Does it even make sense to ask “Why?” if we don’t know “if”? Do bootleggers and Baptists both love Paris?
Well, yes—if “Paris” is the Paris climate accord, the “bootleggers” are industrial giants with a lot to gain from policies needed to implement the accord, and the “Baptists” are the environmentalists who support the accord because they think it’ll save the planet.
Corporations that stand to benefit from mandates and subsidies to renewable energy—wind, solar, geothermal, and biofuels (and best of all, hydro, but greens oppose new dams)—would naturally object. Exiting Paris puts those mandates and subsidies at risk. For example, Elon Musk, CEO of Tesla and SpaceX, resigned from the president’s council of business advisers after Trump’s announcement. Duh. He stands to lose big.
Large corporations that see Paris as protection against smaller competition that can’t afford the technologies needed to reduce CO2 emissions (e.g., ExxonMobil and Conoco Phillips) would object. It’s standard practice for big firms that can stand the cost of regulations to champion regulations that will strangle small competitors.
Bruce Yandle, one of the country’s leading environmental economists, puts the whole case really well in a new blog piece, “When Industries Love Regulation: Trump’s Paris exit and the Bootlegger-Baptist disarray,” over at the Property & Environment Research Center. A little excerpt:
As always, there are multiple motivations at play. Microsoft and Apple, for example, are deeply engaged in software development for electric cars. Siemens and ABB are global providers of efficiency-improving electrical machinery, which they argue can reduce total energy consumption, operating costs, and carbon emissions. Getting a strong Paris nudge to the market for their favorite products could help the bottom line.
This unlikely coalition is evidence of yet another version of the age-old alliance between bootleggers and Baptists. The story goes like this: While the churchgoers normally wouldn’t deign to associate with moonshiners, the two groups share a common interest and political end. They both want to shut down liquor stores on Sunday. But they have very different reasons for doing so. Baptists provide moral support for the policy, while bootleggers receive bottom-line benefits. When combined, the two groups tend to form winning coalitions in a variety of contexts.
Consider how these forces play out in the climate-policy debate. Environmentalists play the role of the Baptists, who for moral reasons support Sunday closing laws. Today, instead of closing liquor stores, these environmental “Baptists” want to shut down carbon emitters. In recent years, environmentalists have supported restrictions that, assisted by market forces, have shuttered coal mines, closed or penalized power plants, limited fossil-fuel emissions, and regulated automobiles. Since the 1970s, the environmental Baptists have preferred central government command-and-control regulation and have often argued successfully against the use of decentralized common law, prices, and fees for accomplishing their goals. Command-and-control policies, of course, call for larger bureaucracies to design and enforce the rules and empower politicians who, in solemn support, deliver on environmental promises.
But another group, the opportunistic industrialists, also often prefer the same command-and-control approach as environmentalists. These environmental “bootleggers” are like the characters in the original story who love seeing the liquor stores—their economic rivals—closed on Sundays. Competition is eliminated for one day a week. These environmental bootleggers love command-and-control regulations that raise rivals’ costs and limit the entry of new competition. They welcome taxpayer subsidies and government-guaranteed loans for developing new solar cells, improved batteries, emission-free automobiles, and other forms of clean energy, and they perhaps smile at the prospect of cartelizing world markets with coordinated rules and higher prices that may result from global emission-reduction agreements that they help design.
With firm-specific government subsidies for the development of clean technologies and a seat at the regulators’ table, the environmental bootleggers, like their earlier counterparts, can laugh all the way to the bank. Meanwhile, millions of widely dispersed consumers of their products may each face slightly higher power bills from older energy sources while enjoying the benefits of zero-emission cars and improved solar systems. (It is also possible, of course, that new technologies can bring cleaner outcomes as well as lower-cost energy, offering benefits to consumers as well as comfort to those who worry about sustainability and the long-term well being of the planet.) [Read the rest.]