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Market trigger

14 December 2015 By Rob Cox

While squabbling among America’s Republican presidential candidates will reach fever pitch at Tuesday’s debate, they seem to agree on two things. They speak about ending so-called crony capitalism, and they are united against imposing new regulations on the firearms industry. But what if the free markets they espouse could help remove the scourge of American gun violence?

It is hard to imagine a piece of legislation that better defines crony capitalism than the Protection of Lawful Commerce in Arms Act (PLCAA). The bill, passed in 2005 by a Republican-controlled Congress and signed into law by President George W. Bush, effectively shields gunmakers from what may be the single most forceful source of discipline in American capitalism: the rule of law.

Arms manufacturers like Remington Outdoor and Smith & Wesson, whose assault-style weapons were used to murder 14 people in San Bernardino on Dec. 2, manufacture the deadliest consumer products known to man. Yet they enjoy protection from liability and negligence lawsuits accorded to no other industry – not to toy producers, not to mortgage lenders, not to carmakers.

Remington, formerly known as Freedom Group, noted under the “legal proceedings” section of a recent filing with the Securities and Exchange Commission: “Our products are protected under the PLCAA, which prohibits ‘causes of action against manufacturers, distributors, dealers, and importers of firearms or ammunition products, and their trade associations, for the harm solely caused by the criminal or unlawful misuse of firearm products or ammunition products by others when the product functioned as designed and intended.’”

The National Rifle Association called the PLCAA “the most significant piece of pro-gun legislation in twenty years” when it was passed. The law was an attempt by Congress to pick one industry – one with a ferociously successful lobbying organization – as a winner, effectively subsidizing its activities by sheltering it from legal action. That is crony capitalism, just the kind of government assistance GOP candidates rail against.

There is nothing unconstitutional, perhaps nothing more American, than the notion of unleashing the same free-market capitalism on the weapons business as on everyone else.

By backing a repeal of the PLCAA, the presidential candidates could show their commitment to market forces and avoid singling out the firearms industry with new rules – while still mitigating the gun violence that has become a black mark against American exceptionalism.

Allowing the market to work on gunmakers just as it does on any other industry would not immediately reduce gun deaths on its own. But it would help create economic incentives for gunmakers and distributors to ensure that their products don’t wind up in the wrong hands and being used for murderous purposes in places like San Bernardino or Newtown, Connecticut, where a gunman killed 20 first-graders and six educators at Sandy Hook School three years ago today.

Plaintiffs with legitimate gripes would be able to hold manufacturers like Remington and Smith & Wesson to greater account through the courts. The threat of big damages awards has encouraged companies in other industries to adopt better practices and safety standards to protect themselves and their shareholders.

What might this look like in gun land? Start with the introduction of safety features including radio-frequency identification systems or biometric trigger locks like those on an iPhone, preventing unauthorized use of a firearm by anyone other than its rightful owner. With safety established as a unique selling point, what might be called the Volvo of guns could even emerge, leading a shift away from marketing that almost exclusively emphasizes the lethal capabilities of firearms.

The threat of potentially ruinous lawsuits would take America a step closer to privatizing what economists call the negative externalities of the weapons trade rather than burdening the public. According to the Law Center to Prevent Gun Violence, gun violence robs the U.S. economy of at least $229 billion a year, half of which is borne directly by taxpayers.

Surely even Ted Cruz, the pro-gun Texas senator and presidential candidate who recently called President Barack Obama an “unmitigated socialist,” can see the philosophical problem with supporting legislation that socializes such costs.

Imposing normal market incentives on gunsmiths – to reiterate the point, nothing more than companies like JPMorgan, Procter & Gamble and General Motors face every day – might also encourage them to be more supportive of broad measures that might keep legal trouble at bay, such as universal background checks for gun purchasers. Manufacturers would also have business reasons to do a better job of policing retailers, weeding out the relatively few bad apples responsible for selling disproportionate numbers of weapons to bad guys.

By calling for a repeal of the PLCAA, the Republican candidates have a unique opportunity to put their rhetorical critiques of crony capitalism into action, and let the free market help fix America’s gun-violence epidemic.

(Rob Cox grew up and lives in Newtown, Connecticut.)

 

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