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Sat, 22 Dec 2012 18:15:00 GMT | By Deirdre McMurdy, MSN Money

The economics behind the U.S. gun control debate

Guns are big business in the U.S. The NRA and other gun lobbyists will use this fact to influence the discussion.


Deirdre McMurdy

It was important to be seen as taking some form of action in the wake of the tragic elementary school shootings in Newtown, Connecticut.

And so, U.S. President Barack Obama announced that his second-in-command, Vice-President Joe Biden, will lead a taskforce to explore ways of curbing gun violence. The taskforce has until the end of January to present some “very specific proposals” to Congress for consideration —and for inclusion in the President’s State of the Union address.

That sweeping mandate – which includes a review of everything from mental health to renewing expired legislation that bans assault weapons (high-capacity gun magazines that can accept more than 10 rounds of ammunition) to the long-term impact of violent video games — is a tall order.

But there’s an even taller order than that.

In most cases, it’s emotion that tends to cloud business and economic issues. In the case of guns, however, economics complicate something that’s a huge emotional issue. Americans, after all, have strong feelings about the right to bear arms.

The ultimate proof of that feeling is the estimate that 47 per cent of the population owns a firearm and Americans own 50 per cent of all firearms in the world.

Taking a close look at the numbers provides extra insight into the challenges that lie ahead for any politicians attempting to direct — let alone change — the national conversation about the American gun crisis.

At a time when the U.S. economy is fragile, it’s more difficult to clamp down on an industry that posts annual sales of $12 billion and has been generating new, high-paying, high-skill jobs at an impressive pace. In fact, over the past two years — as U.S. unemployment has surged over eight per cent — the gun industry has created 26,000 new jobs that pay an average of $47,000 a year in salaries and benefits.

Furthermore, rather than suffering through the recession, gun sales have climbed as Americans have become more fearful of police budget cuts, rising crime, general civil unrest and, post-9/11, terrorist threats.

The federal and state tax revenue from this economic activity is not something to discount lightly.

Not only that, given the high degree of concentration in the sector — there are only 300 companies, and a handful of them are dominant players — it is remarkably cohesive. The industry’s principal lobby vehicle, the National Rifle Association, raked in $228 million in revenue in 2010. And that money came not only from the association’s estimated four million individual members: about $44 million came from corporate donors.

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