This article was originally published in a longer form by the Indian magazine Swarajya.
I’d like to begin with a small confession. Ever since I read Bruce Yandle’s “Bootleggers and Baptists – The Education of a Regulatory Economist” (1983), it has become a cherished pastime of mine to view the many industries of the modern economy through the lens of the bootleggers and baptists analogy. Naturally, I was not surprised to find that that analogy was also useful in explaining the direction of taxi regulation in our country.
The Bootleggers and Baptists Analogy At the time of Yandle’s writing, many states in the United States had laws which banned the sale of alcohol on Sundays. These laws were not only supported by conservative baptists, who viewed alcohol as demonic, but also by bootleggers (illegal traffickers of alcohol) who made good money selling alcohol illegally on Sundays at higher prices.
While baptists would publicly lobby for the Sunday ban on the sale of alcohol, bootleggers would help out local politicians who were (and are) perennially in need of re-election funding. The law banning Sunday sales would contain no provision for banning the consumption of alcohol. This would ensure that both interest groups stayed happy.
And what about the consumer? The answer is simple; they get the short end of the stick. The higher prices due to the ban make their pockets lighter. In effect, it is the (un)holy alliance of baptists and bootleggers which would cause prices to increase.
This post was published at Ludwig von Mises Institute on Dec 31, 2016.