Investing in tragedy: The political economy of mass shootings

People’s World first published this article on December 16, 2015, shortly after the mass shooting terrorist attack in San Bernardino. It was written almost a year before the 2016 election, when Donald Trump became president and some of the gun lobby’s top allies secured tighter control over Congress. We have left the text unchanged.

Since publication, there have been further mass shooting attacks in the United States, including the Pulse nightclub massacre in Orlando, the ambush of Dallas police officers, and more. Late Sunday night, Las Vegas joined this dreadful list. At press time, at least 58 are dead and more than 500 injured. Meanwhile, the stock prices of gun manufacturers Sturm Ruger and American Outdoor Brands (formerly known as Smith and Wesson) are up sharply in Monday morning trading.

The first few years of the Obama Administration were leaner times for the gun industry. Troops were leaving Iraq, the campaign in Afghanistan eventually started winding down, and the army was cutting orders. The government just didn’t need as many guns as it had during the Bush years.

Consumer sales remained brisk during the Great Recession, though. Many people, assuming the uptick in unemployment and foreclosures might also bring a spike in crime, worried about protecting themselves from their neighbors. Right-wing paranoia about a ‘big government’ agenda also helped sustain demand from the Tea Party crowd. As always, fear of stricter gun regulations could be counted on to prop up sales.

That is all par for the course. But something else has been at work recently. Shares of Smith & Wesson, one of the largest gun manufacturers, have increased in value by 452 percent over the last five years. For Sturm, Ruger, and Co., America’s biggest gun maker, the shares have climbed more than 263 percent in the same period. So what is the thing that has really boosted the bottom line these last few years?

Mass shootings.

“Tailwinds of profitability”

The pattern at work here is really quite simple. Once a mass shooting occurs, there is inevitably talk of stricter gun control legislation. Just this past Sunday night, for instance, President Obama called for a ban on sales of military-style assault rifles and for keeping guns out of the hands of those on the no-fly list. As soon as such proposals are made, the National Rifle Association (NRA) and its allies are up in arms – figuratively and literally – about attacks on the Second Amendment. Americans are told that the government is plotting to take away all their guns.

Then what happens? Gun and ammunition manufacturers and retailers watch as sales soar. They, in turn, continue funding the operations of the NRA, which is a multimillion-dollar operation itself. Panic buying ensues, gun company shareholders cash in, and the NRA is flush with donations.

Of course, let’s not forget the other beneficiaries of all this – the Republican Party. The NRA, which is little more these days than the political arm of the gun industry, can be counted on to deliver its members into the GOP fold at every election. Republicans in Congress reciprocate by ensuring that no serious piece of gun legislation ever becomes law.

It is a mutually beneficial relationship that ties the gun industry, the gun lobby, and the Republican Party together.

The important role that mass shootings and the political machinations of the NRA-GOP alliance play in driving gun profits is frankly admitted by many top executives in the industry.

At a global conference for retailers hosted by Goldman Sachs in September of last year, the CEO of Dick’s Sporting Goods, Ed Stack, announced that, “The gun business was very much accelerated based on what happened after the [2012] election and then the tragedy that happened at Sandy Hook.”

A year earlier, James Debney, the chief executive of Smith & Wesson told an investor’s meeting that “the tragedy in Newtown and the legislative landscape” had driven sales up “significantly.” He commented that “fear and uncertainty that there might be increased gun control drove many people to buy firearms for the first time. You can see after a tragedy, there’s also a lot of buying.”

But Tommy Milner, the head of Cabela’s, one of the leading gun retailers, was even more blunt about the political ramifications involved. Before a group of investors in Nebraska, he recently stated that his company made a “conscious decision” to stock up on more guns and ammunition before the 2012 election. Cabela’s bet that Obama’s re-election would drive sales. The gamble paid off.

But then, the Newtown massacre happened just a month later. According to Milner, “the business went vertical…I mean it just went crazy.”

The transcript from the conference says that Milner explained to investors how his company “didn’t blink as others did to stop selling the AR-15.” The AR-15 is a semi-automatic rifle based on the U.S. military’s M-16 and was the type of gun used at Sandy Hook Elementary and in San Bernardino. The decision to continue selling this particular gun was a competitive advantage for Cabela’s against other retailers and brought in “a lot of new customers.” Milner said the company benefitted from the “tailwinds of profitability.”

Political paralysis is good for business

FBI data shows that the number of background checks performed for gun purchases have seen a steady climb since 1999, the year of the Columbine High School massacre. In that year, just over nine million background checks were performed. The number notched steadily upward over the next several years, but saw a huge surge in the aftermath of the Sandy Hook shooting in December 2012.

The latest round of mass shootings looks set to continue this trend. So far this year, almost 20 million checks have been completed.

On Black Friday last month, one of the busiest shopping days of the year, guns proved a popular holiday gift. The FBI reported the highest number of background checks of any day on record with over 185,000 requests received. This only tells us about the legal gun purchases attempted that day. Background check numbers reveal nothing about private sales or transactions at gun shows that still, thanks to Republican intransigence, have no background check requirement.

Earlier this week, Wall Street analyst Brian Ruttenbur told USA Today that, “The increased call for firearms laws, restrictions and regulations leads to the increased demand.” He continued, saying, “Surges in firearms sales are driven by the perceived threat of governmental restrictions.”

The perceived threat of governmental restrictions. But how real is that threat, at least at the federal level? Though Obama and many Democrats are once more talking tough when it comes to assault weapons and keeping guns out of the hands of those on the no-fly list, there is no way such proposals can break through Washington gridlock.

From Newtown to San Bernardino, we see a similar pattern repeat itself. A mass shooting prompts calls for gun control. The NRA responds with a fear campaign.  Gun sales increase. The GOP blocks any legislation.

It is a loop that results in no real substantive action to stopping future massacres but is very effective at delivering profits for gun makers, donations for the NRA, and votes for Republicans. If any progress is to be made to stop mass shooting tragedies, this iron triangle of manufacturers, lobbyists, and politicians must be broken.

2016

The most immediate area of focus for progressive movements has to be the Republican Party. The gun manufacturers are not easy to target politically and the NRA is the biggest lobby group in the country. The quickest way to weaken the gun triumvirate is to remove the GOP from the equation.

The 2016 elections represent the best chance to start chipping away at the gun industry’s lock on the legislative process. This means putting a high priority on not only stopping a Republican from becoming president, but also reversing the balance of power in Congress. If the Republicans’ hold on the House and Senate could be broken, new gun legislation of the kind outlined by Obama on Sunday would become a political possibility.

When the gun debate descends into arguments about the true meaning of the Second Amendment or state militias vs. private ownership, division ensues and the GOP wins. Progressives should prioritize gun proposals that have the possibility of building the broadest possible agreement.

Expansion of the background check system to include gun shows and restricting the sale of military-style guns are first steps that can gain the support of broad numbers of people – including gun owners and NRA members. These proposals will of course not end the scourge of gun violence in America, but they are the types of measures that can potentially begin peeling away support for the GOP on this issue.