EXTERNALITIES: The Impact of Gun culture on Society in the USA
Nikhil Pratap Singh
Virtusa Consulting Services | XLRI PGDM (GM) Co'23 | Ex-SAIL | Operations Manager | NIT Raipur
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“In the presence of externalities, society’s interests in the market outcome extend beyond the well-being of buyers and sellers who participate in the market to include the well-being of bystanders who are affected indirectly. Because buyers and sellers neglect the external effects of their actions when deciding how much to demand or supply, the market equilibrium is not efficient when there are externalities. That is, the equilibrium fails to maximize the total benefit to society as a whole.”
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Almost every month, it happens that as we switch on our television sets to watch prime time news, we find news flashing such as “Mass shooting at Uvalde Elementary school, Texas, 19 feared dead.”. Most Indian viewers cannot relate to such news as in India; we have one of the most stringent laws on acquiring a firearm. We either change the channel for want of more “positive news,” or feel bad for the victims for a while, and then, as any armchair expert on society would do, we blame it on Capitalism, western culture, debate on Democrats Vs. Republicans, or violent video games. Almost nobody approaches it from an economic point of view. Even I would have never thought of these mass shootings as an Externality had I not gone through the course on Microeconomics in Term-I in my MBA at XLRI.
The US Firearm and Ammunition industry was responsible for nearly $ 70 billion in economic activity, employing about 170,000 people directly and 200,000 people indirectly in the country in 2021 alone.[1] The US has a population of almost 332 million [2], and the number of civilian-owned firearms in the US is more than 393 million.[3] The liberty to own guns by civilians in the US arises from the second amendment to the US constitution, “A well-regulated militia, being necessary to the security of a free State, the right of the people to keep and bear arms, shall not be infringed.”[4] According to social surveys, many gun owners associate it with their personal sense of freedom[5], and personal protection is the most common reason for owning a gun [6].
Demand-Supply: Nearly 19 million guns were sold in the domestic market in 2021 and 21 million in 2020.[7] The US market is already saturated with guns and has become more so in the previous decade [8]; still, the annual domestic gun production in 2020 was 11.3 million [9].
Externalities at play: In my opinion, easy access and exposure to firearms coupled with untreated mental illnesses brought young American men to the point where they decided to unleash the horrors of both suicide and mass murder in society.?According to Centres for Disease Control and Prevention, in 2020, 45,222 people died from gun-related injuries- about 124 people each day. Of those, 54% (24,292) were suicides, and 43% (19,384) were murders; the remaining 3% were unintentional or involved in law enforcement. The total gun deaths represent a 14% increase from 2019, a 25% increase from the previous five years, and a 43% increase from a decade prior.[10] When it comes to cases of mass killings in schools, pubs, or hospitals, data is manipulated by changing the definition of “mass shooting.” In 2020, there were 611 such incidents, 700 in 2021, and more than 300 by July 5th, 2022.[11] This year, 22,000 people have died, and there have been 29 school shootings, the most shocking of all was the Uvalde, Texas Robb Elementary school shooting, where 19 kids (aged 9 to 11) and two teachers lost their lives.[12] In 2021 this number was 34, with 68 deaths or injuries.[13]
Data from multiple years and various sources cited in this essay depict the impact of gun culture on American society as a whole. While the buyers are busy in their chest thumping masculinity or sometimes being the family man; the sellers are busy filling their coffers; it is the immediate family of victims who undergo the agony of losing their kids or young adult child caught in the crossfire of radicalization and greed. There have been innumerable debates on limiting the number of guns in households, the mental health of adolescents who turn shooters, traceability of firearms, the relationship between political leanings and gun control laws, implementation of stricter measures, etc. Still, nothing seems to happen on the ground. Every other mass shooting event seems like a wake-up call, but then the society itself soon snoozes the alarm and goes back to its initial state of slumber. One possible reason is the strength of the gun lobby in the US. In 2021 alone, the gun rights group spent $15.8 million on lobbying compared to $2.9 million in lobbying from gun control groups.[14] The National Rifle Association (NRA) has spent $140 million since 2000 on campaigns of pro-gun legislators, including $ 50 million in “outside spending” in support of Donald Trump and six Republican candidates in 2016.[15]
The fact that it is nearly impossible to assess the value of human life makes it extremely difficult for me to explain the market equilibrium in this case or even introduce an external cost factor and then study the subsequent shift in the supply curve, especially when the number of lives lost is in thousands.
?Is there a way out?
In my opinion, until utopia arrives and people start looking beyond their interests, society will remain at the mercy of perpetrators of atrocities committed against it. Till then, it might find a little refuge through the Pigouvian taxes. Economists worldwide need to actually calculate the approximate worth of life through relevant models, multiply it by the average number of fatalities per year and then arrive at a price for these firearms. Along with law enforcement agencies, let the onus of background checks of buyers also fall upon the companies. The companies that manufacture and the owners of firearms must be made liable for every life lost; a combination of these would encourage the manufacturers to profile buyers and discourage buyers from unnecessary purchases. But I guess all of it depends again on the government’s political will, which stands on shaky grounds because Congress (in 2005) passed the Protection of Lawful Commerce in Arms Act (PLCAA). This statute provides immunity to gun manufacturers and dealers in federal and state courts.[16]
It is ironic that in an evolved economy and democracy such as the USA, on the one hand, buyer’s rights are protected through the second amendment to the constitution, and sellers have no moral obligation, plus the pro-gun lobby has much greater bargaining power; the rights of bystanders are not even paid heed to. The government has failed to safeguard the interests of society, and the lives of children and young adults, in this transaction between buyers and sellers. The law of the land doesn’t seem to be favoring its most vulnerable class. As I said earlier, the value of human life is immense, so ideally, even if the manufacturers and buyers suffered losses on a blanket ban, the government should not hesitate to amend the constitution as often as required to ensure the general well-being. Prohibitions and regulations force companies to innovate (for example, pellet guns are effective in ensuring safety and are not life-threatening to the one shot at) and give consumers time to reflect on their consumption patterns and spillover effects.
Given the power of gun lobbies to invest in the political campaigns of legislators in the US, it is also important to curb their power by bringing stricter laws on who can and who cannot invest in political campaigns in elections and a reasonable ceiling to it. ?It is common sense that a ban should be implemented if the gains to society are more significant than the losses to the gun manufacturers and lobbyists. The market will eventually find a new equilibrium where not just the buyers and sellers but society can flourish peacefully.
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References:
[10] https://www.pewresearch.org/fact-tank/2022/02/03/what-the-data-says-about-gun-deaths-in-the-u-s/
MBA XLRI Co'23 | EGMPx IIMB | RIL | NITK Surathkal
2 年Thoughtful article Nikhil Pratap Singh
Consultant - Solution Design | Infosys BPM | XLRI Jamshedpur PGDM (GM) Co23 | Executive Member - Guest Speaker Committee | Ex-TCSer
2 年Well-drafted
Business Consultant @ Tech Mahindra | Digital Manufacturing | MES | Industry 4.0| AI, Data, Analytics Strategy | 2nd Rank @ XLRI
2 年Excellent presentation and insightful
Mahindra & Mahindra Limited | XLRI - PGDM - GM Co'23 | Ex-Bajaj MARKETS
2 年Well articulated, Nikhil Pratap Singh