Bootleggers and Baptists-LVI: The War of the Wok

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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.

Prisoner’s Dilemmas-XV: Sugar Tariffs

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“..Look at the United States. There is no country in the world where the law is kept more within its proper domain—which is, to secure to everyone his liberty and his property. Therefore, there is no country in the world where social order appears to rest upon a more solid basis. Nevertheless, even in the United States, there are two questions, and only two, that from the beginning have endangered political order. And what are these two questions? That of slavery and that of tariffs; that is, precisely the only two questions in which, contrary to the general spirit of this republic, law has taken the character of a plunderer…” Frédéric Bastiat- The Law (1850).

The tendency for people to favor protectionist policies is an understandable fallacy, but a fallacy, nevertheless. Some Americans are under the erroneous assumption that they have a moral duty to keep domestic jobs from being outsourced. Much of this sentiment; was fostered by campaigns waged by organized labor throughout American history. It is difficult to tell if the buy American fallacy is the byproduct of union propaganda or an intrinsic sense of nationalism and economic jingoism. Regardless of whether the American public is receptive to their pithy buy domestic slogans, the union interests frequently get their way. The best example is the enduring specter of import tariffs that have plagued American economic policy for centuries. The earliest example is the Tariff Act of 1789, which was strongly favored by none other than Alexander Hamilton.

Arguably one of the most notable tariffs on the books is related to the importation of sugar. The tariffs placed on foreign sugar have been upheld through various laws over the years, starting from the nascent period of the republic.

“…On brown sugars, per pound, one cent. 

On loaf sugars, per pound, three cents. 

On all other sugars, per pound, one and a half cents

(Tariff Act of 1789, P. 25)..”

From a game-theoretical standpoint, consumers are the first ones to defect. If imported sugar is cheaper American consumers gravitate toward buying the less expensive Caribbean sugar. The lobbyists for the sugar industry work to pressure lawmakers into keeping import taxes on foreign sugar. The collective pressure placed on Congress to place and uphold tariffs can be considered a defection by the domestic sugar producers. Many economists and political scientists assume that the marginal increase in the cost of sugar would be negligible to an individual customer. In turn, fulfilling the enduring axiom of Public Choice theory; concentrated benefits and dispersed costs. Few households consume enough sugar to desire to change their baking and coffee flavoring habits. Although, these costs are salient to commercial confectionary producers who purchase mass quantities of sugar for domestic and international retail goods. It has led to firms relocating production facilities to countries without sugar tariffs (Life Savers plant moving to Canada, p. 4). Technically, this could be a defection, but the irony is that it undermines the moral initiative of keeping domestic jobs within the bounds of the United States. But not every company opts to move their factories abroad, another substitute for cheaper inputs. Hence, the rise of soft drink producers using high fructose corn syrup instead of cane sugar. One noteworthy example would be when Coke and Pepsi switched to using corn syrup in their sodas for the US market in the 1980s (p.5) (Mexican cola still uses real sugar). There has been much debate over whether high fructose corn syrup is more unhealthy than sugar. If it is more injurious to one’s health, then a Prisoner’s Dilemma is afoot, the suboptimal result being the American people doing unnecessary damage to their bodies merely to appease a small subset of the overall constituency.

Bootleggers & Baptists XXXIX- AB-5 and Uber

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The emergence of the Gig Economy has allowed millions of Americans to earn additional money without the constraints of rigid work schedules. However, the flexibility allotted to contractors through ride-sharing and food delivery services is under threat in California. Back in 2019, the California legislature passed Assembly Bill 5 (AB-5) that would classify many freelance workers as “… workers bona fide employees, with schedules and hours determined by the company rather than the worker..” (p.4). The California courts apply AB-5 under the three-prong test developed in Dynamex Operations v. Superior Court to distinguish contractors from full employees; after AB-2257 passed in 2020, “..109 categories of workers were exempted from AB-5..” (p.7). In response to AB-5, delivery and ride-sharing platforms collectively generated Proposition 22 to exempt these services from the law (p.7). Unfortunately, the law was ruled as unconstitutional 2021; per the Los Angeles Times:

That’s in part because the law, Roesch wrote, infringes on the power of the Legislature explicitly granted by the state Constitution to regulate compensation for workers’ injuries.

 Hector Castellanos, et al. v. State of California, et al.

Amid all the AB-5 turmoil, one question emerges, who benefits from labeling gig workers as full-employees? It certainly isn’t the Uber driver. Considering, 80% of surveyed independent contractors “…reported having done some sort of independent contracting gig in the last year said that it was a part-time occupation…” (p.6). Also, most gig workers have insurance benefits either from their primary job or spouse (p.5) and prefer the flexibility over fringe benefits that “…bear opportunity costs in the form of foregone income they could have received if not for the benefits.” (p.6).

When viewed through the lens of Bootleggers and Baptist (1983), it is clear that few economic agents are hiding within the smokescreen of the workers’ rights coalition. The irony is, the demographic that AB-5 is designed to “help’, vehemently opposed the legislation. It can be assumed that the California legislature is a Dual-Role Actor in this coalition. Why? State lawmakers most likely passed this law as a worker protection provision for gig economy employees. However, Judge Roesch’s admission that excluding gig workers interferes with the authority of the legislature. Lawmakers are also Bootleggers for having an invested interest in not relinquishing political power.

 One notable economic agent on the bootlegger side of the coalition would be labor unions. Some readers may wonder why labor unions would not be considered a Baptist or even a Dual-Role Actor. Unions are heavily involved in the political process (p.410), theoretically could be perceived more as political interest groups than employee protection organizations. Arguably, these organizations do little to advance the interests of workers. Labor unions within the state of California had angled to organize ride-share drivers, “…contributing to the pressure on legislators to make a change..”(p.7). Various labor unions throughout California have expressed that AB-5 would reduce the exploitation of contract employees. However, they benefit from this legislative victory because it reinforces their political currency as an interest group. One union that stands to gain the most from reclassifying Uber drivers are taxicab unions. It is well known that the taxicab industry has struggled to compete with the convenience and lower rates of ride-sharing apps. The state of Nevada has placed restrictions on platforms offering ride-sharing services. Uber has faced many regulatory barriers often supported by taxi drivers (p.191); most notably “medallion systems” where governments issue a limited number of licenses to operate as a driver (p.574). Classifying Uber drivers as full-employees would make employing contractors more costly and onerous, thereby disturbing Uber’s operations. All of this to shield taxi drivers from the Schumpeterian gales of creative destruction.