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Оглавление2. Bootleggers, Politicians, and Pork
Having introduced Bootlegger/Baptist theory and presented four modes of interaction, we need to take a step back and examine just who these Bootleggers and Baptists really are. As a simple definition, a “Bootlegger” is any individual, group, or organization that seeks political favors for financial gain. “Baptists” are individuals or groups that seek political favors for loftier reasons. The favors they seek might take the form of benefits to causes they favor or simply actions that magnify the importance of the values they embrace.
Most groups, of course, are not exemplars of either category: there’s a bit of yin in every yang. Surely firms that pursue economic profit are not totally bereft of moral values (or at least, so they often assure us). Groups that pursue regulation for avowedly public-spirited reasons can’t be wholly indifferent to whether a little cash falls into their coffers. Still, in most situations it is relatively easy to pick out those groups drawn to legislation more for economic gain and those with more of a moral interest in the outcome. It is easy because they identify themselves.
In this and the next chapter, we explore what motivates these Bootleggers and Baptists. We show how politicians find it in their interest to cater to each of these groups when crafting legislation or developing regulations. Our theory is largely a positive or descriptive one, in the scientific sense of aiming to understand and predict human behavior rather than to render value judgments. We want to know how the world works. Still, the theory has obvious policy implications, which we try to draw out. Let’s put it this way. We also want to know if things work out well overall for a society that assigns high value to freedom and wealth-creating opportunities.
Bootlegger/Baptist theory also rests in a much larger body of work that applies economics to politics, which we navigate for the reader as well. The body of research called “public choice” was pioneered by Nobel laureate James M. Buchanan and Gordon Tullock (1962) in their seminal book, The Calculus of Consent. Public choice analysis uses standard economic logic to develop a model of how government works—as opposed to a model of how it should work—or what should be done by government regulators to alter human action. James Buchanan (2003, 16) calls it “politics without romance.” Public choice exposes how incentives work in the realm of political theater, just as they do in markets. The differences arise from context, as political institutions create different incentives for people making decisions through politics rather than through economic markets.
We begin this chapter by giving a more complete discussion of public choice theory as it pertains to Bootlegger behavior. (Though we occasionally brush against Baptists as well, they get their turn in the next chapter.) As we look through the public choice lens, we describe four theories of regulation that have evolved in an effort to explain why so much regulation exists. We illustrate these evolving theories by drawing on comments from a series of the Economic Report of the President, starting in 1965 and moving forward to 2010.1 By reviewing 45 years of focused commentary from the same source, we are able to describe in crude terms the linkage between theoretical work and recognition of the work by White House officials. In this way, we identify how and when academic theory came to influence political practice. We understand, of course, that White House recognition of anything will be politically biased—but knowing which biases prevail at different times may be illuminating. We close the chapter with some final thoughts about pork-loving Bootleggers.
Politicians, Incentives, and Pork
Let’s start with a simple notion: politicians are people just like the rest of us. They weigh costs and benefits when taking actions. Like most of us, they attach substantial weight to career concerns: which is to say, they want to keep their jobs or advance to better ones. Even the most idealistic politicians, after all, have little opportunity to implement their ideals unless they first get elected and then manage to hold on to their offices. For politicians, employment requires votes. Securing votes requires running costly campaigns that run costly ads. Politicians need revenue. And revenue can come from happy Bootleggers. Like the rest of us, politicians are smart about some things and naive about others. They cannot know everything, so they logically choose to become best informed about things that matter most to their day-to-day pursuits. They, too, are rationally ignorant about many things except those things that keep their enterprise afloat.
Starting from these premises, we infer that what will matter most to politicians, in practice, is whatever matters most to the special interest groups who support their reelection prospects. For example, if an auto assembly plant, diesel engine manufacturer, or major bank headquarters is located in the politician’s state or district, we can bet safely that he will know a great deal about proposed regulations that affect the fortunes of these particular enterprises. If instead the politician hails from a soybean-producing region without a manufacturing plant or bank headquarters within 500 miles, we can just as safely bet that he will know little about regulations affecting manufacturing and banking but an awful lot about agriculture policies related to soybeans.
Politicians, then, predictably engage in activities that provide concentrated benefits to well-identified special interest groups located in their states or districts. But not just any old benefit will do. Improvements in Yellowstone Park or cleaner rivers in faraway regions may be sentimental goals for Bootleggers and their friends, but none of these political outcomes puts money in Bootlegger bank accounts. Businesses, we assume, can most easily justify spending money—whether on capital goods or campaign donations—when they expect to make a return on investment as a result. If they hope to induce Bootleggers to open their pocketbooks, politicians need to provide the sort of benefit that the recipient can take to the bank. Such benefits may come directly, in the form of cash or a government check, or more indirectly, through a restriction on competition in a Bootlegger’s business or industry that increases the Bootlegger’s revenue—as long as the Bootleggers know whom they ultimately have to thank for their fattened wallets.
Effective politicians want to find low-cost ways to reward Bootleggers who favor them. Doing so is easier when the cost of those rewards is spread across so many naive taxpayers that no one really notices what’s happening. We know a lot about our homes, our families, and the ins and outs of earning a living. Only a few people know a lot about the finer details of 2014 EPA fuel-economy standards for motorcycles, diesel engine emission protocols, the Food and Drug Administration’s proposals for regulating the sale of mentholated cigarettes, and proposals to limit the charges retailers incur when debit cards are used. Even when a particular ill-conceived policy imposes costs on the ordinary taxpayer, it seldom makes sense for any given individual to spend hours researching the issues—let alone mobilize resources to seek policy changes.
The ideal scenario, from a politician’s perspective, occurs when he can provide valuable benefits to a few firms or organizations in his district or state and spread the costs across the entire nation. The smaller the number of Bootleggers pursuing a fixed benefit package, the better. This not only lowers the cost of organizing and agreeing on desired outcomes but also enlarges the benefit each Bootlegger receives. Small is beautiful as far as pork-hungry Bootleggers are concerned. Therefore, concentrated benefits and diffused costs are the stock in trade of the successful politician. And this is just when the Bootlegger side of the matter is considered. Things get more interesting when the Baptist side of the story enters the picture—but we’ll get to that later.
The political distribution of benefits to specific local interests often goes by the name of “pork barrel politics,” and Bootleggers love pork. Perhaps the best-known pork delivery system is the much-maligned “earmark,” where a legislator writes into the government’s budget expenditures that benefit specific parties or groups in his district alone while sticking the larger population with the bill. In recent years, the U.S. congressional practice of making such targeted distributions of government largess to home states and districts through earmarking has received enormous attention. The practice is condemned as though it was a chief cause of the yawning federal deficit or as if earmarking is somehow anti-American.
The fact is, however, that most government-provided goods and services are not really “public” at all. They are bundles of private goods that redound to the benefit of specific individuals, communities, and organizations rather than society as a whole (Aranson and Ordeshook 1981). These benefits do not spring randomly from public wells but are generated by the behavior of particular special interests—Bootleggers—working with particular political entrepreneurs (R. Wagner 2007, chaps. 4–5). Earmarking is clear evidence of Bootlegger success in bringing home more pork. But the competition for pork is tough. And pork does not fall from the sky; flying pigs are rare! Bringing home the bacon requires work—and that work takes time, money, and resources.
Tullock’s Foundation for Thinking about Bootleggers and Baptists
This brings us to a key public choice insight developed by Gordon Tullock (1967). Tullock’s seminal idea relates to just how much Bootleggers spend when they lobby politicians for more pork. Are there limits? What determines them? Tullock looked at the standard model of monopoly found in any introductory economics textbook and asked a simple question: How much would a budding monopolist be willing to spend for a government license that delivered full monopoly power with all the associated profits? Put more concretely: How much would you be willing to pay for the exclusive right to serve all cell phone users in the state of Illinois?
Tullock argued that in a chase with other firms in pursuit of the same goal, the budding monopolist would logically be prepared to spend up to the expected value of what might be gained from the resulting monopoly power. In a political economy where special interests struggle to obtain political benefits, firms eager for government protection may exhaust their hoped-for gains in a vain pursuit of the political prize. Of course, not every bridesmaid becomes a bride, and not every aspiring monopolist wins the permit. But everyone who tries will spend valuable resources doing so.
Monopolies generate an obvious loss to consumers when they produce below competitive levels, but Tullock identifies another loss or waste of resources that occurs in the course of pursuing the monopoly. All those visits to politicians and contributions to campaigns take time, money, and other resources—resources that could otherwise have been devoted to producing goods and services. Sadly, especially from the perspective of the Bootleggers, the amount spent on wasteful lobbying efforts can be as large as the expected profits sought.
Now, just for the moment, let’s get some Bootlegger and Baptist interaction in the story. When considered in the context of the Tullock model, a winning Bootlegger/Baptist coalition lowers the cost of organizing demand for political favors. Because passing legislation with some plausible public interest justification is itself an electoral benefit to politicians, Baptist support may reduce the other forms of inducement—such as campaign contributions—needed to motivate legislators to act in particular instances. As those costs go down, regulatory activities increase, and with that increase come more lobbying expenditures from more Bootleggers and larger corresponding losses that spring from the resulting output restrictions.2
Declining lobbying costs on the demand side reinforce falling costs on the politician-supply side because enormous fixed costs are associated with forming trade associations, opening Washington offices, and keeping lobbyists on retainer. Once the office doors are open, the average cost of chasing bundles of pork gets smaller and smaller (Murphy, Schleifer, and Vichny 2003). In contrast, running a business or operating a factory tends to be an increasing or constant cost endeavor.
Business firms then have a choice. Will they seek gains at the margin through lobbying or by putting more scarce capital into producing products and services? Once the lobbying machinery is built, the calculus will be biased in favor of the former. Indeed, fledgling Bootleggers may even be spared the trouble of building their own machinery by channeling resources through Baptist groups that have already built the necessary infrastructure. We thus get fewer bread factories but more lobbying lawyers and economists doing benefit-cost analysis. Bootlegger/Baptist interaction helps grease the rails that lead to increased regulation and an expanded public sector.
But All That Glitters Isn’t Gold
As we saw in chapter 1, regulation takes the edge off GDP growth. Fortunately, the Bootlegger’s search for pork has limits. We must remember that the political process is competitive. Lots of Bootleggers would love to bend the politician’s ear, but only a few can be successful. Chasing politicians and sharing views with them—lobbying—is costly business. As Tullock teaches us, even the most successful Bootleggers may end up with little in the way of additional net cash flow once the costs of currying favor are tallied. Even the winners of the pork race may discover that their barbecue cookout on the National Mall doesn’t serve up the prime cuts they’d hoped for.
It may seem counterintuitive, or at least ironic, that those who pursue government favors can find themselves suffering from a kind of buyer’s remorse, but this phenomenon has long been recognized in public choice scholarship. In another insightful article, Gordon Tullock dubbed this apparent paradox the “transitional gains trap” (Tullock 1975). His story describes a multistage process in which special interest groups first gain a profitable advantage but then must keep spending to hold their favored position. With profits seemingly assured, owners and managers of politically favored enterprises tend to spend more on fancier digs for themselves and share some of the wealth with their employees. As operating costs head skyward, producers of substitute goods—including novel types of goods that may fall outside the bounds of the monopolizing regulation—cheerfully expand to serve price-sensitive consumers. The market enjoyed temporarily by the favored interest groups contracts, profits fall, and the federal rules that protected the interest group—now with higher built-in costs—become handcuffs that won’t let go.
Tullock uses the example of the U.S. Postal Service to illustrate the point. By maintaining its status as a monopolist in the delivery of first-class mail, the Postal Service garnered plush revenues for decades. With this income came generous pay and fringe benefits for postal workers. Prospective employees flocked to obtain the cushy positions on offer, and with more bright people looking to sign on, hiring standards rose—as did wages, benefits, and of course, postal rates. Costs then were locked in at a permanently higher level. The attendant higher prices attracted more efficient competitors who took advantage of technological change and new forms of communication. With the advent of e-mail and online billing services, the Postal Service discovered that its legal monopoly no longer guaranteed it a captive audience. Captured by an old technology and a labor force spawned by it, the Postal Service held on to its disappearing first-class mail delivery system while caught in a transitional trap.
The essence of Tullock’s lesson is that a regulatory advantage is not necessarily a goose that perpetually lays golden eggs or, indeed, any eggs at all. Successful government favor seekers enjoy only temporary gains that are soon eaten away as windfall profits translate into locked-in costs. If earnings should then be driven to competitive levels—whether by technological innovation, changing consumer preferences, or a shift in the political winds—the organization will find itself desperate to meet its inflated costs, as we’ve seen in the case of the Postal Service. Having been reared in a regulatory hot house, the “lucky” Bootlegger discovers it cannot sustain itself with mere competitive returns.
We find a similar dynamic at work in the surface and air transportation sectors. In both cases, regulation purposefully set up monopoly arrangements, to the benefit of owners and workers. As the regulated industries prospered, their competitiveness languished. Substitute services emerged, often based on new technologies. Some who had favored more regulation called for reform, until eventually, the regulatory structures came crashing down. The ICC, which had regulated trucking and rail transportation for decades, was eliminated in 1995. Trucking was deregulated; rail passenger transportation was nationalized. The Civil Aeronautics Board, which regulated airline pricing and service, was dissolved in 1984. Even the U.S. Postal Commission loosened its grip on the sale of stamps beyond the confines of post offices, cut hours of service, and allowed competitors such as FedEx to place receiving boxes on Post Office property. Deregulation is not complete, but the days of golden eggs for these industries are over.
To sum up, Bootlegger/Baptist theory rests on several key public choice insights. First, each of us tends to be naive about a vast number of subjects but intensely informed about matters that have an immediate and direct bearing on our own well-being. As a result, large benefits can be provided to well-informed special interest groups (Bootleggers) through government transfers without the majority of the population being aware that anything is going on—or having much incentive to find out.
Second, smaller Bootlegger groups have lower organizing costs than larger groups, and average gains per member are higher for smaller coalitions, given a fixed payoff. Startup costs are associated with organizing a lobbying effort. Once that initial investment is made, however, a lobbying group will be ready to go for the pork when another political opportunity surfaces.
As politicians redistribute pork to Bootleggers, the number of organized groups expands. At the upper limit, a rational Bootlegger will be prepared to spend the expected value of a political prize in pursuit of that prize. Once obtained, political restraints on competition or other benefits can improve profits for a time. But higher profits tend to feed higher costs in Bootlegger organizations.
The costly political machinery that provides all this must be maintained. Meanwhile producers of substitute goods and services are attracted by Bootlegger profits. With costs rising and profits falling, Bootleggers find themselves caught in a regulatory trap. The process has limits. Redistribution cannot continue indefinitely without killing the goose that laid the golden eggs or chasing off the pigs that provide the pork.
Four Explanations for “Why So Much Regulation?”
Having laid a public choice foundation, we now consider several accounts of why regulation flourishes and how the Bootlegger/Baptist theory explains the workings of the regulatory world. We review four theories of regulation and trace their appearance in successive editions of the Economic Report of the President spanning 1965 through 2010. We examine which theories White House officials used to explain their regulatory policies and when the various theories seemed to be important. Though the goal of theory is to describe political action, how politicians and the public understand regulation can also have an enormous impact on how political outcomes unfold. That underlies our interest in discovering when the essence of Bootlegger/Baptist theory shows up in the reports.
Serving Everyman (and Everywoman)
The first and oldest theory of regulation—so old it has no clear inventor—is the public interest theory. This theory holds that when they take office, politicians and their appointees also take on a new life, putting aside their personal interests to serve the common good. Once ensconced in Washington, representatives lie awake at night trying to find better ways to provide broadly appreciated public benefits, their thoughts unsullied by any narrower interests.
Whether the problem to be addressed is pollution, unhealthy working conditions, or teenage smoking, a public interest legislator seeks to achieve as much improvement as possible given realistic budget constraints. He is constantly searching for lower-cost ways of achieving public interest goals. The legislator works to build institutions that strengthen (and in some cases repair) beneficial market forces so that markets will be robust. The public interest theory recognizes that politicians are, alas, human—meaning errors and even deliberate acts of chicanery will occur. But these failings are the exception, not the rule.
English economist Arthur Cecil Pigou (1920) is often (mistakenly) seen as the godfather of the public interest theory. Pigou famously argued that governments could take steps to correct all kinds of problems that plague unregulated private markets. Leaders could address the uncompensated harm done when sparks from railway engines set woods aflame, when land management practices caused rabbits to invade neighboring property, or even when construction practices tended “to spoil the lighting of the houses opposite.”3 Pigou worried about automobiles that wore out the surfaces of roads, the sale of intoxicants that then required additional expenditures on law enforcement and prisons, and in his own words “[p]erhaps the crowning illustration of . . . the work done by women in factories . . . for it carries with it, besides the earnings of women themselves, grave injury to the health of their children” (Pigou [1932] 2009, 134, 186–87, 196–203).
The remedy? Pigou called on enlightened leaders to address these problems by taxing unwanted activity, subsidizing desirable activities that tended to be underproduced, and imposing regulations on producers who disregard the social costs of their behavior.4
Now, let’s take a peek at President Lyndon Johnson’s Economic Report of the President (1965, 135–36), in which we get more than a hint of Pigou and the public interest theory:
In the vast majority of industries, competition is the most effective means of regulation. But in a few industries, technological and economic factors preclude the presence of more than one or a few firms in each market. When these industries provide an important service to the public, direct control is substituted for competition. The independent federal regulatory commissions were established in the transportation, power, and communications industries because competition could not be expected to protect the public interest. In other areas, regulation is aimed at providing the public with reasonably full knowledge of the market. In particular, securities and certain commodity markets become so complex and technical that regulation is necessary to insure that buyers and sellers have access to accurate and reasonably comprehensive information.
The statement, prefiguring much of the recent rhetoric aimed at banks by the Consumer Financial Protection Bureau, makes a case for antitrust enforcement as well as regulation of certain consumer markets. Government, in President Johnson’s view, was there to protect and further public interests that would be jeopardized by unchecked private action.
We see a more detailed expression of market failure and public interest theory in President Johnson’s Economic Report of the President (1966). After describing the emerging problems of air and water pollution, the report claims that “in the case of pollution, however, those who contaminate the environment are not charged in accordance with the damage they do. . . . Public policies must be designed to reduce the discharge of wastes in ways and amounts that more nearly reflect the full cost of environmental contamination” (Economic Report of the President 1966, 119–20). Without acknowledging the possibilities for enhancing common law and other private action-based remedies, Mr. Johnson’s economists took a cue from Professor Pigou. Their rhetoric expands the domain of public interest from antitrust regulation and consumer protection to dealing with external costs imposed by firms on their neighbors.
By 1978, the ever-ballooning domain of public interest had led to such extensive regulation that President Jimmy Carter’s Economic Report of the President (1978) began to address regulatory reform. Still, the report indicates the need for government intervention as a means of limiting the unfettered private pursuit of profit: “In a mixed market economy like that of the United States, government regulations of the marketplace sometimes play a vital role in meeting social goals, curbing abuses, or mitigating the hardships that would flow from the unconstrained play of economic forces” (Economic Report of the President 1978, 206). Even as late as 1978, the Economic Report of the President did not recognize what historians and political scientists had known for decades: that the regulatory process can be captured by the regulated.
Capturing the Regulator
The second theory of regulation, called capture theory, builds on the public interest theory but recognizes that even politicians and regulators dedicated to serving the broad public interest face a fundamental information problem: they have no handbook that defines “the public interest.” What the dedicated legislator and regulator do have is an ample supply of private- and public-sector advisers eager to offer their own ideas—not to mention the lobbyists.
It is important to recognize that lobbyists do more than curry favor and plead for pork: they also often provide a high level of valuable technical expertise. That can make them important adjuncts to the politician’s office given the breadth and complexity of the myriad issues a modern government is expected to address. If fact, some lobbyists are so helpful that they get called on to assist in defining the public interest! Thus a thorny problem for elected officials becomes a golden opportunity for the lobbyist, a nascent Bootlegger. Increasingly dependent on the representatives of the very firms they are expected to regulate, politicians are effectively captured.
It is perfectly logical that a president’s report would not discuss this element of political action. Admitting that politicians can be captured would seem to suggest that public servants are not up to doing their jobs. But in the real world, even the most dedicated public servant must obtain detailed information about prospective law and regulations somewhere. Generally speaking, those with the most information are the parties who will be directly affected by regulatory action—and they are typically only too happy to share it, along with their recommendations on the best course of action.
The reason is simple: with the stroke of a pen, a politician can cause vast wealth to be transferred from taxpayers to the providers of all this valuable information. Capture theory helps explain how eastern high-sulfur coal interests influenced key members of Congress when the 1977 Clean Air Act Amendments were being developed. These amendments required the use of “scrubbers” to remove sulfur oxides from smokestacks. Massive machines that used as much as 10 percent of the power generated to operate, scrubbers were mandated even though cleaner low-sulfur western coal could have accomplished the same thing without scrubbers.
The cost of the rule was spread over an enormous number of electricity users; most consumers never knew that their power bills were slightly larger because of the rule. Meanwhile, the benefits were concentrated among a relatively small group of coal mine owners and operators, and coal workers. Additionally, eastern coal was produced by organized labor spread over several states, whereas cleaner western coal was produced by nonunion workers concentrated in lonely Wyoming. Because unionized labor is well organized, unions can far more easily speak with one voice to help influence the debate.
Capture theory also explains how the railroads won the day when Congress empowered the ICC to regulate motor carriers in 1935 (Felton and Anderson 1989). This occurred after carriers began cutting prices for carrying freight, in spite of organized opposition from agricultural and other shipper interests. The rail interests were successful in forcing ICC controls on truckers.
If all this sounds a little too simple, that’s because it is. After all, regulatory tradeoffs are made: political decisions create winners and losers. Thus, the question is not just whether a politician will be captured but which particular Bootlegger will do the capturing. Suppose a legislator is considering an array of proposals to set tighter limits on the nitrogen oxide emissions from diesel engines. Which of the several standards being considered serves the public interest? Is the burden of achieving cleaner emissions best placed on the producers of diesel fuel, on engine manufacturers, or on some combination of the two? Is a simple, uniform rule preferable to a more nuanced one that is sensitive to human exposure and differences between urban and rural operations?
Agents of Bootlegger engine and fuel manufacturers are only too glad to join the discussion—indeed, they better be at the table. Baptists from environmental groups, organized religion, and regulatory agencies are on hand to assist the legislator’s search for a public interest solution as well. Some will even arrive with draft legislation already prepared to guide the politician.
The politician’s search for the public interest is confused by the fact that many lobbyists will claim to be serving the public interest, even though disagreement exists as to which nitrogen oxide standard is most desirable and how best to achieve it. But time is precious, and the politician has to make a decision. Persuaded by some of the lobbyists’ arguments, the legislator takes a position that turns out to be advantageous to certain Bootleggers.
Suppose the politician opts to place the burden of reducing emissions on fuel manufacturers. Perhaps without realizing it, the politician has been captured by the engine manufacturers, one of several competing Bootleggers, while still believing that he or she is serving the public interest. In specific instances, the belief may even be accurate! The point is that whichever choice the politician makes, he or she will necessarily rely on information and analysis provided by parties with powerful vested interests in the outcome.
Stigler’s Special Interest Groups
So how does one predict which Bootlegger group will prevail in regulatory struggles? Our third theory was developed by Nobel laureate George Stigler and is called the special interest theory of regulation. Stigler suggests that if we wish to predict which of several parties will prevail in a valuable political struggle, we should imagine that the specific content of proposed legislation is simply auctioned off to the highest bidder.
By focusing on which parties have the most to lose (or gain) in the struggle, we can begin to understand outcomes. Of course, this is just a first step in the process. To participate in the auction, the agents doing the bidding must know the consensus position of the group they represent. Organizing an interest group is costly, and the more numerous and diverse the players, the greater the cost. Once organized, the group must reach consensus on a preferred policy outcome, which may itself be costly, requiring research, analysis, and internal deliberation.
With Stigler in mind, let’s reexamine the Clean Air Act scrubber case. Suppose the case had simply involved pitting western against eastern coal producers. The eastern producers were located in relatively populous states, had been organized and working the halls of Congress for decades, and had more members of Congress to confront and more support from other interest groups who wanted to keep local economies humming. The producers were not strictly homogeneous. Some produced metallurgical-grade coal, and some were diversified across industries, but a small number of large producers dominated the industry. When speaking to politicians, the voice of the United Mine Workers came through loud and clear.
Now consider the western producers. They were comparatively younger firms with nonunionized workers and were located in remote corners of less populous states. They operated in towns that had yet to flourish, so these towns had not yet given rise to the school districts, Main Street merchants, and others who might later have lobbied for western coal. Although the bulk of the market for western coal was in the east, most consumers and voters were rationally ignorant about where their coal came from. Pushed to pick which region mattered most, concentrated eastern interests with a lot to lose outweighed scattered western interests that had yet to enjoy the fruits of an expanded market for their coal. Using this scorecard, a prediction that eastern interests would carry the day should have been easy to make.
What about the conflict between truckers and rail interests, which led to the truckers being brought into the regulatory web? First, far fewer railroad companies existed than trucking firms at the time. The large rail companies had been organized and politically active for decades. Furthermore, railroad companies owned vast amounts of land in many states. These fixed assets meant railroad companies were all but certain to be around a long time, were in a position to extend significant favors, and had a long-term interest in political decisions affecting the value of their land spread over many states. By contrast, thousands of small, local trucking firms had few employees in the average firm. The truckers, being new to the game, faced high upfront organizing costs. They lacked both deep roots in important political territories and experience in working Washington. The transaction costs of organizing and securing beneficial regulation were lower for railroads than for trucking interests. Unsurprisingly, the railroads won the day.
