by Brandon Reiter
What happened in Uvalde, Texas and, unfortunately, many other places this month, year, decade and entire history of this country, is continuously devastating. How can we ever hope to address this issue with so much divide on something that seems so obvious? Let’s try to look at the problem from an Economist’s perspectives.
No, I am not an economist, but Tim Harford is, and his 2005 book, The Undercover Economist, discusses many aspects of price strategy, taxation, and demand-side economics, that can be directly applied to the topic of gun control.
A large portion of the book focuses on an economic concept called negative externalities. Simply put, a negative externality is the harm passed on to others by another person’s own economic decision. For instance, if I choose to drive my SUV, I am causing air and noise pollution to the people around me. I also run the risk of crashing into another car or pedestrian, or adding to a traffic jam. The result of my seemingly innocent decision leads to negative consequences to my neighbors who have no control over my decision-making process.
Harford suggests that, in order to effectively deal with negative externalities, is to either charge people for the risk they are passing onto others, or to reward those who do not cause them. Of course, as we see so often, given the political landscape of this country, getting economic solutions passed is always met with hesitation by both ends of the political spectrum.
In wake of the latest terrible news out of Uvalde, Texas, I believe Harford’s logic can be attributed to the ever-present gun violence issue in America. The negative externalities of purchasing a gun and lobbying to keep guns as a constitutional right are quite obvious. If you don’t think so, let me briefly elaborate. By purchasing a gun you impose various risks onto others in one way or another. Perhaps your gun can be stolen and fall into the hands of someone with worse intentions, maybe you accidentally misuse it and injure somebody else. By purchasing a gun you are also providing gun manufactures with revenue they use to spend on lobbying to keep background checks flimsy. We can go on and on about the societal repercussions of the availability of guns in this country, but we’re still here in the same spot after another horrible tragedy: a stale mate.
How do we get both sides to come together? Is it even possible? Let’s think about this from economist, Tim Harford’s perspective.
It has been proven that even such a despicable tragedy as what happened in Texas won’t yield to any compromise from the pro-gun side of the argument (in this country). As I mentioned, Harford’s logic probably suggest that in order to address this issue, we should find and economic solution that makes nobody worse off. This can be attempted by either a charge on gun owners for the negative externalities they impose on society by merely purchasing and possessing guns and ammo, or we reward those who do not cause them.
Let’s say we take the first route and place a substantially large tax on certain guns. What would happen? The amount of people buying guns would surely go down, but those with enough money would still be able to buy them, once they pay the tax there is nothing stopping them from buying more bullets. What if we taxed bullets? This would make it not just more expensive to buy the initial gun but also more expensive for each use of the gun. Again, only the people who could afford to would be buying and using guns and the poor gun-owners, the demographic that mass shooters typically fall into would either not be able to purchase them or they would have to find other means to purchase them, like a black market. Of course, this isn’t a brand new idea I just thought of, gun-lobbyists would do and have done everything in their power to prevent such taxes as they have successfully for the better part of three centuries.
When considering economic solutions, Harford suggests the only plausible one’s are those that do not make any party worse off. In the first attempt above, the poor gun owners are worse off because they have to pay more money. So what if we came from the other angle? What if people were incentivized to not own guns in the form of a sizeable tax deduction? Say that if you do not own a gun, you were to get a $10,000 tax deduction; this does not harm the pro-gun community as they do not have to pay anymore for their guns, and it pays an economic benefit to those who do not own guns. Gun owners are not worse off financially, and non-gun owners are better off financially. So far so good. But what about the government? They will initially receive less tax revenue due to the deductions handed out, but they can eventually recoup the loss in way of the rewarded taxpayers using that extra savings to make other purchases which would both boost the economy and provide alternate sales tax revenue for the government. Not only that, but if gun purchases go down so would gun-related deaths, which is not only a positive because it saves lives, but those spared lives keep on living and making purchases that add to the economy’s benefit and sales tax revenue down the line as well. In this scenario, all three parties are either unharmed or better off, something Harford would consider a plausible solution. But does this method really stop the root of the problem we are really trying to address: mass shootings?
It would be safe to assume that a casual gun owner would decide that they’d rather have the tax deduction than hold onto their guns. Basic market theory suggests that eventually gun demand would diminish as a result of the incentive, dropping the profitability for gun manufacturers. As their profits decline they have less money to spend on lobbying, and perhaps more significant legislature can get passed as a result. They would also have to raise the prices for guns to recoup the losses from their diminished demand making it even more difficult for people to legally purchase guns. Obviously, the lobbyists aren’t dumb and would see this coming from a mile away, even if it is in the disguise of a benefit for the non-gun owner. However, surely it is harder to argue against a solution that is not directly taxing their consumers or manufacturer, but rather merely incentivizing those who are not creating these negative externalities onto society.
I am not an economist, nor a politician, but hey, it’s just a thought or worth throwing out there. I see a lot of posts as I do each time a tragedy happens. Posts are well and good, and I don’t mean to offend anyone for showing their support, but how do we actually make a difference? We stop fighting about who’s right and who’s wrong and we negotiate. We deal with the situation we are given and we try to figure out a plan that is for everyone’s greater good. I’m not proposing a bullet-proof idea (no pun intended), I am trying to start a progressive conversation that both sides can listen to.
Feel free to let me know your thoughts. Email me at brandon@skyviewcfo.com.
