Chapter 2: Bootleggers and Baptists in the Theory of Regulation
Bruce Yandle The bootlegger and Baptist theory of regulation (B&B) was born in 1983 when I was Executive Director of the U.S. Federal Trade Commission (FTC) (Yandle 1983). Along with other duties, I was responsible for the agency’s Consumer Advocacy Program, an activity where the FTC intervened in the regulatory proceedings of other federal agencies in an effort to maintain and enhance the competitiveness of the U.S. economy. The agency’s intervention activities revealed a number of instances where seemingly odd interest-group alliances supported the same regulation. This was not the first time I had observed the odd-alliance phenomenon. The idea that demand for the same regulation could come from two distinctly different interest groups, one that seemed to take moral high ground and another that simply wanted economic rents, had come to me in 1977 when I was a senior economist on the staff of the President’s Council on Wage and Price Stability. I was responsible for reviewing and commenting on new regulation proposed by the U.S. Environmental Protection Agency (EPA), the Federal Trade Commission, and the National Highway Traffic Safety Administration. When I reviewed those rules, it became obvious that industry opposition to regulation was far from being monolithic. Almost invariably, there were firms or industry sectors that gained from regulation. For example, in EPA’s proposed rules regulating copper smelter emissions, the agency indicated there would never be another U.S. copper smelter once the rules became final. The rules, which set more stringent standards on new smelters than...
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