Will Bootleggers and Baptists Rewrite NAFTA?

In a recent burst of enthusiastic support for organized labor, Sen. Elizabeth Warren, D-Mass., hailed ongoing NAFTA renegotiation as a "wake up call" for America. It seems that Canadians are troubled by having to compete with lower-paid American workers, and they want to cartelize labor markets by way of a new NAFTA.

Most of NAFTA's detractors mean well, but their argument is a perfect example of what can happen when two groups, one morality-based and one operating from self-interest, find themselves in alignment.

In response, Warren called specific attention to state right-to-work laws that enable anyone who wishes to work to do so without joining a union and paying union dues. These laws, put in place through the democratic process, operate in 28 states (mostly western and southern), as well as Michigan, Indiana, Iowa, Missouri, Nebraska, and Wisconsin.

Describing right-to-work laws as "a powerful weapon in the war against working people," Warren argues that their effects on workers "have been devastating" and that the laws have contributed to the continued decline of middle-class America.

Warren's NAFTA renegotiation celebration contains key elements of my "Bootleggers and Baptists" theory of regulation. The theory argues that government regulation frequently emerges when two very dissimilar parties—"bootleggers" and "Baptists"—seek similar restrictions for decidedly different reasons.

Both bootleggers and Baptists like Sunday closing laws that shut down corner liquor stores, thereby eliminating competition for one group (the bootleggers) and salving the consciences of the other group (the Baptists). Political participation by both groups, silently and openly, helps elected representatives deliver the restriction.

Opposition to right-to-work is fueled by organized labor—the bootleggers, in this case. While they may sincerely believe in their cause, undermining right-to-work also undermines their non-union competition and puts more cash in the union till. Unions win when all workers must pay union dues, whether they are members or not.

Meanwhile, canny politicians can play the Baptist role by taking the moral position and seeking to protect America's oppressed or disappearing middle class. But like most things, there's a tradeoff: Forced higher wages would also mean that the costs and prices Americans pay for goods and services would rise.

Warren's appeal for leveling the playing field by eliminating state right-to-work laws has a familiar ring to it.

In the post-World War II eta, high-cost Massachusetts textile mills were being shuttered and new mills were opening in the lower-cost South. Both the owners of New England mills and their political allies pushed to impose federal minimum wage laws that would raise labor costs in the South.

The rhetoric was the same: "Let's level the playing the field and help workers earn a decent rate of pay." Fortunately, in the debate that followed, Americans remembered that consumption is the purpose of all production. Consumer wellbeing entered the debate, and it should now.

Warren closed her argument with this statement: "A nation that cares about its workers shouldn't need foreign negotiators to sound the alarm…That's why earlier last week I introduced a bill repealing the provision in the National Labor Relations Act that allows states to implement ‘right-to-work' laws."

The bootleggers must have cheered, but quite honestly, I don't think her argument will pass the Baptist litmus test.