Moral Meets Market: The Bootleggers and Baptists Theory in Policy Making
We live in a very complex world, and that is both a blessing and a curse, on one hand, it shows us the fascinating complexity of the universe around us, but on the other hand, it also makes us realize just how limited our brains are sometimes to properly evaluate complex scenarios and take a good perspective on how things are connected. This can lead us to have a lot of shortcomings and biases when analyzing complex scenarios and that’s probably the case for most things in life, we have a limited amount of time and information and based on that, we try to make the best decisions.
One concept that can help us view complex scenarios in a better way is brought to us by one of the most important –and sexiest– fields of human knowledge, economics, which describes how in most policy decisions you might have unexpected allies working together to get the same goals but with radically different motivations, this sometimes can lead to funny examples of policies that benefit society, and in some other cases this can lead to certain groups with a moral concern to be used as a facade for dark forces underneath, and take advantage of the public desire for something better, while offering them a solution that on paper might be good but in reality, it will be detrimental for all of us.
The Term Bootleggers and Baptists comes from economist Bruce Yandle, he coined the term because, during the US prohibition era, two main forces were pushing towards the removal of legal consumption of alcohol in the US. On one hand, we had the Southern Baptists and other religious groups, their main concern was that the consumption of alcohol would corrupt the country and it was leading also to higher levels of crime. (there is indeed a vast literature about the relationship between alcohol consumption and violent crime) The other group that was also pushing for prohibition were the bootleggers and other mobsters who wanted to eliminate the competition of those who were running legal alcohol companies also because due to prohibition, bootlegged alcohol would have an increased margin, increasing their profits and revenue.
Now, this theory illustrates that sometimes for certain policies to survive there is an uncommon alliance of groups with opposing moral positions for a common goal. Which in theory might be a positive thing and that is ok in some cases where you get the Baptists with the moral high ground advocating and changing the public perception of a specific topic, but you also require the bootleggers those that have the capital and the influence to grease up the political machinery to work and shift towards their desired common goal. But sometimes those with vested interests in certain policy changes might abuse the current turmoil to put themselves as the force of change people want and instead of a better solution, you get something even worse.
The Kyoto Protocol
The Kyoto Protocol, adopted in 1997, aimed to reduce greenhouse gas emissions in 41 countries plus the European Union to 5.2 percent below 1990 levels. It was seen as a significant environmental treaty, and let’s be honest it is a pretty noble goal considering the environmental damage that has been caused by human actions in the past couple of centuries.
In a very interesting article from 2001, Bruce Yandle unravels the complexity that such a multilateral agreement has how it could be better for some countries to not sign these sorts of treaties for their best interest, and why others might be pushing forward for it. In a nutshell, Yandle discusses how developed countries with high emissions are the ones with the strongest pressure to reduce their emissions this might be detrimental to their economic growth and affect the lives of their citizens and their well-being. On the other hand, developing nations with low emissions might have the incentive to be a part of this protocol because they are almost guilt-free to continue pursuing and growing their economies with dirty energy sources having an economic benefit and even an advantage over developed economies.
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Also, some energy companies have a vested interest in these protocols and agreements because of their increased profitability in their low-carbon products such as “natural” gas, and other businesses beyond basic fossil fuels. This can also lead to a phenomenon known as “regulatory capture” when a small and powerful minority can coerce or modify a piece of legislation or regulation to benefit their interests and the B&B theory clearly shows this happening when sometimes noble morally positive movements are aligned and captured by forces with nefarious interests that will not benefit society as a whole but just them, and can swindle, the public, and policymakers towards bad policy.
Germany’s Nuclear Phase-out
The decision by Germany to shift from nuclear power to alternative renewable energy sources sent a significant message to the world's energy markets. This policy, heavily influenced by moral considerations rather than factual evidence, emerged in response to public fear following Japan's Fukushima nuclear disaster in 2011. This fear, fueled by a lack of public understanding, along with the influence of environmental organizations and the rising Green Party, created an ideal scenario for implementing this policy.
Analyzing this situation through the lens of the Baptists and Bootleggers theory, it's straightforward to pinpoint and comprehend who the 'Baptists' are in this context. We have environmental group activists and the Green Party fueled by their desire for more political power, aligned with this short-term panic by the population to position themselves as the “saviors” or as the voice of those concerned by the environment, this also goes alongside a rise of renewable energy alternatives which are great don’t get me wrong but the vilification of nuclear was a political and economic ploy nonetheless.
But who were the bootleggers in this case? Well even though this political decision would take many years to come into effect the country still needs energy at an affordable cost, energy regardless of the source is the blood of civilization and a must for any economy to thrive. So, the options were to buy and import cheap fossil fuels from Russia through the diverse pipelines that entered the continent. This can also be explained not only by an attempt to have more harmonious relationships between Europe and Russia–when we still thought that was possible– but also because a former German counselor sits on the board of Russia’s biggest oil and gas company and was being bankrolled by them. We also have the coal industry which is a powerful political pressure in German politics, so much so that the Green party had to vote to approve the destruction of an entire village due to the expansion of a coal mine, which is so bad in so many aspects, but also shows the power and influence of the coal industry which would also benefit from a nuclear phase-out.
This marks the Nuclear phase-out in a much clearer picture, on the Bootleggers' side we have the joint forces of two incredibly contaminant fossil fuels, one backed by the Russian regime and another with deep political ties in the German establishment. And in the Baptists, we have environmental groups, and a power-hungry political party even though they might not see eye to eye their common enemy of dismantling Nuclear power has brought them together whether they like it or not.
So, has this been a good or a bad decision? It yet remains to be seen in the big picture, the benefits of using nuclear as a consistent way for carbon-free energy are clear, but the problem is also the signaling that Germany has given to other countries and the frictions inside the EU this has brought. But to see if this is a good or bad policy just look at the carbon intensity of the electricity production of Germany after its phase out and that of France which has always been a very pro-nuclear country, the results speak for themselves but sadly not strong enough for the politicians and the people who follow them.
B&B Meet AI Regulation
As we hurdle into the era of AI one of the biggest concerns is concerning regulation. How can we develop and deploy safely newer and better AI models to the public is one of the key issues that we NEED to be debating in the next couple of years and I think the B&B theory gives us a good framework to analyze and evaluate the regulation pipeline that will be coming up and to try and identify the Baptists and the Bootleggers in this industry and regulatory landscape can help us make informed decisions for the benefit of humanity.
But, because of the relevance and influence AI will represent for the future of humanity, it is unavoidable that different actors are trying to capture this technology for themselves and regulation is a pathway to do that. Especially if there is a large public outcry without much information and an easily developed pipeline to position an individual, a group, or a specific piece of policy as the “savior” of the people during their time of need.
So as we currently see the current regulatory landscape for AI we have different actors and we have to understand their positions and what is their explicit goals and moral concerns but also look at the potential underbelly of the situation and who might be pushing this forward for their benefit.
The EU has been proactive in proposing comprehensive AI regulation, particularly with the AI Act. This Act focuses on imposing mandatory requirements for high-risk AI uses, including restrictions on facial recognition technologies. The EU's approach is often considered the de facto global standard due to its influence–we did an article about this–, similar to the impact of the General Data Protection Regulation (GDPR).
In contrast to the EU, the US has historically adopted a more light-touch approach to AI regulation, emphasizing voluntary industry guidance and sector-specific rules. However, this stance shifted with President Biden's executive order, which mandates developers to share safety test results with the government and notify them if their AI models pose national security, economic, or health risks. This represents a significant move towards more robust AI regulation in the US.
China’s stance has been more reactionary than anything else with pieces of legislation and piecemeal policies. This also comes with the fact that the Chinese regime uses a lot of AI and similar surveillance technologies to persecute political dissidents, subjugate the lives of its citizens by the Party’s doctrine inside the country, and exert their influence worldwide.
This is why it needs to be watched with caution the regulation that is imposed on different AI companies in the US and EU because if the regulation can become a hindrance to the development of more advanced AI in these countries its opponents in China, Russia UAE, and other nations who are not aligned with values of democratic rule, economic and individual freedoms it is a clear indicator of who the bootleggers pushing forward for stricter rules on AI might be.
Also, tech companies and tech giants have a vested interest in regulation because depending on how the regulation is constructed it can put more barriers to entry which can be easily hurdled by billion or even trillion-dollar companies but almost impossible for new entrants. As well as position themselves as the only ones who can solve this problem which then again sets the balance of power away from people governments and institutions and lays them bare to the tech companies to self-regulate or to solve the problem by themselves.
You have to B&B very careful (bad pun I know)
I think the Baptists & Bootleggers theory is a very interesting framework to view most policy debates because it not only underscores the importance of scrutinizing the motivations behind policy advocacy but also highlights the potential risks of regulatory capture and unintended consequences. Of course, it is not a perfect tool but it gives us a more in-depth analysis of politics, regulation, and the forces behind it.
I think that looking back at various historical and contemporary scenarios illustrates the nuanced and often hidden interplay of interests in policy formulation. And even though sometimes these unorthodox alignments can lead to positive public policies, they can also lead to policies that, while well-intentioned, may not effectively address the underlying issues or may even exacerbate them but make us feel like “we did the right thing” which is a dangerous goal instead of solving the problems around us regardless of our feelings.
As we stand on the cusp of significant technological advancements, the Baptists and Bootleggers theory offers a critical lens through which to view impending AI regulations. It serves as a reminder to remain vigilant, to question the true motivations behind policy advocacies, and to strive for solutions that are not only morally commendable but also pragmatically beneficial for the broader society. This balanced perspective is crucial for navigating the complexities of our world, ensuring that progress is not only technologically sound but also ethically grounded and socially responsible, to the best of what we can do hopefully.