The U.S. economy is no longer performing at historic levels of growth. Today, there is a new, slow growth economy entangled with regulation.

1. Bootleggers & Baptists in the
Garden of Good and Evil
Understanding America’s
Entangled Economy
Capitol Hill Campus
May 20, 2015

2. Exploring the Entangled Economy

3. KUDZU

9. Growth Policy Needed
Progressive Policy Institute president
Michael Mandel responded: “Based on
today’s release from the BLS, ten-year
productivity growth has now plunged to
1.4%, the lowest level since the 1980s. By
comparison, ten-year productivity growth
was 2.2% when Bill Clinton left office at the
end of 2000, and hit a high of 3% at the end
of 2005.”

10. Is there a Wizard???

11. • Bootleggers & Baptists
• Good & Evil?
• Evolving Theory
• Recognition
• Effects

12. What do we mean by Bootleggers & Baptists?

13. BOOTLEGGERS & BAPTISTS
Unvarnished special interest groups cannot expect politicians to
push through legislation that simply raises prices on a few
products so that the protected group can get rich at the expense
of consumers. There must be a better story! Efforts to obtain
special favors must be fortified with public interest stories. Moral
issues are offered as the reason for regulating. And the public
interest may be served…a bit. (Bruce Yandle. 1983. Bootleggers
and Baptists.)

14. Garden of Good & Evil?

15. Bootleggers & Baptists is
a transmission theory
Politician/
Brokers
Interest
Groups
Broker first has a transfer knowledge
problem. Then, a justification problem

16. Why Command and Control?

18. Targeting Benefits with Regulation

19. "Most of our business comes
from wine sales so the legislation
would definitely hurt smaller
businesses like this," says Ryan
Hollencamp, University Liquor.
"We don't see that alcohol is
bringing a lot to the table that's
benefiting our culture, but we are
seeing a lot of damage," says Dr.
Dan Riley, at Calvary Baptist
Church
Baptist churches join liquor stores to fight
supermarket wine March 4, 2009. WATE Knoxville.
http://www.wate.com/story/9949778/baptist-churches-join-liquor-stores-to-fight-supermarket-wine-
salessales

20. Noble Energy, Anadarko, Encana Support Tightening Colorado
Air Rules
Cathy Proctor, Denver Business Journal, Feb. 13, 2014
Three of Colorado’s biggest oil and gas companies and a national environmental
group are maintaining their support of new, tighter regulations the state is proposing.
The rules are meant to cut pollution from wells pipeline and processing plants and
improve air quality across the state.
Colorado adopts tougher air rules for oil, gas industry
Bruce Finley, The Denver Post , Feb. 23, 2014.
Colorado adopted tougher air pollution rules for the oil and gas industry — the first in the
nation to cover methane, a gas linked to climate change.
State air quality control commissioners voted 8-1 on Sunday to pass the rules with the
support of leading operators Anadarko Petroleum, Noble Energy and Encana.
But they did so over the protests of much of the oil and gas industry, including the powerful
Colorado Oil and Gas Association and Colorado Petroleum Association trade groups. The
Environmental Defense Fund led the creation of rules, which withstood COGA and CPA
challenges.

21. Why Big Tobacco Is So “Concerned” about E-Cigs and Your Health
The Unholy Alliance of Cronies and Busybodies Strikes Again
Nick Zaiac
March 24, 2015
“When it comes to e-cigs, Big Tobacco is concerned for your health,” writes Martinne
Geller for Reuters. Her article attempts to explain the recent trend of tobacco
companies working with the US government and public-health advocates for more
stringent regulation of electronic cigarettes (e-cigs).
Just days before this Reuters report hit the internet, a team of well-known professors
of regulatory policy released a report explaining why this alliance would form. The
answer lies in the familiar parable of “Bootleggers and Baptists” laid out by Bruce
Yandle in the journal Regulation. Coincidentally, it is this same journal that would
publish the report on e-cigarettes 22 years later.
Simply put, industry incumbents seek regulation to keep upstart competitors at bay,
while moralizers (the “Baptists” in the parable, or anti-tobacco groups today) seek to
regulate the industry to make selling products they dislike more difficult. Both sides
seek regulation, but for very different reasons.

22. Mr. Putin and Hydraulic Fracturing
Speaking to a 2013 London economic
conference, Russian President Vladimir Putin
sounded a green alarm about the use of hydraulic
fracturing for recovering natural gas: “If you frack,
black stuff comes out of the tap.” A host of
environmentalists would likely endorse Putin’s
concern for drinking water purity. As stated on the
Sierra Club’s web site: “Fracking for natural gas
damages the land, pollutes water and air, and
causes illness in surrounding communities. It is
also a major threat to our climate…We need to
move beyond natural gas.”
Quote from Robert Zubrin. Putin’s Anti-Fracking Campaign. National Review. May 5, 2014.
http://www.nationalreview.com/article/377201/putins-anti-fracking-campaign-robert-zubrin.

23. Green Groups Go Red, Team With Putin To Fight Fracking
Green Groups Go Red. Team with Putin to Oppose Fracking.
Investors Business Daily
January 27, 2015
http://news.investors.com/ibd-editorials/012715-736562-environmental-groups-take-russian-money-to-oppose-
fracking.htm
[T]he anti-fracking movement has received funding from the fossil fuel industry. But the source of funds
isn't a U.S.-based company. The money is from fossil fuel concerns linked to a country that is emerging
as an enemy of America.
A shadowy Bermudan company that has funneled tens of millions of dollars to anti-fracking
environmentalist groups in the United States is run by executives with deep ties to Russian oil interests
and offshore money laundering schemes involving members of President Vladimir Putin's inner circle,"
the Free Beacon reported Tuesday. Russia and U.S. environmentalist groups have a common goal:
They both want to see fracking shut down in the U.S. Russia wants to stop it because it's hurting that
country's oil and gas industry.
The green groups oppose fracking simply because they loathe fossil fuels and the benefits they bring —
though, apparently, not enough to stop taking Russian oil money, a fact that calls into question their
integrity.
It's a bootleggers-and-Baptists relationship, in which two groups with seemingly opposite interests team
together against a mutual foe. The Baptists, who want restrictions on the sale of alcohol, have common
ground with the bootleggers, who know that the Baptists' prohibition of legal sales pushes business their
way.

24. Bootleggers Subsidizing Baptists
Teamsters fund Sierra Club in 2009 fights NAFTA’s relaxation of
trucking rules.
Chesapeake Gas and American Gas Association in 2012 provides
$26 million subsidy to Sierra Club beginning in 2007 in an EPA
struggle to eliminate coal-fired utilities.
United Arab Emirates funds 2012 Promised Land, an anti-
fracking movie developed to build support for regulation
limiting use of fracking to obtain natural gas and oil from
deep shale deposits.

25. The Data

28. Budgetary Costs of Regulatory Agencies, 1960 -2015
(2009 Dollars)
Susan Dudley and Melinda Warren. George Washington University, Center for Regulatory Studies,
2015. 2015 Regulators' Budget: Economic Forms of Regulation on the Rise.
http://regulatorystudies.columbian.gwu.edu/2015-regulators-budget-economic-forms-regulation-rise

29. Shall. Must. May not. Prohibited. Required.
What about the Effects?
Patrick McLaughlin

32. Natalie Scholl, AEI, September 2, 2014. How Regulation Smothers Productivity Growth, in One Chart.
http://www.aei.org/publication/how-regulation-smothers-productivity-growth-in-1-chart/print/

34. Source: Office of Advocacy, U.S. Small Business Administration, from data provided by the U.S. Bureau of the Census, Statistics of U.S. Business.

37. UNDERGROUND ECONOMY
Richard Cebula and Edgar L. Feige. 2012. America’s Unreported Economy:
Measuring the Size, Growth and Determinants of Income Tax Evasion in the
U.S., Crime, Law and Social Change. April, 2012: 265-286

43. How do you get untangled?