THE Bootlegger/Baptist theory of regulation was discussed, for the first time, in the May/June 1983 issue of Regulation magazine. The author was economics professor Bruce Yandle. In 2014 he and another economics professor, Adam Smith (I know!), published an expanded and updated version of how B/B “works.”
According to the authors, “the theory gets its name from two seemingly unrelated groups that both stand to gain from restrictions on the sale of alcoholic beverages. Baptist leaders lobby openly and enthusiastically for regulation of spirits; they prefer a world where less alcohol is consumed. Bootleggers, the illegal sellers of alcoholic beverages, happily support [restrictions on alcohol sales]; Sunday closings shut down legitimate sellers, thus expanding opportunities for bootleggers to sell their wares.”
Well-meaning restrictions implemented “for the good of us all” usually create profitable opportunities for the, well, business-minded. In the states, for example, the high taxes on cigarettes have unleashed the “inner entrepreneurs” of certain enterprising citizens.
About 10 years ago, the New York Times reported about “The Brisk, Shady Sale of ‘Loosies’ ”:
“The administration of Mayor Michael R. Bloomberg has outlawed smoking in restaurants, bars and playgrounds, and outside hospital entrances. Even city parks, beaches and pedestrian plazas will soon be off limits to smokers. Then there have been successive rounds of taxes — the most recent one, a $1.60 rise in the state tax… — that raised the price of a pack of cigarettes to $12.50 at many Midtown newsstands.
“ ‘The tax went up, and we started selling 10 times as much,’ Mr. Warner said. ‘Bloomberg thinks he’s stopping people from smoking. He’s just turning them onto loosies.’ ”
Mr. Warner is Lonnie “Loosie” Warner. He and his two assistants sold loosies on Eighth Avenue, Midtown, NYC.
“Mr. Warner said he bought his cigarettes — almost always Newports — for a bit over $50 a carton from smugglers who get them in states like Virginia, where the state tax is well under a dollar a pack. He then resells them for 75 cents each, two for $1 or $8 for a pack ($7 for friends).
“Mr. Warner said he and each of his two partners took home $120 to $150 a day, profit made from selling about 2,000 cigarettes, mostly two at a time. Each transaction is a misdemeanor offense….
“For the moment, business is good enough that Mr. Warner said he intended to buy health insurance for the first time.”
In the summer of 2014, however, another NY loosie vendor, Eric Garner, was arrested by the police. When he resisted — “I'm minding my business, officer, I'm minding my business. Please just leave me alone.” — he was put in a chokehold by an officer, and later died.
A year after that tragic incident, the Wall Street Journal reported that “loose untaxed cigarettes were being openly peddled during the evening rush on the crowded streets of East Harlem, at times in plain view of New York Police Department officers on foot patrol”:
“ ‘Newports, Newports, Newports,’ a bearded vendor barked along Lexington Avenue near 125th Street, his voice fading as an officer approached and then passed by. ‘Newports, Newports, Newports.’
“Since Mr. Garner’s death, ‘the police don’t bother me about selling loosies,’ said Yusef Malbon, 42 years old, another peddler who stays in a nearby homeless shelter and uses the $8 to $16 he can make in a day to wash his clothes and buy food. ‘They don’t care about it as much as they used to.’
“The NYPD has made nearly 33% fewer arrests citywide so far this year for selling untaxed cigarettes, the crime Mr. Garner was suspected of during a deadly confrontation on Staten Island last summer.”
In the case of the taxed cigarettes, the Baptists are our health advocates, who only mean well, of course, and are very worried about our well-being, of course. As for the Bootleggers, they are the loosies and smugglers who profit from what is clearly a moronic tax law which they do not oppose, of course.
Economist Dan Mitchell noted that another “unholy” B/B alliance involves the War on Drugs “which has the support of both the activists who despise drugs and the criminals who get rich selling drugs in the black market.”
The Bootlegger/Baptist label, say Yandle and Smith, “is now applied to a wide variety of regulatory episodes where there term ‘Bootlegger’ no longer implies illegal action but rather applies to political action in pursuit of narrow economic gains. Moreover the term ‘Baptist” does not necessarily indicate a religious motivation but rather group action driven by an avowed higher moral purpose or desire to serve the public interest.”
On Saipan, by now, we know who the B/B folks are.
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