Obama’s Gift to Big Gun

I know the kerfuffle about Obama’s gun push has died down a bit, though I assume he will revive it tonight in the State of the Union. One point that I’ve been meaning to make for a while – which may not be original at this point — is how much Obama is helping the gun industry. Many people have noted that Obama’s anti-gun theatrics are a boon to the NRA in terms of political donations and to gun manufacturers in terms of sales. But I have in mind something else.

As I understand it — and I’m open to correction from our gun enthusiasts around here — the gun-show loophole is largely a myth. But, what Obama wants to do is make it very hard for Joe Citizen to sell his gun to Jane Citizen. If I sell you my car, that doesn’t make me a car dealer. But Obama essentially wants to make selling your personal gun to a friend or neighbor the equivalent of a full-fledged business transaction and then hang a bunch of paperwork on top of that.

Whatever you may think about the policy objectives involved, it seems pretty obvious to me that this is a boon to the gun industry. Let’s say the government comes out and puts lots of burdens on the sales of used cars, particularly person-to-person sales. Who benefits the most from that? New car dealers. I don’t see why the same thing wouldn’t happen with guns. The more onerous you make it to sell a used gun, the more likely it is you will send buyers to get new guns. 

The Second Amendment issues aren’t really what I find so interesting here. It’s the nature of regulation itself. Whenever the government gets involved in regulating the economy (or trying to make its citizenrylegible“), it tends to benefit the big players. That’s because the big players can absorb the transaction costs better than the smaller ones.  As Goldman Sachs CEO Lloyd Blankfein put it:

It’s very hard for outside entrants to come in and disrupt our business simply because we’re so regulated. We hear people in our industry talk about the regulation, and they talk about it with a sigh about the burdensome of regulation. But in fact in some cases the burdensome regulation acts as a bit of a moat around our business.

This is a phenomenon I’ve written quite a bit about before. Progressives claim to dislike corporatism because they think it means “rule by corporations.” It doesn’t. The reality is they love it. They love having the “stakeholders” around one table so they can be coopted and bought-off.

The whole objective of the early New Deal was to cartelize the economy so the government could form partnerships with Big Business. When Clarence Darrow wrote his final report on the success of the National Recovery Administration he concluded that in “virtually all the codes we have examined, one condition has been persistent . . . In Industry after Industry, the larger units, sometimes through the agency of . . . [a trade association], sometimes by other means, have for their own advantage written the codes, and then, in effect and for their own advantage, assumed the administration of the code they have framed.” 

What’s interesting about this situation is the unintended nature of it. There’s no way Obama likes gun manufacturers any more than Democrats in the 1990s liked big tobacco. But the result of all of the big tobacco regulations of 20 years ago, government — I should say “governments” —  is now in bed with big tobacco and is much more hostile to small tobacco companies that didn’t sign on to the master settlement.

I don’t know a huge amount about how the National Rifle Association and other gun groups handle their relationships with gun manufacturers, but I suspect they provide a service few appreciate. If guns were widgets, you would expect Big Widget to cut deals with the government that screw the little guy and create “moats” around their businesses. Uncle Sam could say something like, “If you stop selling retail, we’ll guarantee you sales to law enforcement and military of X,” or some such. But gun manufacturers probably can’t do that.  In part because of liberal hostility to firearms. But a bigger reason is probably that the gun lobby would have a zero-tolerance policy for compromises that undermined gun rights in America.

Anyway, just a thought. 

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