks’ and Waiters’ Union, was a staunch supporter of anti-Chinese legislation (p.33). Various food service unions boycotted Chinese Restaurants and advocated for laws to loosen their gripe on the restaurant industry.

After the boycotts failed to achieve the Union’s anti-competitive objectives, they decided to lean on the legislature’s pen to reclaim the market share lost by Caucasian restaurant proprietors. The unions had the perfect pretext for demanding regulation (p.13); that was the moral concern of white women. As detailed by Chin and Ormond:

“..Newspapers offered lurid reports that Chinese restaurants were fronts for opium dens, and that Chinese men used opium “as a trap for young girls.” The idea of white female victimization became a media trope. In 1899, King of the Opium Ring, by Charles E. Blaney and Charles A. Taylor, played at the Columbus Theater and the Academy of Music in New York. Later produced around the country, it featured a clown who rescues a young white woman from the balcony of a Chinese restaurant. Movies depicted similar scenes and renowned “realistic” artists painted Chinatown vistas… (p.34).

At the time, there was a profuse amount of propaganda suggesting that Chinese men would try to lure white women into their establishment and then take advantage of them. The upper-class habit of “slumming” made trips to Chinatown a popular destination. There remained a lingering fear that white women would be enticed by the food but would decline into exploitation and degeneracy. Organized labor capitalized on this perception of Chinese immigrants and utilized it to provide the pretext for creating laws that would derail the success of Sino-dining establishments. Most of these measures varied by state and municipality, the majority of these laws either restricting or barring white women from entering or being employed in Chinese restaurants (p. 34-37). The unions have since given up on these measures once Chinese restaurants no longer appeared to be a threat and have since moved on to other policy issues (p.37). This chapter in American history perfectly embodies the incentives and dynamics of Bruce Yandle’s Bootleggers and Baptists (1983) model of coalitions. Regardless of the veracity of the claims of Chinese men seducing white women, it is still a “moralistic” concern as it posits a normative motive for enacting such ordinances and state legislation. Some of the holy-rollers included missionaries who entered Chinese neighborhoods proselytizing Christianity, who purportedly witness this moral impropriety (p.34). It should be conspicuous who the Bootleggers are in this scenario, as a union in themselves are nothing more than glorified lobbyists whose pedigree of rent-seeking can be traced back to the medieval guilds.

Bootleggers & Baptists- LV-Gun Control

***Special thanks to Dylan, proprietor of the Onlookers blog! He pointed out a few typos and the necessary edits have been made.

Check out his blog (Click Here).

Few issues in the current political scene are as divisive as the Second Amendment; as articulated in the SCOTUS case District of Columbia v. Heller (2008), an individual right. Anytime a mass shooting occurs or restrictions are purposed, gun rights advocates tend to double down. After all, regulating firearms is a prisoner’s dilemma in which neither side of the aisle is interested in making any concessions. Prima facie, it does seem that guns have become increasingly regulated over the years. Potentially vindicating the slippery slope logic expressed by Second Amendment proponents. The fear of prohibitively strict gun regulations or outright bans weighs on the minds of gun owners. A point substantiated by the fact that 59 % of polled gun owners indicated that gun control advocates desire to outlaw private ownership of firearms. Many gun enthusiasts view this right as sacrosanct and a vital component of living in a free society.

Number of Mass Shootings in the United States 1982-2022. Courtesy of Statista.

How do the reactionary sentiments of slow and grinding decline to an outright gun grab correlate with patterns in gun sales? There does seem to be a connection between precipitating events and increases in transactions related to procuring firearms (including background checks). Analogous to how macroeconomic events impact trading on the stock market, the prospect of regulation after events such as mass shootings results in abnormally high gun sales. For example, gun sales in California soared by 168 % between 1996-2015. 50 % of all mass shootings within the past 50 years transpired after 2000.  20 % of the mass shootings in this timeframe occurred within the past five years.

Gun control proposals; are often formulated in the wake of a mass shooting; there does seem to be at least a superficial correlation between mass shootings, gun control proposals, and gun sales. But, are politicians and political activists concerned with decreasing the number of guns in the hands of the citizenry shooting themselves in the foot? It is inherently human for people to purchase large quantities of a commodity facing a ban. A clear example of this was before JFK enacted the Cuban Trade Embargo; he stocked up on his favorite brand of Cuban cigars. It isn’t outlandish to believe that gun owners would seek to stock up on accessories, ammunition, and firearms after a mass killing or the announcement of gun control legislation. In effect, this would encourage people to obtain more guns. Rendering the bluster of tough-on-guns rhetoric to being counterproductive. Unwittingly, when politicians like Beto O’Rourke are telling us that he is coming after our AR-15s he’s saying “.. Everyone run to the gun shop now!..”. O’Rourke is blinded by political gamesmanship; he overlooks that his firebrand comments have only created a cobra effect; people panic and buy more guns.

If progressive politicians are inadvertently increasing the number of guns owned by the American public, who benefits from gun-grab-mania? Gun store owners. In applying the logic of Bruce Yandle’s Bootleggers and Baptists (1983) model, it becomes clear that gun control advocates are indirectly helping the proprietors of gun stores. By sending all of their patrons into a frenzy, the moral arguments of the anti-gun crowd end up drumming up more business for gun vendors. While neither party is intentionally working together and does not even share the same goals, they have a synergistic relationship. Beto is waving the flag of the gun shops without even knowing it.

Bootleggers & Baptists: LIV- Going Cashless

Photo by Pixabay on Pexels.com

In an age of digital banking, physical cash has become a cumbersome relic of a bygone era in the eyes of most Americans. It is easy to assume that we would all be better off in a cashless society, taking the lead of nations such as Sweden. The belief is that we would be better off in a digital monetary regime that would facilitate tax collection and tracking of criminal activity (p.2). Only demonstrating the tensions between law enforcement interests and the Fourth Amendment rights regarding financial crimes (p.3). Does the question become who benefits from the United States eliminating the use of money? It should be abundantly clear that it is axiomatically true that every policy selects winners and losers. The decision to abolish physical cash transactions is no different.

In the fashion of Bruce Yandle’s Bootleggers and Baptists (1983) theory of political coalitions, for every policy prescription; there is a moralizing agent and a beneficiary. In his 2018 paper, Norbert J. Michel, Special Interest Politics Could Save Cash or Kill It, details the parties that stand to benefit from the relinquishment of cash transactions. Some of the most conspicuous parties that prosper from a cashless society would be law enforcement, with a digital record of every economic transaction, it is hard to obscure illicit conduct. There are parities in the private sector that would find the move to electronic transactions advantageous. The credit card companies are likely one of the most salient groups of Bootleggers of anti-cash policies. The CEO of Mastercard has been a vocal exponent of getting rid of cash; it was even the first company to openly lobby on “… the behalf of bitcoin..” (p. 8). Any move towards digital payments over tangible currency would fatten the pockets of creditors. All credit card transactions are digital; it is not that farfetched to suspect that individuals who use cash would be more apt to use their Mastercard.

Other than law enforcement officials, who are the holy rollers of killing the dollar? One needs to look no further than the late Arizona senator John McCain, as he was an advocate of the COINS Act. This was a measure that was purposed to suspend production of the penny for approximately a decade. McCain defended this policy because it cost more than the actual monetary value of a penny to produce the coin. Very few American consumers would miss the penny; only twenty-six percent of transactions in 2018 patrons used pennies. Why would anyone miss a burdensome form of currency that cost more than what was worth to produce? It is important to note that McCain’s COINS bill did not dispense with copper coinage.

“ In addition, the bill provides for: (1) modifications to the composition of the five-cent coin; and (2) the replacement, in circulation, of $1 notes with $1 coins.”

The legislation would merely shift production towards the presumably more lucrative seigniorage of dollar coins. It would be naïve to not consider the local business interests in McCain’s home state of Arizona. Arizona has long held the reputation as a top copper producer and is the second-highest producer of natural minerals of any of the states. For a state that constitutes seventy percent of all cooper output, the COINS Act provides these firms with concentrated benefits. The COINS Act and the Arizona cooper industry are even Bootlegger and Baptists dynamic outside of the cashless society debate.

Bootleggers & Baptists-LIII: Condom Prohibition???

Photo by Klaus Nielsen on Pexels.com

Arizona senate candidate Blake Masters is signaling that he wants to double down on the rhetoric of the draft of the Dobbs decision. Per Business Insider, stated that Masters does not want to ban contraceptives outright; but believes that Griswold v. Connecticut was flawed. His response to the publication lacks any substantive explanation. He will have plenty of time on the campaign trail to elucidate his position on Griswold. When I first heard about Masters’ position, it was framed as a “condom ban”. The words of a politician tend to be hollow, but only time will tell if his policy scope will veer into prohibiting contraceptives. As we all know, like dishonesty, political figures also have a penchant for engaging in policy mission creep.

If we were to apply the Bootleggers and Baptists (1983) lens to Masters stance on Griswold, the question arises, who benefits? Masters is a Baptist for advancing the normative objective of supporting a Pro-life platform. Arguably, this hard-right political candidate is also Bootlegger for pandering to the highly religious populous right. It is entirely possible that he has gone too socially conservative.

The undisputable Bootleggers are Democratic candidates in Arizona. Why? Independent voters and moderate Republicans might be turned-off by Masters’ social policies. Especially, considering the vagueness of his explanation for wanting Griswold overturned lends itself to misinterpretation. Leading many to assume that his position is equal to a contraceptive ban. Condom bans in the works? Not 100% sure at this point, but it seems like many people are jumping the gun. In the meantime, it will make for some great political theater. For those in Texas, never fear; Ted Cruz has vigorously defended the use of prophylactics; needless to say, 2022 will make for an intriguing midterm cycle.

Bootleggers & Baptists: LII- Pro-Gun and Pro-Roe Actvists Form a Coalition

Photo by Artem Podrez on Pexels.com

The Dobbs draft leak has seemingly added more fuel to the abortion debate over the past week. The real point of contention stilting the embers of the current renaissance in the commentary on Roe v. Wade was the passage of the Texas Heartbeat Bill (Senate Bill 8) last year. The state legislature passed a law that would effectively operate as an informal ban that skirts judicial review; since enforcement was being handled through the deputization of private citizens. Senate Bill 8 is a spectacle of legislative ingenuity; even knowledgeable detractors must admit this point. The design of the Bill is particularly pernicious and could be manipulated for partisan retaliation. For example, last year, California Governor Gavin Newsom talked of engineering his variant of SB 8 tailored to target ghost guns and semi-automatic rifles. The only thing gun owners have going for them in defense against such an action is that the Second Amendment is an enumerated right, meaning they do not need to only rely on stare decisis.

An unlikely coalition formed in 2021 to combat the passage of Senate Bill 8. The kind of coincidental political union that only further justifies the utility of Bruce Yandle’s concept of Bootlegger and Baptist (1983) coalitions. The California-based Firearms Policy Coalition joined the Texas pro-choice faction to oppose the legislation. Even going so far as to author an amicus brief critical of SB 8. Per Statista, of the Republicans, polled 50% owned a gun; 61% lived with a gun owner. Odds are, members of the Firearms Policy Coalitions are right-wingers that would not typically work with the pro-Roe camp. The flawed structure, logic, and versatility of SB 8 could put gun rights in jeopardy. Who would be the Bootleggers and the Baptists in this scenario? Anytime there is a collaboration between different stripes of political activists, these roles are interchangeable depending on the observer’s ideological proclivities. A more even assessment would be that both merging factions are Dual Role Actors (2020). As the pro-gun and the pro-Roe camps, both are defending moral arguments but simultaneously benefit from achieving their own separate policy goals.

The Paradox of Implicit Logrolling: Bodily Integrity- Newports and Roe

The Paradox of Implicit Logrolling (Clark, 2021) demonstrates how intra-platform vote trading can lead voters to hold logically inconsistent policy positions. One example is; a Republican purporting to be Pro-life but concurrently supporting an aggressive foreign policy. In the current political climate of the United States, the topic of bodily integrity appears to be the nexus of the most salient examples of this phenomenon. After all, the genesis of this paradox came from the incongruency of Democrats favoring vaccine mandates (93 % of poll Democrats support mandates applied to private companies) and simultaneously defending Roe v. Wade from the standpoint of bodily integrity. 

However, the current trends in the Democratic party’s policy platform‘s lack of logical continuity regarding bodily integrity are evident from the policies the party has recently supported. Last week, the Biden Administration announced a plan to move forward with a national ban on mentholated cigarettes. A measure favored by 57 % of Democrats polled. The fervor of Pro-choice (predominately left-leaning voters) advocates protesting and repudiating the decision in the leaked draft of the Dobbs case. 

These examples are not intended to shame modern liberals, nor are these normative value judgments regarding their ideological positions; these examples are merely observations derived from an applied static model. The bundle of policies favored by the Republican party is also rife with logical contradictions. The DNC seems to be providing us with most of the conspicuous examples of this paradox. The fact that the Dobbs case and the menthol ban magnifies how the topic of bodily integrity causes political parties to adopt policy preferences that pose philosophical contraventions. If it is rational to assume that electing to obtain an abortion is a matter of self-ownership, then would not the same apply to an adult choosing to smoke Newports? It is perplexing how this lapse in logic eludes many folks on the left. President Biden openly spoke out on the Dobbs decision but opted to proceed with nationwide menthol prohibition. It is possible his vocal criticism of the SCOTUS draft decision is a political maneuver to curve the disappointment of the Progressive-wing of the DNC with his centrist policies. Making the correct statements on the right wedge issue can be gold in the sphere of social currency. 

Photo by Markus Spiske on Pexels.com

Bootleggers & Baptists- LI: The U.S. Ban on TV Cigarette Ads

Photo by Nima Ashkbari on Pexels.com

The enduring brilliance of Bruce Yandle’s concept of Bootlegger and Baptists (1983) coalition dynamics cannot be overstated. Often the policies supported by the “Baptists” end up benefiting various interest groups. The nature of this self-propelled relationship is steeped in irony. Superficially, many of the proposed initiatives would be detrimental to the interests of the “Bootleggers”, but frequently have consequences contrary to the aims of the morally motived activists. Carelessly crafted remedies to social ills can result in gapping loopholes or anti-competitive advantages to established firms producing goods that are injurious to public wellbeing.

An excellent example of this phenomenon was the FTC’s 1971 ban on televised cigarette commercials. This example seems to be timely considering the finalization of President Biden’s national prohibition on mentholated cigarettes. The impact of the 1971 advertising restrictions is detailed in Baptists, Bootleggers & Electronic Cigarettes (2016):

“….The tobacco industry was not as enamored with these regulatory initiatives as were some health-oriented groups. Congress reacted to such concerns with new legislation that weakened the FTC’s proposed label language while banning TV advertising starting in 1971.53 Far from a loss for the industry, this legislation erected a substantial entry barrier for potential competitors 54 The established brands enjoyed widespread name recognition, and new entrants would be unable to use television to establish their brands. 55 The elimination of television ads for cigarettes also brought an end to the offsetting public interest messages that attacked tobacco products and reduced cigarette company advertising costs. 56 The tobacco Bootleggers gained ground, and innovation took the back seat in what began to look like a comfortable cartel. Meanwhile, the health-care Baptists may have unwittingly cheered the new strictures that seemed to penalize bad Bootlegger behavior but actually protected their profits…” (p.325-326).

Based on the prima facie impressions of most people, it is easy to assume that the limitations on advertising would harm the tobacco industry; to a certain extent, it did. Cigarette consumption did decrease in the period after advertisements; were pulled from the airwaves. However, the magnitude of the impact is difficult to measure as other factors can also account for the lower smoking rates in the United States. This policy truly harmed the up-and-coming cigarette companies more so than the titans of the American tobacco market. Why would Marlboro need to advertise its products? The brand already had significant brand recognition by the early 1970s. Companies like Philip Morris and RJ Reynolds could comfortably rest on their laurels while the newcomers could flounder in their attempts to gain a little piece of the market share. Effectively, this ban significantly increased market concentration among the established firms.