Thursday, September 15, 2016

"Bootleggers and Baptists" at the Gate

We live in strange times. Even though people still look to Washington in hopes of getting sometime done, it's hard to feel good about the majority of people who are elected for that purpose. In many instances, I'm compelled by the trends behind the individuals involved. Perhaps that helps to explain, why I've become less inclined over the years, to delve into the particulars of political personalities.

Both Democrats and Republicans have ignored supply side fundamentals, especially those regarding practical aspects of knowledge use in today's marketplace. This inclination to dismiss deep structural issues out of hand, undermines both political platforms - a trend which Trump's ascendance exemplifies all too well. Consequently, the fact he is noncommittal about many policy preferences, could oddly work in his favor. Whereas the fact Clinton accepts more of those "back room" mutual agreements among progressives and conservatives alike, may work against her. Meanwhile the "old guard" remains nervous about Trump, in part because he can't be counted on to "guard the gate".

Perhaps a good way to describe this seeming oddity, is in terms of "bootleggers and baptists". Consider the gate as economic access - particularly in terms of knowledge use. My dad still has vivid memories from his youth of the real thing, in Depression era East Texas. He even put some of those stories to paper - decades earlier - when he first retired. Meanwhile, a national version of this phenomenon is proving somewhat more difficult to eradicate. From Wikipedia:
Bootleggers and Baptists is a catch-phrase invented by regulatory economist Bruce Yandle, for the observation that regulations are supported by both groups that want the ostensible purpose of the regulation, and by groups that profit from undermining that purpose.
For much of the 20th century, Baptists and other evangelical Christians were prominent in political activism for Sunday closing laws restricting the sale of alcohol. Bootleggers sold alcohol illegally, and got more business if legal sales were restricted. Such a coalition makes it easier for politicians to favor both groups. The Baptists lower the costs of favor seeking for the bootleggers, because politicians can pose as being motivated purely by the public interests of well-funded business. Baptists take the moral high ground, while the bootleggers persuade the politicians quietly, behind closed doors. 
Even though both progressives and conservatives have their own "high moral grounds", it is the progressives which have inadvertently proven most public with theirs, as to "needed" regulations which can also impact the most basic elements of economic access. For instance, Bernie Sanders, in his recent push for "free education", provided an apt reminder, how progressives increased educational costs in their ongoing efforts to expand university access. One could say progressives have taken the "high moral ground" or Baptist role in this instance, via their reaction to a lack of economic access.

Alas, then things become more complicated. The (more) public nature of a progressive high ground dialogue, means it's easy for Republicans to blame Democrats, as responsible for driving service product price levels ever higher, even as they remain quiet about their own restrictive supply side role. One is reminded of the old rich who don't wish to advertise their good fortune, lest attention be drawn to its "unseemly" political source.

A good example of "knowing too much" in this regard, was Milton Friedman, who broke what was mostly a code of silence, regarding physicians and licensing restrictions. In recent years some have asked, "Why do tight money conservatives reject Milton Friedman's monetary wisdom - especially since he was such a staunch supporter of free markets?"

While differences abound between pro business and pro market perspectives, some rejections likely exist since Friedman committed the "unpardonable" sin, of highlighting a (mostly otherwise) hidden supply side problem. I say mostly hidden, because while the layperson speaks about it, policy makers steer clear wherever possible. Even though many of Friedman's targets involved progressive policies, he had few qualms about pointing out what was particularly a conservative role, given the supply side limits of healthcare. Today, advocates of tight money, are often "closet" advocates for tight restraints, in knowledge based supply side production.

Hence a lot of bootlegger and baptist action continues to take place behind the scenes, while media debates for ever more healthcare regulation, have been a constant feature of daily television news for decades. The progressive (Baptist), in promoting government "protection", still does the heavy lifting on the conservative's (bootlegger's) behalf, for supposedly "rational" supply side measures. While progressives contribute to higher knowledge use prices in the mistaken belief that product demand is the most important issue, many conservatives also understand that limits to supply are responsible for their own prosperity.

Megan McArdle argued in an article earlier this year, "Cut health costs or help workers. You can't do both." Perhaps the bootlegger versus baptist story helps to explain why her insightful argument mostly fell on deaf ears. Fortunately, the process of production reform for healthcare could begin along the margins. But too many wealth capture gains exist, to expect real change in the circumstance of general equilibrium, anytime soon.

No comments:

Post a Comment