April 19, 2013

Why are people selling guns online and skirting the law? Are they in economic dire straits?

The New York Times (in a long-delayed follow-up from Mother Jones magazine) finally reported on a story of recent relevance that would have made an impact, on the same day that anything resembling meaningful gun control reform in the United States got squelched by the U.S. Senate. When president Obama called for a vote, he wound up getting nine votes in the the U.S. Senate this week, only to see them all go down in flames.

The New York Times reported on the vibrant and massively secretive market for firearms purchased online. The Times found that 94 percent of the 170,000 gun ads posted on an online buying forum called Armslist were made by "private parties". Such a classification didn't require background checks or the keeping of records, and purchases can be made in cash. To quote from a post from Daily Kos:

The Times found many of those private parties seemed to be acting instead as gun dealers without licenses, selling significant numbers of firearms. They do so without running background checks on any of the people they sell do. Nor do they keep records of their sales. As the newspaper points out, where the line is drawn about what makes a dealer and what makes a private seller is blurry. How many guns can someone sell before becoming what the law calls "person who devotes time, attention, and labor to dealing in firearms as a regular course of trade or business with the principal objective of livelihood and profit."

And Armslist is one of many, many such online buying forums for guns, the majority of purchases would fail elementary checks for checking backgrounds and record-keeping.

I'd like to make two points:

1. This is a critical example of the fallacy of ignoring market externalities. Market theory considers only the buyer and the seller in a purchase of a good, like guns. (Maybe it should be called a "bad" rather than a "good" in this case?) But there can be, and probably will be, serious externalities paid for by people who had nothing to do with the immediate purchase. Not to put too light a point on it, but twenty-six dead people at Sandy Hook Elementary School for a single purchase is a serious externality, even if the purchase was ostensibly legal. In markets, such externalities are ignored, to the detriment of everyone. In contrast, in a participatory economy, the metric of indicative prices would include the immediate predictable consequences of a good, like guns. In the case of someone getting killed by a gun that someone bought secretly online, those indicative prices would include a metric of "social cost", which would understandably escalate the cost of the good, dramatically so. Hopefully, the rising cost would reach the point where many "buyers" in a participatory economy would decline to "purchase" the good on the grounds of the cost being too expensive to afford, to the benefit of those affected by the exchange but not taking part in the exchange. If anyone should consider a turn away from markets and towards a participatory economy, this stands as an enormously powerful reason why.

2. In light of the report, I can understand why some people sell guns. With little oversight otherwise either on legal or economic grounds, selling guns can be a quick way to earn some cash, and without the typical constraints of a standard job -- no boss to worry about, no punch card to check in, just sell your guns online and enjoy your cash and/or pay your rent. In some circumstances, it's probably the only way some people can to earn some cash, especially given the lousy economy and eroding position of the middle and working-class. So people sell guns. The situation reminds me of a quote from the extraordinary movie Bulworth, and a scene near the end of the film where a drug dealer explains why some people go into the risky but lucrative role of selling drugs:

I'm giving them entry-level positions into the only growth-sector occupation that's truly open to them right now. That's the substance supply industry. They gonna run this shit someday. They gonna have the whole empire. Man, y'all don't give a fuck about it. You greedy-ass politicians. That's what you tell me every time that y'all vote to cut them school programs; every time y'all vote to cut them funds to the job programs. What the fuck; how a... how a young man gonna take care of his financial responsibilities workin' at motherfuckin' Burger King? He ain't. He ain't, and please don't even start with the school shit. They ain't no education goin' on up in that motherfucker. 'Cause y'all motherfuckin' politicians done fucked the shit up. So what they gonna do? What's a young man supposed to do then, right? What's he gonna do? He gonna come to me, that's what he's gonna do.