Bootleggers & Baptists: How Economic Forces and Moral Persuasion Interact to Shape Regulatory Politics (5 page)

As Booth’s effort gained momentum, the Methodists and brewers decided to take him on; yet they proved unable to gain meaningful political support for their efforts, largely by not cooperating in pursuing their common goals. Brewers in communities where the Salvation Army held services paid local beer lovers to disrupt the army’s music and preaching. Meanwhile, Methodist bishops and other religious leaders struggled to shut down the army’s successful efforts to attract members and funds for its growing enterprise. Instead of disrupting the preaching, playing, and singing in the streets, the bishops worked for the enforcement of city ordinances that would require permits for religious parades and noisy street gatherings. Though both groups were working toward the same end, they used distinct methods and strategies in doing so.

Roy Hattersley (1999, 253–54) describes the development this way:

And it was in 1880 that there came into existence the strange alliance which menaced The Salvation Army for the rest of the century. “Professors of religion and haters of religion,” Booth told his followers, “combined to drive you away.” A collation of intellectually fastidious bishops and frightened brewers were coming together. The whole establishment, seeing the uniforms and the banners, feared that the church militant might take on a political or military form and that William Booth, having taught the working classes to pray, would encourage them to fight. They were joined in antagonism by the people who simply thought William Booth ridiculous. (pp. 253–54)

Opposition from brewers grew as the army experienced increasing success in converting London’s street people. The Salvation Army (2011) explains how an opposing army rose against them:

Despite its rapid increase in numbers and growing success, The Salvation Army provoked brutal and determined opposition, attracting many enemies. Pub and brothel owners were particularly angered when many of their former customers were converted in Booth’s Army. Their profits fell rapidly and business suffered. Many persuaded their friends to join ‘The Skeleton Army’ whose main ambition was to get rid of The Salvation Army at any cost. (The Salvation Army 2011)

Disruptions of Salvation Army activities reached such a tempo that Booth appealed to Prime Minister William Gladstone for protection. Although Booth received no official government response, his appeal captured the attention of the
Times
of London, which did not endorse the army’s activities but editorialized in favor of freedom of speech. Booth, prefiguring the more famous 20th-century campaigns of Gandhi and Martin Luther King Jr., instructed his people in the art of passive resistance. As a result, Booth and his Salvation Army gained national attention.

Salvation Army preachers were jailed for disturbing the peace with their sermons and music, and mayors, especially those who were also brewers, refused to offer police protection when the army came to town (Hattersley 1999, 239). As the disruptions continued, Booth described this situation this way:

In nearly every town where there has been any opposition we have been able to trace it more or less to the direct instigation and often the open leadership of either Brewers or Publicans or their employees. The plan adopted is by treating or otherwise inciting gangs of roughs. (Hattersley 1999, 273)

In spite of the opposition, Booth’s strategy gained momentum—and eventually the support of wealthy philanthropists. With its coffers and membership both swelling, the army captured the attention of the Church of England, which debated how it might affiliate with William Booth’s successful program but made no official accommodation with the upstart group. The Salvation Army moved on to become a global ministry.

Efforts to regulate the Salvation Army, supported by brewers and Methodists, were unsuccessful. One factor in that failure may have been the lack of a political broker. Most Protestant denominations, including the Methodists, were fractured over doctrinal and other issues, and the Church of England no longer enjoyed its monopoly influence over Parliament. Put another way, no real cartel existed to oppose the Salvationists. Those opposed to the army were unable to gain parliamentary action that might have effectively blocked its efforts at the national level. Instead, the opposition had to rely on desultory efforts to step up enforcement of city ordinances. A successful Bootlegger/Baptist strategy must involve effective political brokers who can deliver effective restrictions across the relevant jurisdictions. Thus, the Salvation Army prevailed despite Bootlegger/Baptist opposition.

Cooperative Strategy

Our third type of Bootlegger/Baptist interaction—in which private firms fund public advocacy groups—is well illustrated by a recent regulatory episode involving Walmart’s support for President Obama’s 2009 Affordable Care Act. This case also provides a convenient demonstration of how politicians can spur firms to cartelize, either formally or informally, to gain political benefits (Adamy and Zimmerman 2009).

To understand this story, we must bear in mind that although the world’s largest retailer is routinely attacked for not providing more generous insurance to all its workers, it has actually greatly expanded opportunities for its employees to obtain company-provided health care benefits, especially when compared with its smaller competitors. In 2009, some 52 percent of Walmart’s 1.4 million U.S. employees were covered by company-provided insurance, up from 46.2 percent three years earlier (Adamy and Zimmerman 2009).

Walmart was a crucial supporter of President Obama’s Affordable Care Act, which requires the mega-retailer’s competitors to pony up health benefits as well. A story in the
Wall Street Journal
summarized the company’s position with the telling headline “Wal-Mart Backs Drive to Make Companies Pay for Health Coverage” (Adamy and Zimmerman 2009). In this case, a host of groups supporting government-enforced expansion of health care played a highly visible Baptist role—and among the most prominent was the nicely named Center for American Progress (CAP), which received at least a half-million dollars in Walmart funding.

Also joining the fray on the Bootlegger side was the Service Employees International Union (SEIU), whose logo appeared alongside those of Walmart and CAP atop a letter announcing the retailer’s support for the Affordable Care Act (Podesta, Stern, and Duke 2009). The union, too, backed its words with cash. Tax documents show that in 2010 alone, CAP’s activist arm, the Center for American Progress Action Fund, received $625,345 from the SEIU.

Like Walmart, the union was interested in raising the costs of its competitor—nonunion labor. Although conventional wisdom often paints labor groups such as SEIU and capitalist employers such as Walmart as eternal and inherent antagonists, both had a shared interest in using government regulation to raise their rivals’ costs. Yet the Bootleggers could have never done it without the Baptists leading the charge.

CAP is a genuine leftist advocacy group that promotes its values across a wide array of policy areas—and there’s little doubt it would have backed the Affordable Care Act (though perhaps less effectively) even without corporate or union funding. Sometimes, however, Bootleggers find it more expeditious to organize and fund their own ad hoc Baptist associations—typically with high-sounding names designed to help them pass as public interest groups. For example, firms in the housing industry formed a group called the National Homeownership Strategy (NHS) that lobbied for more federal housing assistance for lower-income families.

Bootlegger-spawned Baptist groups may also serve a secondary function: when an industry’s existing trade associations encompass members whose interests are normally aligned, but diverge on a particular issue, a subset of the industry may find it necessary to combine and focus its efforts through a new and separate entity that has more of a Baptist flavor. We find an example of this situation in a controversy that emerged in the trucking community. It exposed a division between larger commercial enterprises, such as Schneider National, and small driver-owned firms that compete for freight forwarding and delivery (Greenfieldboyce 2011).

The controversy started with a proposal from the U.S. Department of Transportation that mandated Global Positioning System (GPS) devices for all trucks. The devices cost roughly $2,000. They monitor and record a truck’s location and activity, making possible more effective enforcement of adherence to Department of Transportation regulations limiting excessive driving time, which can lead to drowsy drivers and accidents. Most larger trucking companies already had their trucks equipped with the devices; they use them to encourage efficient hauling (Peter Klein 2011). Smaller operators keep written logbooks; these would be replaced by the more costly GPS monitors. Requiring small operators to go high tech would impose no cost on the already equipped larger firms.

The initial Baptist role in this story is played by Jackie Gillan, president of Advocates for Highway and Auto Safety, which is described on its website as “an alliance of consumer, health and safety groups and insurance companies and agents working together to make America’s roads safer.”
4
Tired truckers, Gillan argued, “are a major, major safety problem. Paper log books are easily manipulated. They are easily falsified” (Greenfieldboyce 2011). Todd Spencer, executive vice president of the Owner-Operator Independent Drivers Association, an organization with about 150,000 members—many of whom own just one truck—thought otherwise. Spencer didn’t buy the argument that GPS devices would detect tired drivers or catch cheaters: “The only thing that it will automatically record,” he argued, “is when a truck is moving.”

What about the Bootlegger element? The American Trucking Association, which represents thousands of trucking companies, supported the Department of Transportation proposal, but not all of the group’s members were strongly committed to the effort. As usual, there were differential effects across industry members. Thus, five of the largest trucking companies formed a new lobbying group with a conspicuously Baptist name: the Alliance for Driver Safety and Security. The alliance supported the rule, perhaps expecting to raise rivals’ costs.

An official with alliance member Schneider National praised the GPS plan as an effort to “elevate the expectations and the performance of all motor carriers” (Peter Klein 2011). The spokesperson for the independent owner-operator drivers’ group took a more jaundiced view: “When they talk about leveling the playing field, what they are really saying is we need to get behind efforts that will increase costs of our competitors. We don’t find that to be an especially noble effort.”

One final intermediary type of scenario is worth considering. Instead of forming their own Baptist groups or merely funding Baptist efforts already under way, Bootleggers may seek to influence the positions or priorities of existing Baptist groups to ensure they align with the Bootleggers’ interests. An example of this approach is seen in the debate over a controversial new technology called fracturing—more popularly known as “fracking”—that uses hydraulic pressure to access natural gas deeply embedded in shale. Old gas fields in Ohio, Pennsylvania, and elsewhere have become highly productive thanks to fracking. But the technique has also spurred environmentalist concerns about the potential for earthquakes, damage to water supplies, and harm from the disposal of chemicals used in the fracking process.

However, environmentalists also have reasons to welcome fracking: expanded natural gas production could help enable coal-fired electric utilities to switch to the cleaner fuel. The Sierra Club is the leading environmental group dedicated to ridding the United States, if not the world, of high-carbon-emitting fuels—and coal, in its view, is the chief culprit. Natural gas producers are rather keen on this idea, because it favors their product over coal.

Now, enter the Bootlegger. Chesapeake Corporation is one of the nation’s most innovative and successful natural gas producers. It, too, would like to see coal displaced by gas. Chesapeake made a $26 million donation to the Sierra Club to help fund an attack on coal directed to the EPA, with Sierra leading the charge (Martosko 2012). As it turned out, Sierra Club and other like-minded groups were successful. Citing the harmful effects of carbon emissions, the EPA issued final rules that, when implemented, will shut down or force fuel switching for 20 percent of America’s coal-fired power generation. To the chagrin of environmentalists, President Obama postponed implementation of the rules.

But the story doesn’t end there. Perhaps sensing growing concern among environmentalists about natural gas fracking, the Sierra Club shifted its stance—but only after receiving the Chesapeake payment. The organization disavowed support for natural gas but chose not to return the $26 million. One need not be an incorrigible cynic to wonder whether the group might have altered its view on the perils of fracking earlier had it not been for the promise of those Chesapeake funds.

Meanwhile, natural gas producers may have gotten what they wanted: a regulation that raises rivals’ costs. Sierra Club got what it wanted as well: $26 million in funds. At first blush, the whole thing sounds like a case of gains from trade, but it is far from clear that society gains. Instead, vast resources have been devoted to restricting output and padding the pockets of a handful of businesses and advocacy groups.

Coordinated Strategy

The fourth and final category of Bootlegger/Baptist interactions involves political actors—often presidents—taking the initiative to yoke together interest groups and regulators in pursuit of national political goals. As a first example of this sort of activity, we turn to the recent financial crisis.

The 2008 credit-market meltdown brought with it the collapse and taxpayer bailout of Fannie Mae and Freddie Mac; the nation’s gigantic quasi-public mortgage refinance units suddenly became fully owned by American taxpayers (Wallison 2008). For years, the two agencies formed a backstop for private mortgage lenders who made loans and sold them to the two agencies. The agencies in turn securitized the mortgages with their own bonds, which were sold in global credit markets.

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