The role of regulation in raising rivals’ costs

The Bootlegger and Baptists theory of environmental regulation

Environmentalists accept the views of the majority of scientists when its suits their agenda. In other cases, the precautionary principle is used to suspend judgment, reject science such as on GMOs and demand ever more evidence.

A good discussion of environmental interest group coalitions is Bootleggers, Baptists, and the Global Warming Battle by Bruce Yandle and Stuart Buck

  • The theory’s name is meant to evoke 19th century laws banning alcohol sales on Sunday.
  • Baptists supported Sunday closing laws for moral and religious reasons, while bootleggers were eager to stifle their legal competition, so they can sell more of their moonshine.
  • Politicians can pose as acting in the interests of public morality, even while taking political support and contributions from bootleggers.

Yandle and Buck argue that during the battle over the Kyoto Protocol, the "Baptist" environmental groups provided moral support and political cover while "bootlegger" corporations and the EU and developing nations worked in the background to seek economic advantages over their rivals about who has to cut their carbon emissions most and least:

National governments are strategically positioning themselves to benefit from the negotiations while operating under cover of the international environmental groups sounding the alarm about global warming.

When we survey the participants, we find that some countries, such as the United Kingdom, are positioned to exploit carbon reductions they have made in the past by raising the cost to economies that still rely heavily on coal.

Other countries, including developing countries, are allowed higher emissions. These countries see opportunities for payments from the developed countries for reducing carbon emissions or for offsetting actions such as planting trees.

In addition, within countries, some industries are favoured by the rules and, within industries, some firms will also be favoured.

Meanwhile, environmentalists are running interference and providing cover.

The same goes for the war on drugs. The last thing that drug gangs want is the drugs they are black-marketing to be made legal. The prohibition era in the USA had the same political dynamics.

Then there is BAPTISTS? THE POLITICAL ECONOMY OF POLITICAL ENVIRONMENTAL INTEREST GROUPS By Todd J. Zywicki, 53 Case Western Reserve Law Review 315 (2002-2003). Zywicki specified three testable implications on the public interest model of the activities of environmental interest groups:

(1) A desire to base policy on the best-available science;

(2) A willingness to engage in deliberation and compromise to balance environmental protection against other compelling social and economic interests; and,

(3) A willingness to consider alternative regulatory strategies that can deliver environmental protection at a lower-cost than command-and-control regulation.

On all three counts, Zywicki found that the public-interest explanation for the activities of environmental interest groups fails to describe their behaviour. Instead, the evidence on each of these three tests is consistent with a self-interested model of the behaviour of environmental groups.

Zywicki concluded that environmental regulation can be best understood as the product of an unlikely alliance of "Baptists and Bootleggers" – public-interested environmental activist groups and private-interested firms and industries seeking to use regulation for commercial advantage, private gain and expressive politics.

Bootleggers and Baptists highlights the role of trade-offs and comparative advantage in the competition among pressure groups for political influence.

Both Gary Becker (1984) and Sam Peltzman (1980) predicted that interest group coalitions would be sub-groups of business, unions, workers, consumers and expressive voters. These coalitions form and realign as demand and cost conditions evolve.

Odd political alliances always arise. The coalition of the Christian Right and radical feminists on the Left joining to fight to censor pornography is a classic. They each wanted to ban the same thing for the exact opposite reasons.

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