Try taxing the bullets if guns won’t be banned

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Sensless acts of violence as we saw several days ago in Las Vegas once again sent out calls to ban guns. The latest stats from the Bureau of Alcohol, Tobacco and Firearms (ATF) can be seen here. There has been a huge shift in gun manufacture since GFC. Over 9mn guns of all types were made in the US in 2014 ( the latest figs to hand), Twice the level of 2008. Less than 5% are exported. One can see the proliferation in weapons sales by type below. Banning guns in the US is a taboo subject because there are many “responsible” gun owners as they like to view themselves. Comedian Chris Rock had perhaps the best solution if guns couldn’t be banned  – to tax bullets to exorbitant levels that the cost per shot would limit such atrocities. To be sure if Paddock went to a gun smith asking for $100,000 worth of bullets then surely that would be a red flag in itself!

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60 deaths and 500 wounded people is no laughing matter but we should ask ourselves why have weapons manufacture/purchase skyrocketed like they have? If less than 5% of guns are going overseas then the home market is the only place they are ending up. Note these stats only include civilian and police purchases not military.

While 2014 sales were down from the peak of 10.5mn ownership is still estimated by the ATF to be around 35% of households down from 50% in the 1970s.

Smith & Wesson and Ruger shares have soared as demand has fueled earnings since GFC. Since 2017 the shares have slackened off for both companies. Is this because there is a feeling of economic hope and a lower level of uncertainty? Or could it be the risk of a ban on weapons was greatly reduced when Trump took office. The latter seems most plausible.

Do we deduce that the rebound in gun sales since GFC has been driven by the fear of a lack of security? The concern that localized theft, car jackings and break & enter would rise pushing the need for self protection? The FBI stats (below) show the prevalence of crime has been in a long term decline per head of population for almost 25 years  in 2015 there has been a small bump but relatively inconsequential.

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Perceptions can often be far removed from reality however the purchase stats speak for themselves. Economically the value of crime in a recession should fall as the access to black markets is curtailed and the “bang for the buck” per stolen item is likely less meaning the risk-reward ratio is more acute.

Reading through the newsfeeds on who Paddock was, which political affiliation he had or those host of other conspiracy theories the fact remains innocent people were slaughtered. Parents, children, relatives and friends must surely carry a psychological burden which is unfathomable.

After the Port Arthur Massacre in Australia in 1996 the federal government had an amnesty where the state bought back guns. In Australia there was nowhere near the scale on an absolute or relative basis versus the US. Will the US amend the second amendment? It is unlikely but Rock’s suggestion of an exorbitant bullet tax would certainly limit the extent of damage and flag irrational purchase orders.

The other question lies in the black market. If one wants to get a gun, provided they have the financial ammunition there is little to stop such atrocities even if guns were banned. Yes Australia hasn’t seen a massacre since yet there was never a big problem in the first place. 661,000 firearms were removed from circulation. Or 1 gun for every 33 people. In the US it is c.1 gun for every person in circulation. Even if a third of households have them we are looking at 1 gun per 3 people in the US.

The Aussie government offered $500/gun average. If Trump ran the same programme (albeit 21 years later) and taking into account inflation then conservatively at $1,000 a gun he would be looking at a cost of $320bn. To put that in perspective the annual US military budget is around $680bn. So a combined spend of $1 trillion.

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