Of Bootleggers and Baptists
Last week I was accused of being a stooge for the powerful. It wasn’t the first time, and it probably won’t be the last. What did I say that caused this charge? I suggested that the market should be given a greater role in the provision of health care.
Well, then, you might say, what more need have we of witnesses. Everybody knows that free markets are in the interests of the powerful. That’s why big businesses are so opposed to government intervention in the economy.
Changing the subject completely, I was reading an article in the DC Examiner only a few hours later when my eyes fell upon the following sentence:
Philip Morris, openly and without qualification, backs Kennedy’s and Waxman’s bills to heighten regulation of tobacco.
That’s odd. I thought big business was supposed to be against government regulation of industry.
Well, yes and no. Businesses tend to be opposed to government intervention if they think it will hurt them. They are all in favor of it if they think it will help them or hurt their competitors.
In the case of tobacco:
all regulation adds to overhead, and thus falls more heavily on smaller firms. Second, restrictions on advertising help Philip Morris’ Marlboro, a brand everyone already knows, by keeping lesser-known brands in the shadows. (Existing restrictions on advertising have already helped Philip Morris in this regard, with an added benefit spelled out in Altria’s annual report: “Marketing and selling expenses were lower, reflecting regulatory restrictions on advertising and promotion activities. … ”)
Nor is this sort of thing limited to tobacco. Lots and lots of legislation marketed as being for the common good in fact turns out to benefit larger (and hence more politically powerful) companies as against their smaller rivals. This is what economist Bruce Yandle calls the “bootleggers and baptists” phenomenon. Bootleggers stand to benefit from prohibition as much as anyone else. But as it wouldn’t really do for bootleggers to hold a rally on Capitol Hill, Baptists form the public face of the drive for legislation, while bootleggers work behind the scenes and reap the rewards.
Sometimes the bootlegger and the Baptist merge in the person of a single individual. If you watched much TV in the last year, you’ve probably seen ads for the so-called ‘Pickens Plan’ being promoted by Texas businessman T. Boone Pickens. The plan, which calls for massive government subsidies and intervention to promote alternative energy, which would help fight global warming, reduce dependence on foreign oil, and, purely by coincidence, benefit Pickens personally.
The moral: Don’t equate being pro-free market with being pro-big business. Sometimes the interests of large businesses oppose government interference in the economy. Often they do not. There’s a reason the Republican with the lowest ranking according to the U.S. Chamber of Commerce is Ron Paul.
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Bootleggers are mentioned but Miller and Anheuser Busch are not. There is little doubt of the correlation between difficult to secure goods and the brokering fees that can be earned. Insert marijuana debate talking points here. In the constant redebate of Prohibition, alcohol consumption actually did go down, at least until the time an alcoholic beverage was redefined as anything exceeding 5% alcohol by volume. Tobacco use has gone down with increased regulation; in other words it worked as designed. That PM has benefited in this environment shouldn’t be a cause of scandal. If you wish to argue that the rents accumulated via PM’s distribution network are exploitive and monopolistic, then make the argument plainly. I’m all for breaking up monopolies, even if my libertarian friends are from agnostic to antagonist toward the proposition.
Last week I was accused of being a stooge for the powerful.
Good work if you can get it.
BA, I don’t think you are a stooge for the rich and powerful, though I don’t think you always fully develop the thoughts you put out here.
Even last year, Phillip Morris saw the writing on the wall and decided to negotiate over its legitimate concerns rather than totally oppose the tobbacco bill (as they had in the past). It was not an embrace of socialism or Bootleg Baptistism, but of Realism (hence the split with Ron Paul).
At the same time they did that, I got a phone call from a lobbyist for “Little Tobacco” who wanted a LARGER federal role than what “Big Tobacco” was agreeing to.
So, BA, you certainly are not a stooge for small business either!
As a professional stooge for the powerful, I can attest that BA is again correct. Large corporations don’t like the free market any more than they like government regulation. Or, more precisely, they like both equally: they prefer, at any given moment, whichever alternative they think will make them more money. They do not hesitate to cloak themselves (or encourage the lawmakers the support to cloak themselves) in rhetoric about the “public good” if it leads to an outcome that they consider to be in their interest.
It reminds me of a point that Michael Pollan (author of The Omnivore’s Dilemma) made in the context of an E.coli outbreak in spinach:
“Yet perhaps the gravest threat now to local food economies — to the farmer selling me my spinach, to the rancher who sells me my grass-fed beef — is, of all things, the government’s own well-intentioned efforts to clean up the industrial food supply. Already, hundreds of regional meat-processing plants — the ones that local meat producers depend on — are closing because they can’t afford to comply with the regulatory requirements the U.S.D.A. rightly imposes on giant slaughterhouses that process 400 head of cattle an hour. The industry insists that all regulations be ‘scale neutral,’ so if the U.S.D.A. demands that huge plants have, say, a bathroom, a shower and an office for the exclusive use of its inspectors, then a small processing plant that slaughters local farmers’ livestock will have to install these facilities, too. This is one of the principal reasons that meat at the farmers’ market is more expensive than meat at the supermarket: farmers are seldom allowed to process their own meat, and small processing plants have become very expensive to operate, when the U.S.D.A. is willing to let them operate at all. From the U.S.D.A.’s perspective, it is much more efficient to put their inspectors in a plant where they can inspect 400 cows an hour rather than in a local plant where they can inspect maybe one.
So what happens to the spinach grower at my farmers’ market when the F.D.A. starts demanding a Haccp plan — daily testing of the irrigation water, say, or some newfangled veggie-irradiation technology? When we start requiring that all farms be federally inspected? Heavy burdens of regulation always fall heaviest on the smallest operations and invariably wind up benefiting the biggest players in an industry, the ones who can spread the costs over a larger output of goods. A result is that regulating food safety tends to accelerate the sort of industrialization that made food safety a problem in the first place.”
Tobacco use has gone down with increased regulation; in other words it worked as designed.
Tobacco use did go down after the lawsuits, etc. But it was going down before that too.
The idea that people, even as corporations, aren’t mindless ideologues and attempt to perceive the best interest of themselves doesn’t seem particularly noteworthy to me at least. Corporations do like the free market when it serves their interests. See ADM, corn, Mexico, NAFTA.
I agree that powerful interests look out for the interests of the powerful, BA. If it is in their interests to have lots of government regulation and interference (if your initials happen to be “AIG”, lets say), they will use their power to have things regulated and interfered with; if it is in their interest to have things NOT regulated, then they will use their power to have very little government regulation.
As long as what powerful people want is in accord with the demands of justice, then I have no problem with any of the above; it is when they use their power to advocate for things contrary to the demands of justice that I have a problem with it.
Powerful interests oppose single-payer health care. The unvarnished truth is this: The main reason they oppose it is because they benefit economically (and by that I mean, “add large amounts of money to the piles they already have”) from the status quo.
It seems to me (and I am open to being wrong) that defending a free-market status quo that benefits economic elites is the underlying motivation of many of your posts, rather than a sincere attempt to answer the question, “what are the demands of justice?”
As long as what powerful people want is in accord with the demands of justice, then I have no problem with any of the above; it is when they use their power to advocate for things contrary to the demands of justice that I have a problem with it.
Agreed.
Powerful interests oppose single-payer health care.
True. Powerful interests also support it. But as we just agreed, what matters is not who supports or opposes what, but whether it is a good idea.
It seems to me (and I am open to being wrong) that defending a free-market status quo that benefits economic elites is the underlying motivation of many of your posts
This isn’t my motivation, and in fact I don’t favor the status quo. Indeed, the kind of changes I’d like to see when it comes to health care would mean a much larger change from the status quo than anything Obama has proposed.
…as we just agreed, what matters is not who supports or opposes what, but whether it is a good idea.
No, I did not agree to that. Don’t lawyer me, BA. What I said was that “As long as what powerful people want is in accord with the demands of justice, then I have no problem with [it].”
Matt,
How is what you said different from what I said?
Oh, then apologies, BA. We agree that as long as economic elites advocate for things on the basis of the demands of economic justice (even when it is contra to their economic interests) they should be supported, and when they advocate for their economic interests but against economic justice, they should be opposed. Is that correct?
How about agreeing to address people’s actual arguments rather than immediately heading off into spurious ad hominems? One should be able, for example, to make an argument for the legalization of drugs without immediately being accused of having nothing in mind other than serving the interests of Colombian cartels.
Matt,
Of course.
Again I’d like to bring the subject of “free markets” back to basics.
Does anyone imagine that free market economics is an element of the Kingdom of God?
The free market exists because we live in a fallen world, specifically because most people are primarily motived by self-interest.
At best, the free market is a necessary evil–both necessary and evil. And we actually know quite a bit about both sides of the equation because liberals and socialists and their ilk are busy pointing out the evils, while the right wing stresses the necessary side: the system is needed to motivate people to work and strive, to seek out innovation, to create “wealth” in the worldly sense. (The golden rule, sadly, although it gets great lip service, turns out not to be such a great motivator as compared to the almighty dollar, a.k.a. “mammon.”)
The world has found no better way to organize itself economically than a fundamentally free-market system; the alternatives have all seemed to lead to messes a whole lot bigger than, say, the periodic bad slumps of capitalism. But let’s not try to convince ourselves, contrary to the gospel, that capitalism is anything close to an unalloyed good thing that doesn’t need a great deal of countervailing action at times (public or private) to ease its bad effects on people.
The free market exists because we live in a fallen world, specifically because most people are primarily motived by self-interest.
Actually, I think that’s why governments exist.
It’s true that the free market is all things considered pretty good at taking the baser motives of man and making them work for a socially productive purpose. But that’s not all the market is good for. Even a society of saints (assuming it contained more that just a few people) would find the market system useful as a mechanism of allocating resources to their best and highest purposes. The sheer amount of information necessary to make these decisions is beyond the grasp on any man or group of men, and if it wasn’t for something like the price system is just wouldn’t be possible for the sort of coordination necessary in an advanced society to take place. Defenders of the free market tend to spend a lot more time on the incentives point than on the information point (perhaps understandably), but in my view both are equally vital considerations.
Show me a way of organizing health care that provides care for the same number of people, to the same degree, with the speed and certainty that single-payer systems do, and I’ll be happy to support it.
Single-payer means everyone has health care, and no one declares bankruptcy due to medical bills. Do you free-marketeers see any alternative that has all those advantages, and has been proven in the real world?
It seems that any time an idealistic liberal expresses a desire to work for peace or social justice, conservatives shake their heads in little mimes of concern and “lament” how “it’ll never happen in this fallen world” and so on.
The evidence of the past 30 years is that conservatism has become a way of defending the powerful against the encroachments of their underlings.
Blackadder, from the evidence I’ve seen you are probably a formidable opponent in the courtroom – you argue skillfully, and marshal lots of evidence and references to authorities to support your assertions; but you’re sticking up for a system that exploits people.
The more a system is an unregulated free market, the more history shows that system is oriented to serve the interests of the powerful only, and the more the common good suffers. You end up with a situation where a few people live in fabulous wealth, and the many unwashed toil away for (at best) subsistence wages and in atrocious working conditions.
I’m not against capitalism and (within certain limits) free markets per se – capitalism generates wealth better than any other system devised. But you need some way to counteract the tendency capitalism has to concentrate money (and thus, power) at the top. Progressive taxation, redistributive programs, and government-provided health insurance are great ways to do that.
Show me a way of organizing health care that provides care for the same number of people, to the same degree, with the speed and certainty that single-payer systems do, and I’ll be happy to support it.
Done.
The more a system is an unregulated free market, the more history shows that system is oriented to serve the interests of the powerful only, and the more the common good suffers. You end up with a situation where a few people live in fabulous wealth, and the many unwashed toil away for (at best) subsistence wages and in atrocious working conditions.
I disagree. If you look at things like the Index of Economic Freedom, for example, the countries with the greatest level of economic freedom tend to be the ones where people don’t toil at subsistence wages in atrocious working conditions.
I’m not against capitalism and (within certain limits) free markets per se – capitalism generates wealth better than any other system devised. But you need some way to counteract the tendency capitalism has to concentrate money (and thus, power) at the top. Progressive taxation, redistributive programs, and government-provided health insurance are great ways to do that.
I hope I won’t shock you too much when I say that I also believe in progressive taxation and redistributive programs. Heck, I would even give government a special role in health care, though I think its footprint ought to be a lot lighter than it currently is. Where we differ (one of the places we differ, at any rate) is that I don’t think the government needs to be heavily involved to keep all the wealth in a given society from concentrating at the top. Ordinary competitive pressures will do that job (not perfectly, but well enough that government efforts will pale in comparison).
BA,
Singapore’s system seems to give a bigger role to government and government mandates than anything President Obama has proposed.
Singapore’s system seems to give a bigger role to government and government mandates than anything President Obama has proposed.
Yes and no. It’s bigger is some ways, but in other respects it gives a greater role to market forces than does the current system.
More importantly, though, it meets Matt’s three criteria that it be a system that 1) actually exists; 2) works as well as a single payer system; and 3) has less governmental involvement than a single payer system. Obviously I think that you could have a health care system that had even less government involvement than Singapore and still work just as well, but since no country has as yet adopted my crazy ideas, it doesn’t meet Matt’s requirements.
Reminds me of Gabriel Kolko and his works on the Progressive Era:
Kolko, in particular, broke new ground with his critical history of the Progressive Era. He discovered that free enterprise and competition were vibrant and expanding during the first two decades of the twentieth century; meanwhile, corporations reacted to the free market by turning to government to protect their inherent inefficiency from the discipline of market conditions. This behavior is known as corporatism, but Kolko dubbed it “political capitalism.” Kolko’s thesis “that businessmen favored government regulation because they feared competition and desired to forge a government-business coalition” is one that is echoed by conservative economists today.
I believe that this shows the problem that whenever government becomes involved in any activity it will ultimately become captive to special interests that will put their welfare over the general welfare. When you attempt to regulate industry the regulators become captives of the regulated. When government becomes involved in interventionist military activities abroad it becomes captive to special interests (see Meirsheim & Walts The Israel Lobby)which put their interests above that of the general interests. Any national health care system will become captive to health care providers who will be looking after their interests as opposed to the general welfare.
Free Markets may not always be beneficial to the general intersts, but neither are interventionist governmental policies. At least in a free market these special interests are not given the coercive powers of government.
BA writes:
“Even a society of saints (assuming it contained more that just a few people) would find the market system useful as a mechanism of allocating resources to their best and highest purposes.”
This is an extremely idealistic view of the matter. The system gives the people what they want–a lot of stuff that is good for them, but a lot of stuff that is not good as well, such as SUVs and Big Macs and environmnetal pollution.
And yes, government is a necessary evil, too, and prone to going wrong in its own ways. I guess we could say that government and the free market act as checks and balances on each other–which is pretty close to the Catholic understanding of the matter as I understand it. Private property and the free market protect individuals from excessive government control while government is there to protect the common good.
And the arrangement implied her is called: Social Democracy.
This is an extremely idealistic view of the matter.
Well, of course. A society of saints isn’t terribly likely. The basic point remains, however.