Bootleggers and Baptists

In this blog, we have talked about the use of government policy as an element of competitive strategy (Make the rules or your rivals will). Susan Dudley has a terrific Primer on Regulation with lots of fun examples of how to use policy to further your own ends:

Like the bootleggers in the early 20th century South, who benefited from laws that banned the sale of liquor on Sundays, special interests need to justify their efforts to obtain special favors with public interest stories. In the case of Sunday liquor sales, the Baptists, who supported the Sunday ban on moral grounds, provided that public interest support. While the Baptists vocally endorsed the ban on Sunday sales, the bootleggers worked behind the scenes and quietly rewarded the politicians with a portion of their Sunday liquor sale profits.

Modern day stories of bootleggers and Baptists abound. A 2000 Department of Energy regulation banned the sale of low-priced washing machines under the guise of increasing energy efficiency. Who were the biggest supporters of the ban? It was not the consumers, who by a margin of six-to-one preferred to purchase lower-priced machines. It was the washing machine manufacturers—because now they would be able to sell expensive “front-loading” models at an average price of $240 more than the banned machines—who worked behind the scenes to draft the regulations.