Monday, January 11, 2016

Market Forces

Anderson Cooper: “What can you say to somebody tonight to convince them that you don’t want to take away everybody’s guns? That you’re not coming for their guns?”
President Obama: “Well, first of all, Anderson, I think it’s useful to keep in mind, I’ve been, now, president for over seven years, and gun sales don’t seem to have suffered during that time.”
Cooper: “If anything, actually, you’ve helped.”
Obama: “They’ve—they’ve—gone up. I’ve—been very good for gun manufacturers.”
 —Exchange at CNN’s Guns in America town hall on January 7
What to make of that back-and-forth between the CNN anchor and the president?

I don’t want to put words in the president’s mouth, but I think it is fairly safe to say that he would prefer for gun sales to be going down rather than up. And, if we accept that premise, then the president’s defense against charges that he wants to undermine the Second Amendment basically amounts to this: Gun rights advocates do not have anything to worry about because I am so ineffective at achieving my policy goals—at least when it comes to guns.

The irony that gun sales have surged under this president—the very one who has been most vocal in our memory about the problem of guns in society—highlights an interesting point. Barack Obama’s actions as president suggest a very interesting understanding (or lack thereof) of how economies work. The BBC World Service’s overnight business program last week underscored, however unintentionally, that fact. One of their segments reported on how gun sales how had surged in response to his raising the gun issue. This is a pattern we have seen again and again. By injecting even the merest theoretical uncertainty into the future market availabilty of firearms, the marketplace responded by driving up demand for those firearms.

A similar thing has happened when it comes to business investment and, consequently, employment. During Obama’s first term, prolonged talk of tax increases and uncertainty over the healthcare law, which was rolled out in slow motion, caused businesses to hold back investment because they could not forecast their expenses. That, in turn, caused the recovery to be anemic. Yes, the latest job figures (seven years after the financial crisis) look good on paper, but the workforce participation number is the lowest in generations and wage levels have fallen.

The other segment on the BBC program was about the rise of healthcare costs in America. As reported by the BBC’s partner, the Marketplace program on American Public Media, a consequence of the Affordable Care Act is that it has encouraged hospitals to consolidate, resulting in higher costs from a lack of competition. To add insult to injury, Gallup reported the other day that, despite the ACA, the percentage of uninsured Americans ticked up to 11.9 percent last year from a low of 11.4 percent. (That compares to 14.6 at the beginning of 2008).

The president’s response to this sort of bad news is usually to blame participants in the economy for not conforming to his reality. He does not acknowledge the market demand he himself created for more firearms purchases. Instead, he blames the National Rifle Association for its lobbying activities. It does not seem to occur to him that the NRA’s successes are actually due to a widespread demand for guns rather than the cause of it. If people are rushing to buy more guns, it is not because of laws that are or are not passed by Congress or because of the activities of some lobbying group. If they are buying more guns, it is because they do not feel safe. You can argue whether those fears are rational or not, but it is certainly clear that this is what is behind the demand for guns.

If the president wants to see fewer guns being purchased, he needs to do what he can to make people feel safer because, so far at least, his response to terror attacks in France and California do not seem to have done the trick. Not only have weapons sales surged but so has Donald Trump’s political support. Even if that support does not amount to a majority of Americans—or even of Republicans—it is still an indictment on his ability to reassure the country.

Maybe more people would be less jittery if they perceived the government as having at least realized that the attack in San Bernardino was not strictly result of inadequate gun legislation. Or that the American marketplace consists of more than just the Democratic base.

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