Bootleggers & Baptists: How Economic Forces and Moral Persuasion Interact to Shape Regulatory Politics (18 page)

Nevertheless, the public-sector proceeds associated with these arguments, although large, would not be tagged for individuals who might convert the proceeds to bottom-line bank accounts. Because of this, only those swayed by public interest arguments would be inclined to offer financial support for the law. Billionaire George Soros was just such a person (Aaron Smith 2010). Putting forth the public interest arguments we just summarized, Soros gave $1 million to support the legalization effort.

For public-sector revenues to matter, real people with pocketbook interests in those revenues have to get involved. For Bootleggers to get interested, in other words, the profits must be appropriable as pork. Apparently, the state teachers’ union liked the smell of money. Randi Weingarten, president of the American Federation of Teachers, and whom we might call a leading Baptist, endorsed the legislation. We might normally think that it takes a lot for public schoolteachers to endorse marijuana consumption, but saving one’s job from budgetary cataclysm is no small thing. Indeed, when
Washington Post
writer Jonathan Capehart reacted to Weingarten’s announcement by exclaiming, “Teacher approved!,” Weingarten responded, “If it’s legal” (Rush 2010). The shift on the issue demonstrates that incentives matter. The shift might also explain why opposition forces were successful in eliminating the state revenue component from the proposed legislation.

Just as some public employees hoped to see more cash in the coffers, others in law enforcement balked at the prospect of losing huge amounts of revenue from civil forfeiture actions involving the drug trade. Many law enforcement officials were dead set against the law’s passage—not just locally. Marijuana-related law enforcement activity was so extensive that legalization would lead to serious cuts in police and prison employment. Harvard professor Jeffrey Miron estimated in 2005 that budget savings in those areas would amount to $981 million annually (Miron 2005). Opposition from leading law enforcement officers may have looked a lot like Baptist opposition, but these were Bootleggers in disguise. Put another way, drug dealers are not the only beneficiaries of illegal markets. Nevertheless, with police opposing and teachers favoring the measure, there were Baptists on both sides of the issue.

To complicate things even further, three groups favored legalization because of their belief that certain minority groups bore the brunt of drug law enforcement. The NAACP, the National Black Police Association, and the League of United Latin American Citizens of California endorsed the act.

Literally hundreds of endorsements came on both sides of the issue, but the more interesting effort opposing legalization came from the literal Bootleggers in the situation, the illegal growers and sellers of the weed itself. California’s Humboldt County prides itself as a major producer of high-quality marijuana. Humboldt State University economists estimated marijuana accounts for $500 million to $700 million of the county’s $3.6 billion economy (Ammiano 2010). Concern for the county’s future ran so deep that a Humboldt County radio host organized a community meeting labeled “What’s after Pot?” (Ammiano 2010). Several other marijuana-rich counties followed with similar events. Whatever the exact amount of revenue at stake, the Humboldt growers were not going to go down without a fight. They even had a trade association, the Humboldt Growers Association (HGA). Here is how the HGA described itself:

The HGA is a non-profit, member-based business association that promotes the sustainable cultivation of medical cannabis in Humboldt County. It is run by a committed volunteer board of directors. We work to develop programs and policies that promote safety and sustainability for the legal cultivation of medical cannabis. We know that regulation of medical cannabis is occurring—our county officials are already working on it—and we want the cannabis-growing community to have a voice in this process. The HGA represents cannabis growers not only locally, but also on a state-wide level, since that is where the most change in the industry needs to happen to keep our local farmers in business.
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As referendum time approaches, bumper stickers that read “Keep Pot Illegal” showed up in Humboldt County (Frauenfelder 2010).

It is easy to see why the Humboldt producers were so opposed. Legalization brought the prospects of expanded scope for marijuana production and the possibilities that the small Humboldt growers would not be competitive in an open market. At the very least, opening up the market to greater competition would reduce their current profit margins. All kinds of rumors abounded; some suggested that the world-class tobacco companies would enter the industry, and there was the additional possibility that the U.S. Department of Agriculture would someday support marijuana production again, as the agency had done in 1915 (USDA 1915).

As the vote approached, the U.S. Department of Justice sent word that it would diligently enforce the 1937 federal cannabis prohibition statute. This move, which must have delighted the Humboldt growers, would jeopardize the newly opened market. Meanwhile, background preaching against legalization continued, and the Campaign for Children and Families led efforts to get out the opposition vote (Baptist Press 2010).

The final referendum vote suggests that a strange set of bedfellows joined forces to keep pot illegal in California: (a) the marijuana growers of California’s marijuana counties; (b) local and state law enforcement officials; (c) religious and other leaders who saw marijuana consumption as an unmitigated evil; and (d) the U.S. Department of Justice, which threatened to steamroll California law enforcement if the state opened the market for a product deemed illegal under federal law (M. Hall 2010).

Reactions were mixed when the final tally was reported. Obama administration spokesman Gil Kerlikowske said in an e-mail:

Today, Californians recognized that legalizing marijuana will not make our citizens healthier, solve California’s budget crisis, or reduce drug related violence in Mexico. The Obama Administration has been clear in its opposition to marijuana legalization because research shows that marijuana use is associated with voluntary treatment admissions for addiction, fatal drugged driving accidents, mental illness, and emergency room admissions. (M. Hall 2010)

Alex Kreit, professor of law at Thomas Jefferson School of Law, and a supporter of Proposition 19, countered: “People are realizing that the war on marijuana and the war on drugs is a failed strategy. We’ve been pursuing it for 40 years and marijuana is just as available now as it was 40 years ago” (Hall 2010).

In sum, California’s Proposition 19 was narrowly defeated by opposing Baptists who appear to have neutralized each other’s influence; by California cannabis growers and their supporters who feared the loss of a major regional industry; by organized law enforcement officers who feared the loss of major sources of drug enforcement revenues; and by the U.S. Department of Justice, which made it clear that an open marijuana market would not be tolerated. In our opinion, the Department of Justice action was the coup de grâce.

Aftermath: The Secret Is in the B&B Sauce

Ah, but the story has a sequel. Since California’s rejection of Proposition 19, two other states, Washington and Colorado, both held ballot measures in November 2012 to legalize possession of marijuana in small amounts. In a similar vein to California, Bootleggers and Baptists lined both sides of the fence. For example, in Washington, medical marijuana users rallied around an anti-legalization group called “No on I-502.” This group claimed that legalization was flawed in that it threatened to prosecute those who drove under the influence, even if marijuana use had occurred days before (Johnson 2012).

Indeed, the lack of language regarding prosecution of driving under the influence was seen in hindsight as one factor that injured Proposition 19 in California. Initiative 502 was an attempt to buttress this criticism by explicitly establishing “a per se driving under-the-influence hold for marijuana of 5 nanograms of active THC metabolite per milliliter of blood.” The initiative also provided for “annual distributions of $500,000 for the Washington State Health Youth survey; $200,000 for cost-benefit evaluations by the Washington State Institute for Public Policy; $20,000 for web-based public educational materials about the health and safety risks posed by marijuana use; and $5 million for LCB administration” (Washington State Senate Committee Services 2012).

These provisions marked a greater regard for public sentiment and helped turned the tide in the initiative’s favor. Furthermore, they drew support from all of the various Bootlegger and Baptist organizations that directly benefitted from the financial support. Once the ballots were counted, Initiative 502, along with its counterpart in Colorado, had passed (Healy 2012).

Although these recent events in no way undermine the public’s repugnance for sin, they do highlight the lesson that Baptist support is essential for successful legislative victory, particularly with popularly determined voting initiatives. As marijuana legalization advocates realized, the secret is in the B&B sauce.

Final Thoughts

It is no surprise that activities viewed as sinful would attract Bootlegger/Baptist interaction. Purveyors of sinful products are eager to serve their customers, especially in restricted markets. And guardians of moral high ground readily mobilize opposition when sin arrives on the political agenda. But we must look closely to see how the interaction occurs and what result obtains. We have examined three products that are sold in either heavily regulated or illegal markets.

The regulation of alcoholic beverages has matured in a cartelized industry where Bootleggers and Baptists openly cooperate to solidify favorable legislation. The resulting division of labor places the 50 states in the driver’s seat, but Bootleggers are concerned about some competitive clouds on the horizon.

By comparison, tobacco products have been regulated for centuries with little in the way of open cooperation between Bootlegger and Baptist interests. But the pace of regulation has accelerated in recent decades. Indeed, tobacco-delivered nicotine as a consumer good may well be on the way to becoming illegal. Yet so far, industry profits have increased with each new restriction.

Finally, marijuana exists in a halfway house between being a regulated and an illegal consumer good. Pot’s illegal status does not mean that no profit is to be made in the illegal market—just the opposite. Indeed, Bootleggers have fought to maintain the status quo, while some unexpected Baptists joined the movement to legalize the product.

We draw one general conclusion from the three case studies presented in this chapter. Bootlegger/Baptist interaction rises to a high level when changing voter attitudes threaten to upset the relative fortunes of Bootleggers—and open wide a door for Baptist influence. As lobbying becomes more intense, politicians become more important, and more valuable. Some members of an industry coalition may like things the way they are. Those who have achieved financial gain under the status quo prefer a stable, government-coordinated cartel. They like the briar patch.

Others in the industry, who never made it to their particular briar patch, are apt to be more eager for disruptive reform. Savvy politicians profit from both groups. Similarly, those who strive to make the world a better place but who have been walled out by government cartel managers also love it when the regulatory walls begin to crack and crumble.

Political power brokers become more important in times of flux. Regulatory turbulence brings brighter days to political entrepreneurs. The successful politician can craft regulatory reforms that serve both Bootleggers and Baptists, creating a new equilibrium. This may be observed when newly designed strictures enhance Bootlegger profits and generate large government revenues that can be spent to “serve the public interest,” as we saw in the cases of alcohol and cigarette regulation. On other occasions, the new political balance seems to serve one group at the expense of the other, as when Congress intervened to counter the FTC’s efforts to require stronger warning labels on cigarette packages.

When change is in the air, it is also time for Baptists to rethink their strategies and in some cases break off their support for past regulations. When change is sufficiently radical, as with marijuana, the Baptists must first identify themselves and decide which hymns to sing, as Bootleggers attempt to predict which briar patch they will prefer. When those positions are sorted, it is then possible for the politician-broker to make mutually beneficial deals. But as the marijuana case teaches us, uncertain Baptists and not-so-sure Bootleggers can lead to lost opportunities for regulatory reform. Moral appeals through the political process, without accompanying hidden financial beneficiaries, are like a sailboat without a breeze.

5. The Rocky Road to Climate Change Legislation

Environmental regulation provides a rich vein of gold for Bootleggers and Baptists to mine.
¹
Fervent environmentalists make good Baptists.
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In their view, uncaring polluters are willing to trade the last landscape for another shot of positive cash flow. To prevent such rampant greed, public-spirited defenders of the Earth must expand and enforce environmental laws to punish firms that put private profit over the public interest. Then there are the Bootleggers, industrialists who prefer polluter profits to no profit at all. Just the right form of government regulation can be a dream come true for profit-loving Bootleggers. Although perhaps never fully comfortable in a room of self-righteous Baptists, Bootleggers still welcome their religious counterparts when pious pleading can be parlayed into persistent profits.

This chapter focuses on a specific episode of this common phenomenon: climate change regulation inspired by the 1997 Kyoto Protocol. It established goals for reducing global greenhouse gas emissions, primarily in the form of carbon discharge.

Bootleggers require regulations that raise rivals’ costs, block entry, impose differential costs across firms, cartelize entire industries, and in other ways favor successful seekers of pork. We show how producers of natural gas and nuclear energy, with a lot to gain by providing low- or zero-carbon fuels, joined forces with environmental groups in an effort to reduce carbon emissions. In response, the less-favored coal producers teamed with environmentalists to lobby for clean coal subsidies. Concurrently, corn producers harmonized with clean air advocates in an appeal for mandated and subsidized use of domestically produced ethanol as a gasoline supplement.