What Do Trickle-Down Economics, Prohibitionism, and Gun Control Have in Common?
They’re all nonsensical supply-side arguments to complex problems. Fundamentally, they all argue that demand can be controlled by supply, or, more simply, that “supply finds its own demand.” The corollary to this is that a high demand can be curtailed by controlling the supply. In modern economics, the supply-side school is one that argues that an insufficient demand for a good or service can be raised by producing more of it. This ideology has found its most ardent supporters among Neoliberal economists who push the so-called “trickle-down” theory which states that prosperity will “trickle down” to the rest of the country if we pad the pockets of the rich.
Many accuse this theory’s proponents of greed, but that’s a shallow argument; trickle-down theory is actually a classic supply-side view that has nothing to do with wanting to “reward” the rich simply for being rich. The logic behind this theory goes that since the economy in general is driven by consumer demand, the best way to raise demand is to increase the supply, and since the supply is created by the capitalists, business owners, investors and the like, then money should be given to them so that they may more easily increase their productive output.
The problem with this theory, of course, is that it doesn’t work in practice. It claims that supply drives demand; in fact the reverse is true. There’s no incentive whatsoever for a business to increase its supply during a crisis, for example, because there’s insufficient demand to support such an enterprise. In layman’s terms, when people are too poor or frightened to buy, only foolish businesses spend their money trying to sell more. But that’s exactly what trickle-downers try to encourage: their solution for crises of demand is to encourage businesses to increase their supply by throwing money at them. But businesses are smarter than that. They’re not suicidal; they know that increasing their output when nobody wants to buy is stupid, so they hold onto the money (incidentally enough, this is just what the American people did with their rebate checks; looks like we’re also smarter than the politicians). In this current crisis, the businesses who have had billions thrown at them have mostly used it to buy out smaller, weaker firms that are struggling worse than they are. We gave the banks cash and told them to lend; they kept it for themselves and killed their less-governmentally-favored competitors.
These supply-side arguments were first enumerated by Jean-Baptiste Say, a man whose nonsensical ideas that run contrary to human nature have influenced generations of wrong-headed economists, a group trickle-downers are in my opinion members of.
What does this have to do with prohibitionism or gun control? Simply put, both are also approaches to complex problems that focus naïvely on the supply rather than the demand. Prohibition is a great example; in 1919 congress overrode Wilson’s veto and said “alcohol is bad, but people are getting drunker than ever, so if we can ban alcohol, eventually they’ll stop drinking!” We all know how that turned out. Nobody stopped drinking, they just became criminals when they did it. A whole underground industry of alcohol brewing and smuggling sprung up, and organized crime came into existence to ensure that the booze kept flowing. One could say “demand created its own supply.”
It’s very similar with guns. I just read an interesting article this morning about an enormous cache of drug gang weapons seized by Mexican law enforcement. The haul is huge — more than 400 rifles and pistols, fully-automatic weapons, machine guns, grenades, grenade launchers, and even rocket launchers (pictured to above). I later found another article about it full of hand-wringing about how porous our borders are and how it’s all Arizona’s fault. If only we had tougher gun control laws! The supply could be choked off and then drug dealers would be starved of weapons!
If only it would work, I would fully support this. The problem is that there’s no evidence that it would. Organized crime is notoriously slippery; they’ll get what they want pretty much any way you try to slice it. Mexico has extremely harsh gun laws, so they hire people to get guns in America. If we too do something as silly as Mexico and ban all guns, they’ll simply get their guns somewhere else. Most likely they’ll use their influence at all levels of the Mexican government to steal military weapons. There’s already ample evidence that they’re doing this; the seized arsenal included explosives and machine guns that you can’t get in America. As we see, demand is creating its own supply. Mexican drug cartels can’t get the heaviest weapons north of the border? No problem, a few greased palms and suitcases full of greenbacks and the Mexican national guard armories are wide open.
Needless to say, this would be even worse. Right now, the majority of weapons acquired by these cartels are civilian-legal weapons in America — semi-automatic pistols and rifles. If that supply is choked off, they’ll turn to the military to supply their needs, which uses fully-automatic weapons and explosives. How would you like to see the drug gang’s foot soldiers carrying military-grade weaponry? Me neither.
This is similar to an interesting trend I just uncovered among U.S. street criminals. All the literature and accounts I’ve read from the 70s and 80s indicate that criminals from those decades tended to be armed with pretty pitiful guns: .25s, .32s, and other cheaply made “junk guns” that were as likely to jam as they were to fire. It didn’t matter much, though. Career criminals aren’t stupid; they’re capable of exercising pretty sophisticated logic. In this case, they realized that for street crimes like mugging, robbery, and rape, the capacity to cause injury wasn’t as important as the threat of it; any gun — no matter how crappy — is a credible threat, capable of forcing a victim to capitulate. It doesn’t matter how terrible the ballistics of the .25 ACP round are, nobody wants to be shot with one, and criminals realized that they could get the most “bang for their buck” by buying cheap guns because they rarely needed their guns to work at all — they were mostly for intimidation.
There were a few semi-coherent movements during this time period to ban “junk guns” that never really succeeded, but what really ended the carrying of crappy guns by criminals was the Brady Bill. This bill mandated background checks for all firearm purchasers. And you know what? It was hugely successful! Despite some high-profile failures, the system generally works pretty well to prevent criminals and the insane from buying weapons on the open market.
Criminals realized very quickly that they could no longer safely walk into a store and buy a gun — their supply had dried up. Their demand for guns was unchanged, though — they still wanted to carry ‘em! So what did they do? They found a new supply. They started stealing them from houses, or buying them on the black market or from drug dealers. And guess what? These sources tended to have much, much better guns! As criminal demand for guns was undiminished, it simply found a different — and in this case superior — supply of them. Now street criminals are more likely to own high-quality revolvers or high-capacity pistols, both in calibers more likely to result in death rather than injury when fired at victims or police.
Me? I’m with John Maynard Keynes, the man who orchestrated the New Deal and pulled us out of the depression: “Control demand, not supply.” This means asking some tough questions, like, “Why are there drug cartels that want military weapons?”, “What has caused the explosion of street crime in this nation?” and, “What caused demand to collapse during the Depression?”
We need to address the core reason for the demand, whether it be low or high. In the case of the New Deal, Keynes was able to stimulate demand by correctly divining that a lack of employment had dried up consumer spending, so he put people to work building infrastructure projects that survive to this day. Once employment rose, incomes did as well, and demand gradually eased back up to normal levels.
I have my own theory about what caused the drug cartels: illegalized drugs. Just like during prohibition, the demand for an illegal substance has created the incentive for extra-legal organizations to traffic it from producers to consumers. During prohibition, it was the mafia. Under the drug war, it’s the cartels. We neutered the mafia by legalizing alcohol. We can do the same for the cartels by legalizing drugs. Dry up the demand for guns (which is caused by the supply pinch for drugs) and there will be fewer problems with their supply.