No, the Gun Industry is Not “Secretly Pulling” for Hillary
Jon Stokes 02.20.16
I read with interest this Guns.com piece on Businessweek reporter and best selling author Paul Barrett’s notion that the gun industry is somehow secretly hoping for a Hillary Clinton victory.
I understand where Barrett is coming from. My first exposure to the firearms industry was at the SHOT show immediately in the wake of the Newtown massacre and in the thick of the greatest gun-buying panic the world has ever seen. As I went from booth to booth, interviewing gunmakers for my Wired piece on the AR-15, I assumed, like Barrett, that they were lapping all this up. But like Barrett, I was wrong.
After talking with gun manufacturers, I learned that they unanimously hated these spikes. They hated the “Obama Surge” of 2008, and they hated the post-Newtown panic. The reason these spikes are so widely hated is that they’re inevitably followed by a lengthy period in which nobody is buying guns because they’re broke and their safe is full. These wildly swinging up-and-down sales volumes and profits may be good for stock traders who like to bet on big moves in gun company share prices, but they make it very difficult for the gun companies themselves to forecast demand and adjust production capacity accordingly. It’s really, really hard to run a business when there could be a sudden run on your product, followed by years of terrible sales.
The economic mechanism behind all of this is very straightforward, and we saw it in action with Obama’s post-2008 “cash for clunkers” stimulus package. An A&M study showed that this package may have provided a short-term boost to car sales, but it ultimately hurt the auto industry.
Let’s remind ourselves of what Cash for Clunkers was meant to do and how it worked. In Obama’s words, the program was meant to “boost the economy” by allowing “folks to trade in their older less fuel-efficient cars for credits that go towards buying newer more fuel-efficient cars.”
The question is: Did the program work?
According to the careful empirical analysis carried out by the three Texas A&M economists, it did not. Car sales went up during the program, but they went down by enough during the subsequent seven to nine months that the total number of vehicles sold within a year of the start of the program was not affected.
Gun panics work exactly like the “cash for clunkers” program in that instead of creating demand for new products out of thin air, all they do is pull demand forward from the future. The inevitable hangover from such stimulus comes following the temporary buying spree, when tapped-out customers (who have bought their next four or five years worth of guns in one sudden rush) close up their wallets while producers (many of whom boosted their production capacity in response to the first panic) are left with soft market and a overstuffed inventories that could take years to drain down.
After both the 2008 and 2012 panics, many gunmakers had their worst years ever, and they struggled to stay afloat in a gutted firearms market.
So no, I can say quite confidently that there is not a single gunmaker that is hoping for a Hillary victory, even in the most secret recesses of what I’m sure Barrett imagines to be their tiny, black little hearts. A Hillary win would certainly set off a gun panic that would probably dwarf Newtown, but the eventual hangover would decimate gun industry sales and share prices. And then there are the BATF shenanigans that an HRC administration would no doubt use make the industry’s customers miserable. A Hillary win would be a catastrophe on all levels for gunmakers, and you can bet they know it.