bootleggers_fc_storeEnvironmental activists tend to bash electric utility companies like Duke Energy. But the activists and Duke both support efforts to mandate use of so-called “green” or “clean” energy.

Anti-smoking advocates and tobacco companies are natural enemies. But both groups supported a massive settlement of tobacco lawsuits that has pumped billions of dollars into state coffers since the late 1990s.

To understand how these antagonists come together in support of new regulations and restrictive public policies, it helps to have a little knowledge of the economic theory that lies behind the recent book Bootleggers and Baptists: How Economic Forces and Moral Persuasion Interact to Shape Regulatory Policies.

Economist Bruce Yandle of Clemson named the “Bootleggers and Baptists” theory more than three decades ago, and his 1983 journal article coining the phrase serves as the appendix of the book Yandle has co-written with grandson Adam Smith (yes, there’s a living economist named Adam Smith) of Johnson & Wales University.

The name comes from the old public debates over banning alcohol sales on Sundays. Baptists pursued the bans for moral reasons. Bootleggers pursued the bans to remove competition on one day of the week. Any time a new social regulation can lead to private gain, Smith and Yandle argue, you can bet that some form of “Baptists” and “bootleggers” are likely to play a role in pushing for that regulation.

The authors define four different ways bootlegger/Baptist scenarios play out: covertly, with bootleggers adopting Baptist rhetoric; noncooperatively, with bootleggers and Baptists pursuing the same goal separately; cooperatively, with bootleggers supporting Baptist groups; and in a coordinated form, with government-led coalitions of bootleggers and Baptists.

Why do these bootlegger/Baptist coalitions tend to work?

First, rational ignorance on the part of the general voting population enables key players to operate without fear of being held accountable for their pursuits, especially if they establish moral cover. For while rational ignorance applies to the details of policy, the body politic still insists on being assured that government is doing the “right” thing.

Second, voters are most likely to remain rationally ignorant — and pork most easily extracted — when lobbying yields concentrated benefits for coalition members while spreading the cost of providing those benefits across a vast pool of taxpayers and citizens at small cost to each.

Why is this a problem? Why should we care about all of these bootleggers and Baptists, working either in concert or separately?

Third, the scale and frequency of Bootlegger/Baptist interaction imposes a real deadweight loss on society. In the scramble for pork, the paired interest groups may nearly exhaust the gains obtained from their political struggle. Once Bootleggers and Baptists are locked into a successful coalition, their structural incentives change, making political wealth extraction more attractive that private wealth generation — to society’s detriment. In other words, scarce resources that might be allocated to the production of valuable goods and services become obligated to the task of maintaining the supply of pork provided by politicians.

Those searching for a silver lining will end up disappointed by Smith and Yandle’s conclusion. Bootlegger and Baptist interactions are “driven by forces rooted deeply in the human psyche,” the authors contend. Limiting the negative impact of bootlegger/Baptist scenarios will require new constraints on the production of regulation.

While that prospect might prove difficult, at least Smith and Yandle will help more people recognize cases in which Baptist messages obscure the benefits bootleggers stand to gain at the public’s expense.