Bootleggers and Baptists in the Garden of Good and Evil: Understanding America’s Entangled Economy

Abstract

The U.S. is a regulatory state where major industries and firms throughout the economy are subject to extensive command and control regulation. Put another way, America is an entangled economy where concepts of seperate private from public enterprises and occasional intervention to affect market outcomes no longer apply. There is regulation at every margin. Drawing on the Bootlegger/Baptist theory, this chapter seeks to explain how special interest group demand for command-and-control regulation, as opposed to other forms of regulation, such as the use of performance standards and economic incentives, has accommodated and reinforced the rise of the regulatory state. The chapter traces the evolution of regulation theory to the present and then provides evidence on the rise of regulation and its effects.

The authors are Associate Director of Research at the Center for Politics & Governance and Lecturer at the Economics Department, University of Texas at Austin and Dean Emeritus, College of Business and Behavioral Science, Clemson University and Distinguished Adjunct Professor of Economics, Mercatus Center at George Mason University, respectively.