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Thursday, June 11, 2015

Bootleggers, Baptists, and Bribes in the Magna Carta

Public choice illuminates the history of the first consumer protection law

As Lawrence Reed shows in his wonderful history of the Magna Carta, the signing of the “Great Charter” 800 years ago by King John was a huge victory for limited government.

At the time, it was seen as just a modest (and short-lived) win for the nobility against excessive taxation, but what it represented was a revolution. For the first time, the monarchy was explicitly bound under the law, and the king was required to respect the rights and liberties of free people.

But from the crooked timber of politics, nothing entirely straight can be made.

One curious provision of the charter translates:

There is to be a single measure for wine throughout our realm, and a single measure for ale, and a single measure for Corn, that is to say the London quarter, and a single breadth for dyed cloth … that is to say two yards within the lists.

It sounds innocuous enough, establishing standards for weights and measurement, but it’s actually a classic public choice story of rent-seeking, corruption, and Bootleggers and Baptists.

The idea of “Bootleggers and Baptists” explains how groups with seemingly contradictory interests can end up supporting the same policy. In the 1920s, Baptists wanted to stop the sale of alcohol for moral reasons; Bootleggers wanted outlaw competition and protect their profits.

They converged on a common cause: Alcohol Prohibition. Baptists provided the moral cover, bootleggers provided the money, and political entrepreneurs united the two interests to create a policy that earned them both popular support and financial kickbacks.

What does this have to do with the Magna Carta and cloth in medieval England?

Bruce Yandle and Adam Smith explain in their book Bootleggers and Baptists:

London weavers exploited a stricture contained in the Magna Carta to gain an advantage over foreign competition. … 

Chapter 25 of the “Great Charter” established uniform measures of ale, grain, cloth, and other goods to facilitate trade — a classic case of consumer protection at a time when buyers, ill-equipped for comparative shopping, dealt with traveling merchants who moved from market to market, and “traders and merchants found it practically impossible to conform to the standards that were different in each locality.”

Such imposed uniformity may have made sense on its own terms given the potential uncertainty of dealing with traveling peddlers, but enforcement of the standard was not uniform. …

London weavers paid a bribe to local enforcement agents to avoid having the standard enforced on themselves but demanded that it be scrupulously applied to traveling merchants who came to London markets.

Differential enforcement thus entered the picture, allowing the best organized merchants to raise rivals’ costs, and — unsurprisingly given the state of communications at the time — traveling merchants from assorted far-flung locales had little chance of being as well organized as the London weavers.

In short, the “uniform” standard meant to protect consumers became a barrier to entry for disfavored sellers.

The royal command sounded great: make sure everyone knows what they’re getting and gets what they paid for. It’s one of the first examples of consumer protection regulation. 

But in reality, it was used to protect the business interests of wealthy weavers who could either afford large looms that actually produced cloth two yards wide or could afford the bribes that let them skirt the law. London elites and government officials made out very well; poorer weavers from the country got left.

It’s a lesson to always be skeptical about the details of public-spirited legislation, even when overall it’s a win for limited government.

  • Daniel Bier is the executive editor of The Skeptical Libertarian.