Bootleggers, Baptists, and Tobacco Regulation
Rotondi, Joseph A., Regulation
Members of both houses of Congress have introduced identical bills to include tobacco under the Food and Drug Administration's regulatory umbrella. FDA chairman Andrew yon Eschenbach opposes this legislation. Altria, the largest U.S. cigarette producer with 51 percent of the market, supports it. This seeming paradox grows from and is explained by tobacco roads paved with "bootlegger-Baptist" coalitions.
THEORY Pioneered by Bruce Yandle in this magazine in 1983, "bootleggers and Baptists" is an important addendum to public choice theory. It draws its name from stories behind states' enactment of Sunday alcohol sale prohibition laws. To wit: for moral reasons, Baptists advocated bans on Sunday alcohol sales. Bootleggers quietly and willingly went along for the higher prices and enhanced profit that would result from halted competition. The theory's essence, then, is that durable social regulation forms when two very different groups demand regulation: Baptists' public interest cloaks bootleggers' naked greed, the invisible coalition greases government machinery, and voila.
The history of U.S. tobacco regulation is rife with these alliances. It has taught some public health advocates, as well as some tobacco companies, that "bootleggers" will likely benefit from FDA control.
EARLY BOOTLEGGERS Before the 1964 surgeon general's report on smoking's perverse health effects, the cigarette industry largely avoided regulation for two main reasons. First, smoking was a popular and accepted habit. During World War I, the U.S. troop commander in France cabled Washington that "tobacco is as indispensable as the daily ration; we must have thousands of tons of it and without delay." During World War II, tobacco farmers stayed home because their crop was deemed essential to the war effort. After the war, cigarette popularity increased even more, with famous athletes and movie stars lighting up.
Second, industry power pervaded government. Members from tobacco-producing states chaired one third of House committees and nearly a quarter of Senate committees in the early 1960s. In 1957, one House subcommittee introduced a bill that would have both set limits on tar and nicotine levels in cigarettes and granted the Federal Trade Commission injunctive powers to prevent deceptive advertising. Directly thereafter, the subcommittee chairman lost his post and his subcommittee was disbanded altogether. The bootleggers had simply flexed their muscle without concern for Baptist cover.
But in February 1960, the FTC announced it had negotiated a "voluntary agreement" with the industry to cut all tar and nicotine claims from cigarette advertising. Public health Baptists, whose ranks had grown with mounting medical evidence that smoking causes cancer, claimed victory. The FTC chairman called the agreement "a landmark example of industry-government cooperation in solving a pressing problem." But bootleggers had won. While FTC intent was to improve the market for safer cigarettes, the ban forced tobacco companies to stop competing on the health claim margin. As a result, they cut costs and increased profit.
BAPTISTS RALLY, BOOTLEGGERS WIN In 1964, the surgeon general issued a major report that linked smoking to lung cancer, chronic bronchitis, and coronary disease. It dramatically changed the political debate on tobacco and stoked Baptist fervor. The FTC quickly issued a rule that would require cigarette ads and packages to say "Cigarette Smoking is Dangerous to Health and May Cause Death from Cancer and Other Diseases."
The bootleggers took control of this Baptist revival. Through congressional maneuvering, the tobacco industry helped pass a bill that gave the FTC specific authority to regulate health claims and nicotine content in advertising but watered down the FTC warning to read "Caution: Cigarette Smoking May Be Hazardous to Your Health." More importantly, it preempted any further FTC, state, or local government-mandated cigarette package warnings and prohibited any such requirement in cigarette advertising until 1969. …